The Outdated Economics of Conservative Ideologues

April 26, 2016

Some of you may have been following Shankar Vedantam on NPR or the discoveries of Daniel Kahneman, the Nobel Prize winning psychologist on the Princeton faculty, and their demonstration of the irrational ways that people very naturally and ordinarily reach decisions. Indeed, for quite a long time it’s been apparent that rational decision making often demands too much of people. As Cornell’s Vicki Bogan said in a talk in Albany, the rational choice model of economics assumes that people:

  • Think like Albert Einstein
  • Can store as much memory as IBM’s Big Blue
  • Can exercise the will power of Mahatma Gandhi
  • … [and] make unbiased forecasts

Nobel Prizes have been awarded to psychologists and economists who have been studying human decision making, showing that people literally can’t do what conservative economic theory expects them to. The rational man doesn’t exist, and for that reason, markets often don’t protect us. For both businessmen and consumers, rational choice is often impossible; it’s just too hard. Sometimes things aren’t currently knowable. Sometimes they’re beyond the capacity of individuals, even if institutions can figure it out.

A trip to the grocery store helps make the point clear. Even though much of the information exists, I can’t know enough about all the ingredients of the goods I buy, and their impact on my body, and still take the time to do my work and have a life to live. I have to trust someone or something else. But consumer ignorance shapes what businessmen have to do to survive. Those who cater only to the most informed, cater to small markets and often go under.

One consequence is that the market doesn’t protect us. That’s why workers’ compensation was started many decades ago – workers couldn’t figure out the odds of injury and didn’t have the ability to protect themselves as cheaply and effectively as informed employers could. Government stepped in to move that burden of knowing and choosing from the employee to the employer.

Those are examples. The broader impact of what is now called behavioral economics is that the economic theory of market ideologues is thoroughly discredited nonsense. It doesn’t work. A couple of decades ago there was a big debate about the efficient market theory which claimed that the market had it right even though individuals could be wrong. But they couldn’t tell me whether the market had it right the day before or the day after the crash. In other words it was nonsense on stilts.

That’s one of the reasons the public, all of us, have to get out of the glare of the outdated economics coming from conservative ideologues. It’s one of the reasons why it has been so important that Elizabeth Warren and Bernie Sanders have moved the Democratic Party to the left. That shift also clears the way for Hilary Clinton to return to the roots of the modern Democratic Party in the Great Depression, in Roosevelt’s New Deal, in being a party with heart.

Hilary and Bernie both have a lot to offer, but just as big a key to progress will be the Senate and the House of Representatives, which have blocked Obama’s efforts to push this country toward better, more caring solutions at every turn.

— This commentary was broadcast on WAMC Northeast Report, April 26, 2016.

Libertarians on and off the Court

December 2, 2014

Most Supreme Court justices are libertarians in some sense. But what kind and for whom varies widely.

We all believe we have rights to decide lots of things for ourselves. But what are the limits? The more “conservative” the justices and others are, the closer to the Tea Party, the only limits they recognize are force and fraud. Various conservative philosophers have been very plain about that. Regulations, almost all regulations, interfere with that freedom of action.

People sign contracts every day that have draconian consequences for them, but, say the far right, you agreed to that. You signed a contract for which the only remedy is a stacked deck, arbitration in front of an arbitrator arranged by the company, and you have no right to unite with other people in the same situation to fight expensive battles together and share the costs – that’s called a class action, and the Court’s conservatives forbid it in arbitration, won’t allow the states to try to protect consumers from such restrictions on their rights. That protects the company’s liberty. And of course you had the liberty not to sign – if you read and understood the contract and had a realistic choice.

You signed a mortgage with a lender and it had all sorts of hidden costs, fees, rates and traps that put a lot of people underwater and helped to build and then break the housing bubble, and with it the economy. But, tough, you signed, say the conservatives.

Most states used to forbid usury, interest rates that no one could reasonably pay but that piled up so quickly bankruptcy was inevitable. Not any more – the Supreme Court made sure states could no longer forbid usury.

And where the conservatives on the Supreme Court couldn’t block federal law, like the antitrust laws which were intended to give us the benefit of competition and protect us from monopoly, they made it impossible to prove.

There are an endless set of examples. The company gets the liberty and you get the shaft.

But when you get the shaft, that doesn’t just affect the liberty that judges and legislatures say you have. Getting the shaft affects your real liberty – liberty to make wholesome life choices for yourselves and your families. Most of us think our liberty is limited by the effect on other people’s liberty. Giving people the shaft deprives people, ourselves and lots of others, of our very real liberty.

Most states tried to limit legal liberty to do things that harm others. There should be no liberty to foul the water we drink or the air we breathe. There should be no liberty to bury costs in fine print legalese, or propose terms that the company knows will do damage. There should be no liberty to put people into unsafe working conditions when the company could have saved their lives, saved people from collapses and explosions in coal mines, oil rigs, and similar disasters. It doesn’t matter that the workers agreed, signed a contract, took the job – the company knew and we should be able to stop it.

We too believe in liberty, but it is liberty bounded by what’s good for everyone. We have a choice between freedom for those who have the money and power to exercise it, or freedom for everyone based on some realism about what’s going to happen.

Do we care? The protectors of corporate legal liberties on the Court have a child’s idea of liberty – without responsibility. Children throwing tantrums at civilization have no place on the Court.

— This commentary was broadcast on WAMC Northeast Report, December 2, 2014.

The Chemical Contamination in West Virginia

January 28, 2014

Before moving to Albany thirty-five years ago, we lived in Morgantown, West Virginia – a university town and a mining town. We knew people in both worlds. Our daughter was only seven, but after we moved she got letters from a little friend there who was the son of a miner. Miners lived all around.

Morgantown was very special, but the chemical leak and contamination in Charlestown reveals the naiveté of many in West Virginia and elsewhere in the U.S., who believe that whatever is good for the companies is good for us, that the companies are looking out for our welfare. Read the rest of this entry »

Romney-Ryan Rickshaws

October 23, 2012

Both candidates say they want to pull us out of the recession and put people back to work – to create jobs. Jobs, jobs, jobs, the election seems to be about jobs.

President Obama is straightforward Read the rest of this entry »

Regulation and the Slide to Hell

August 28, 2012

There’s too much regulation, says Romney. Too much regulation, say some businesses. It’s always categorical, not about which regulation. Just that regulation is bad. Stop it.

The forests are burning. The drought continues. The deserts are growing. The earth is warming. The diseases are spreading. The storms are destroying our towns and farms. The glaciers are melting and the oceans are retaking our shores, submerging islands, making refugees and warriors. But oh block the regulation. Read the rest of this entry »

Romney’s Choice: Paul Ryan for Vice President

August 14, 2012

Mitt Romney ended the suspense with the choice of Paul Ryan for Vice-President. And what did we get? Nothing! The Ryan budget for dealing with our problems is zero – no taxes, no expenses, no government. No regulation, no protection, no help, no investment. We’re in a recession and what do we get to pull out of it – nothing, zero, nada. Read the rest of this entry »

Capitalism, Religion and Global Warming

August 7, 2012

Global warming is the earth’s response to unrestrained capitalism. Everybody gets to make, buy and use whatever they want without regard to how it affects the sustainability of the environment and everyone in it. Drilling in the Gulf, the Arctic or anywhere, hydrofracking in New York, Pennsylvania or anywhere, turning food like corn into oil that can be burned, all make carbon based fuels that contribute to global warming.

The growing list of minor chores that we once did with cranks, like grinding coffee, requires more power for which more carbon based fuel is burned. Planning buildings without regard to natural cooling requires maximum use of power hungry air conditioners. This is capitalist freedom to do whatever we want. And the earth is fighting back.  Read the rest of this entry »

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