The Outdated Economics of Conservative Ideologues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.


Supreme Court Vacancies and the Sheriff of Nottingham

February 23, 2016

Justice Scalia’s death creates a vacancy on the Supreme Court. The next president may have more to fill. Deciding cases as if it were the Sheriff of Nottingham, The Roberts Court is having a major impact on the economy. How those vacancies are filled will make a big difference to all of us.

Robin Hood and the Sheriff of Nottingham come down to us from a medieval fairy tale and retellings in print and on film. Bruce Bueno de Mesquita and his colleagues explain the role of Sheriff of Nottingham type figures in our contemporary world. As fewer people have real power, those who run the government must shovel favors to them. Given how wealthy they already are, they won’t appreciate any but very large rewards. But what government does for the public leaves less for these powerful patrons. So rulers employ modern Sheriffs of Nottingham. It’s what Bueno de Mesquita’s group calls the dictator’s game: by starving the public, dictators have more for powerful supporters – and the more they demand.

Kevin Phillips detailed the enormous benefits that corporations seek and government directs toward corporations and their leaders. Spending on politics has huge returns, driving the fruits of government to the favored few, and dismantling government wherever business prefers to operate in the dark.

Many of us have been fighting against special favors for corporations that exploit workers, the environment and the general public. But it gets worse. As the story of Robin Hood implies, holders of great wealth and power fear the people will take their ill-gotten gains from them. To prevent it  they block opponents from voting, minimize their votes by gerrymandering, and pour large funds into preserving their power while starving the population of public services.

The Supreme Court has been helping. Despite enormous gains by the wealthiest in America, and the declining share of the general public, this Court consistently moves economic benefits from the public to business, from the victims to the predators. The Court reversed the meaning of a 1925 arbitration statute to derail a plethora of state consumer protections and made it almost impossible to sue. Instead, the Court allows corporate defendants to choose who will decide the dispute, and at what cost. The Court undercut both state and federal standards of liability for injury to consumers, securities fraud and the damages available if plaintiffs win. And the Court is waging a battle to strip the unions of power to protect workers.

At the same time, the Court unleashed the full power of corporate treasuries on politics. Those corporate treasuries had barred from politics since early in the twentieth century. And the Court allowed states to make it harder to register to vote by increasing the cost and time to register – making it harder for working class, poor or physically challenged Americans to vote. The Court allows gerrymandering to reshape American politics, and has supported other efforts to entrench political incumbents. The Court topped all that by removing the requirement that covered states pre-clear voting changes, the one weapon of the Voting Rights Act that had worked.

Historians and political scientists tell us that pattern of disparities often leads to the breakdown of democracy, the loss of self-government. Sometimes it leads to violence, like the Black Shirts, Brown Shirts, Death Squads, and the security services of people like Putin. Sometmes the plutocrats simply invite a dictator to take control. Great disparities are dangerous. Instead of moderating these outrages in the name of American tradition, the Court has been making the problems worse, increasing disparities and letting them take over American politics. This Court is a danger to American self-government.

That’s where the 2016 elections matter. Whatever policies candidates claim to support, their judicial picks will have a big impact on what really happens to ordinary Americans and the future of self-government in America.

— This commentary was broadcast on WAMC Northeast Report, February 23, 2016. An expanded essay can be found here.

 

 


Schwerner, Chaney, Goodman and the Voting Rights Act

November 25, 2014

Yesterday, President Obama posthumously awarded the Presidential Medal of Freedom to James Chaney, Andrew Goodman and Michael Schwerner, a Black Mississippian and two white New Yorkers, murdered fifty years ago, working to register Blacks to vote in Mississippi. They were among many who lost their lives in that struggle.

Schwerner’s widow, Rita Schwerner Bender, said the best way to honor her husband “and all the others killed or injured in the struggle for voting rights and the dismantling of Jim Crow would be the reinstatement of the Voting Rights Act and its aggressive enforcement.”[1]

At the last hearings on renewal of the Voting Rights Act, witnesses made clear that efforts to rig the process against African-Americans continue unabated, moving polling places, changing district lines, reorganizing forms of government so that Blacks could still be excluded. Because the Voting Rights Act gave the United States Attorney General power to reject changes, those efforts had not succeeded.

In Shelby County v. Holder,[2] Justice Roberts used the Act’s success against it, saying it is no longer needed because the statistics are better. Pamela Karlan, a highly-respected Stanford Law professor, told Congress:

“ if you have a really bad infection and … the doctor … give[s] you a bunch of pills, and … tell[s] you, ‘Do not stop taking these pills the minute you feel better. Go through the entire course of treatment because, otherwise, the disease will come back in a more resistant form.’ … [T]he Voting Rights Act is strong medicine, but it needs to finish its course of treatment, and that has not yet happened … [as] you have heard from other witnesses. ”[3]

Those other witnesses made clear that the efforts to undo electoral integration continues almost unabated and would come roaring back if allowed. The Court stripped the pre-clearance provisions from the Voting Rights Act and the disease came roaring back just as Prof. Karlan predicted.

Should we care about African-American voters? Absolutely. Morally, they’re people like us. Democracy has no right over peoples denied the vote.

And for our own self-interest. Martin Niemöller said of the Nazis:

First they came for the Socialists, and I did not speak out—

Because I was not a Socialist.

Then they came for the Trade Unionists, and I did not speak out—

Because I was not a Trade Unionist.

Then they came for the Jews, and I did not speak out—

Because I was not a Jew.

Then they came for me—and there was no one left to speak for me.

 

As Bruce Bueno de Mesquita and his colleagues explain, the power of dictators is built on shrinking the number of people to whom he or she owes her power, and then rewarding those folk big-time.

You have no stake in southern white racist politics. If you’re Democrats, you have no stake in Republicans winning by excluding African-Americans. In Congress and state legislatures, people of good will are allies. We cannot win on the nonracial issues important to us if we allow our African-American fellow citizens to be excluded from the vote.

Those who wrote and ratified the Fourteenth and Fifteenth Amendments understood that having won the Civil War they could lose the peace if African-Americans could be prevented from voting in the former Confederate states.  We all have a stake in a society where all are represented because that is our chance for a just society in which government is not just of, by and for people who think they’re better than the rest of us.

— This commentary was broadcast on WAMC Northeast Report, November 25, 2014.

 

[1] Jerry Mitchell, Presidential medal to honor 3 slain civil rights workers, JOURNEY TO JUSTICE, The Clarion-Ledger, November 18, 2014, available at http://www.clarionledger.com/story/journeytojustice/2014/11/10/presidential-medal-of-freeom-given-three-slain-civil-rights-workers/18826791/, or http://on.thec-l.com/1ugJ0pp, visited Nov. 24, 2014.

[2] 133 S. Ct. 2612 (2013)

[3] Statement Of Pamela S. Karlan, in The Continuing Need For Section 5 Pre-Clearance, Hearing Before The Committee On The  Judiciary, United States Senate, One Hundred Ninth Congress, Second Session, May 16, 2006, Serial No. J–109–77, S. Hrg. 109–569, at 5.


The Sacred Right to Vote

November 6, 2012

I keep hearing that many people are blasé about voting in this election. The great American historian Gordon Wood described liberty in the Revolutionary era as meaning the right to vote, the great right of a free people.

My wife and I worked in Iran in the mid-1960s. Read the rest of this entry »


Follow

Get every new post delivered to your Inbox.

Join 368 other followers

%d bloggers like this: