Tag Archives: oligarchy

The American Dream: Socialism for the Rich Or Capitalism For All?

December 30, 2015 Mike

You know that something’s up when the Wall Street Journal begins running op-ed columns that question capitalism. Has even the WSJ now realized that American capitalism thrives by two sets of rules: one for the rich socialists, the crony capitalists who manipulate markets (and politics), invent loopholes, skirt regulation, and place enormous bets with others’ wealth; the other, for the poor capitalists, who innovate, work hard and create tangible value.

Now even Bill Gates — the world’s richest citizen — tells us that only socialism can address climate change! It’s clear that the continued appeal of Bernie Sanders to those on the political left, and the likes of Ben Carson and that-other-guy-with-the-strange-hair-and-big-mouth-and-even-bigger-ego to those on the right, highlights significant public distaste for our societal inequality and political morass. At times I feel as if I’ve been transported to a parallel universe, a la 1Q84, where the 99 percent will rise and finally realize meaningful change through social and economic justice. Can it really happen?

Nah! It’ll never happen. The tentacles that connect politicians and their donors are too intertwined; the pathways that connect the billionaires, oligarchs, plutocrats and corporations to lobbyists to regulators to lawmakers are too well-protected, too ingrained. Until these links are broken the rich will continue to get richer and the poor will continue to dream. So, for the time being remember: the rich are just too big to fail.

From the WSJ:

If you want to find people who still believe in “the American dream”—the magnetic idea that anyone can build a better life for themselves and their families, regardless of circumstance—you might be best advised to travel to Mumbai. Half of the Indians in a recent poll agreed that “the next generation will probably be richer, safer and healthier than the last.”

The Indians are the most sanguine of the more than 1,000 adults in each of seven nations surveyed in early September by the market-research firm YouGov for the London-based Legatum Institute (with which I am affiliated). The percentage of optimists drops to 42 in Thailand, 39 in Indonesia, 29 in Brazil, 19 in the U.K. and 15 in Germany. But it isn’t old-world Britain or Germany that is gloomiest about the future. It is new-world America, where only 14% of those surveyed think that life will be better for their children, and 52% disagree.

The trajectory of the world doesn’t justify this pessimism. People are living longer on every continent. They’re doing less arduous, backbreaking work. Natural disasters are killing fewer people. Fewer crops are failing. Some 100,000 people are being lifted out of poverty every day, according to World Bank data.

Life is also getting better in the U.S., on multiple measures, but the survey found that 55% of Americans think the “rich get richer” and the “poor get poorer” under capitalism. Sixty-five percent agree that most big businesses have “dodged taxes, damaged the environment or bought special favors from politicians,” and 58% want restrictions on the import of manufactured goods.

…

Friends of capitalism cannot be complacent, however. The findings of the survey underline the extent to which people think that wealth creation is a dirty business. When big majorities in so many major nations think that big corporations behave unethically and even illegally, it is a system that is always vulnerable to attack from populist politicians.

John Mackey, the CEO of Whole Foods, has long worried about the sustainability of the free enterprise system if large numbers of voters come to think of businesses as “basically a bunch of psychopaths running around trying to line their own pockets.” If the public doesn’t think business is fundamentally good, he has argued, then business is inviting destructive regulation. If, by contrast, business shows responsibility to all its stakeholders—customers, employees, investors, suppliers and the wider community—“the impulse to regulate and control would be lessened.”

Read the entire column here.

Idea Soup

Monarchy: Bad. Corporations and Oligarchs: Good

December 5, 2015 Mike

The Founders of the United States had an inkling that federated democracy could not belong to all the people — hence they inserted the Electoral College. Yet they tried hard to design a system that improved upon the unjust, corruptness of hereditary power. But while they understood the dangers of autocratic British monarchy, they utterly failed to understand the role of corporations and vast sums of money in delivering much the same experience a couple of centuries later.

Ironically enough, all of Europe’s monarchies have given way to parliamentary democracies which are less likely to be ruled or controlled through financial puppeteering. In the United States, on the other hand, the once shining beacon of democracy is firmly in the grip of corporations, political action committees (PAC) and a handful of oligarchs awash in money, and lots of it. They control the discourse. They filter the news. They vet and anoint candidates; and destroy their foes. They shape and make policy. They lobby and “pay” lawmakers. They buy and aggregate votes. They now define and run the system.

But, of course, our corporations and billionaires are not hereditary aristocrats — they’re ordinary people with our interests at heart — according to the U.S. Supreme Court. So, all must be perfect and good, especially for those who subscribe to the constructionist view of the US Constitution.

From the Guardian:

To watch American politics today is to watch money speaking. The 2016 US elections will almost certainly be the most expensive in recent history, with total campaign expenditure exceeding the estimated $7bn (£4.6bn) splurged on the 2012 presidential and congressional contests. Donald Trump is at once the personification of this and the exception that proves the rule because – as he keeps trumpeting – at least it’s his own money. Everyone else depends on other people’s, most of it now channelled through outside groups such as “Super PACs” – political action committees – which are allowed to raise unlimited amounts from individuals and corporations.

The sums involved dwarf those in any other mature democracy. Already, during the first half of 2015, $400m has been raised, although the elections are not till next autumn. Spending on television advertising is currently projected to reach $4.4bn over the whole campaign. For comparison, all candidates and parties in Britain’s 2010 election spent less than £46m. In Canada’s recent general election the law allowed parties to lay out a maximum of about C$25m (£12.5m) for the first 37 days of an election campaign, plus an extra C$685,185 (to be precise) for each subsequent day.

Rejecting a challenge to such campaign finance regulation back in 2004, the Canadian supreme court argued that “individuals should have an equal opportunity to participate in the electoral process”, and that “wealth is the main obstacle to equal participation”. “Where those having access to the most resources monopolise the election discourse,” it explained, “their opponents will be deprived of a reasonable opportunity to speak and be heard.”

The US supreme court has taken a very different view. In its 2010 Citizens United judgment it said, in effect, that money has a right to speak. Specifically, it affirmed that a “prohibition on corporate independent expenditures is … a ban on speech”. As the legal scholar Robert Post writes, in a persuasive demolition of the court’s reasoning, “this passage flatly equates the first amendment rights of ordinary commercial corporations with those of natural persons”. (Or, as the former presidential candidate Mitt Romney put it in response to a heckler: “Corporations are people, my friend,”)

In a book entitled Citizens Divided, Post demonstrates how the Citizens United judgment misunderstands the spirit and deeper purpose of the first amendment: for people to be best equipped to govern themselves they need not just the freedom of political speech, but also the “representative integrity” of the electoral process.

Of course, an outsize role for money in US politics is nothing new. Henry George, one of the most popular political economists of his day, wrote in 1883 that “popular government must be a sham and a fraud” so long as “elections are to be gained by the use of money, and cannot be gained without it”. Whether today’s elections are so easily to be gained by the use of money is doubtful, when so much of it is sloshing about behind so many candidates, but does anyone doubt the “cannot be gained without it”?

Money may have been shaping US politics for some time, but what is new is the scale and unconstrained character of the spending, since the 2010 Citizens United decision and the Super PACs that it (and a subsequent case in a lower court) enabled. Figures from the Center for Responsive Politics show outside spending in presidential campaign years rising significantly in 2004 and 2008 but then nearly trebling in 2012 – and, current trends suggest, we ain’t seen nothing yet.

The American political historian Doris Kearns Godwin argues that the proliferation of Republican presidential candidates, so many that they won’t even fit on the stage for one television debate, is at least partly a result of the ease with which wealthy individuals and businesses can take a punt on their own man – or Carly Fiorina. A New York Times analysis found that around 130 families and their businesses accounted for more than half the money raised by Republican candidates and their Super PACs up to the middle of this year. (Things aren’t much better on the Democrat side.) And Godwin urges her fellow citizens to “fight for an amendment to undo Citizens United”.

The Harvard law professor and internet guru Larry Lessig has gone a step further, himself standing for president on the single issue of cleaning up US politics, with a draft citizen equality act covering voter registration, gerrymandering, changing the voting system and reforming campaign finance. That modest goal achieved, he will resign and hand over the reins to his vice-president. Earlier this year he said he would proceed if he managed to crowdfund more than $1m, which he has done. Not peanuts for you or me, but Jeb Bush’s Super PAC, Right to Rise, is planning to spend $37m on television ads before the end of February next year. So one of the problems of the campaign for campaign finance reform is … how to finance its campaign.

Read the entire story here.

Image courtesy of Google Search.

Technica

How to Get Blazingly Fast Internet

September 1, 2014 Mike

Chattanooga,_Tennessee It’s rather simple in theory, and only requires two steps. Step 1: Follow the lead of a city like Chattanooga, Tennessee. Step 2: Tell you monopolistic cable company what to do with its cables. Done. Now you have a 1 Gigabit Internet connection — around 50-100 times faster than your mother’s Wifi.

This experiment is fueling a renaissance of sorts in the Southern U.S. city and other metropolitan areas can only look on in awe. It comes as no surprise that the cable oligarchs at Comcast, Time Warner and AT&T are looking for any way to halt the city’s progress into the 21st Century.

The Guardian:

Loveman’s department store on Market Street in Chattanooga closed its doors in 1993 after almost a century in business, another victim of a nationwide decline in downtowns that hollowed out so many US towns. Now the opulent building is buzzing again, this time with tech entrepreneurs taking advantage of the fastest internet in the western hemisphere.

Financed by the cash raised from the sale of logistics group Access America, a group of thirty-something local entrepreneurs have set up Lamp Post, an incubator for a new generation of tech companies, in the building. A dozen startups are currently working out of the glitzy downtown office.

“We’re not Silicon Valley. No one will ever replicate that,” says Allan Davis, one of Lamp Post’s partners. “But we don’t need to be and not everyone wants that. The expense, the hassle. You don’t need to be there to create great technology. You can do it here.”

He’s not alone in thinking so. Lamp Post is one of several tech incubators in this mid-sized Tennessee city. Money is flowing in. Chattanooga has gone from close to zero venture capital in 2009 to more than five organized funds with investable capital over $50m in 2014 – not bad for a city of 171,000 people.

The city’s go-getting mayor Andy Berke, a Democrat tipped for higher office, is currently reviewing plans for a city center tech zone specifically designed to meet the needs of its new workforce.

In large part the success is being driven by The Gig. Thanks to an ambitious roll-out by the city’s municipally owned electricity company, EPB, Chattanooga is one of the only places on Earth with internet at speeds as fast as 1 gigabit per second – about 50 times faster than the US average.

The tech buildup comes after more than a decade of reconstruction in Chattanooga that has regenerated the city with a world-class aquarium, 12 miles of river walks along the Tennessee River, an arts district built around the Hunter Museum of American Arts, high-end restaurants and outdoor activities.

But it’s the city’s tech boom has sparked interest from other municipalities across the world. It also comes as the Federal Communications Commission (FCC) prepares to address some of the biggest questions the internet has faced when it returns from the summer break. And while the FCC discusses whether Comcast, the world’s biggest cable company, should take over Time Warner, the US’s second largest cable operator, and whether to allow those companies to set up fast lanes (and therefore slow lanes) for internet traffic, Chattanooga is proof that another path is possible.

It’s a story that is being watched very closely by Big Cable’s critics. “In DC there is often an attitude that the only way to solve our problems is to hand them over to big business. Chattanooga is a reminder that the best solutions are often local and work out better than handing over control to Comcast or AT&T to do whatever they want with us,” said Chris Mitchell, director of community broadband networks at advocacy group the Institute for Local Self-Reliance.

On Friday, the US cable industry called on the FCC to block Chattanooga’s plan to expand, as well as a similar plan for Wilson, North Carolina.

“The success of public broadband is a mixed record, with numerous examples of failures,” USTelecom said in a blog post. “With state taxpayers on the financial hook when a municipal broadband network goes under, it is entirely reasonable for state legislatures to be cautious in limiting or even prohibiting that activity.”

Mayor Berke has dealt with requests for visits from everyone from tiny rural communities to “humungous international cities”. “You don’t see many mid-sized cities that have the kind of activity that we have right now in Chattanooga,” he said. “What the Gig did was change the idea of what our city could be. Mid-sized southern cities are not generally seen as being ahead of the technological curve, the Gig changed that. We now have people coming in looking to us as a leader.”

It’s still early days but there have already been notable successes. In addition to Access America’s sale for an undisclosed sum, last year restaurant booking site OpenTable bought a local company, QuickCue, for $11.5m. “That’s a great example of a story that just doesn’t happen in other mid-sized southern cities,” said Berke.

But it’s what Chattanooga can do next that has the local tech community buzzed.

EPB’s high-speed network came about after it decided to set up a smart electric grid in order to cut power outages. EPB estimated it would take 10 years to build the system and raised a $170m through a municipal bond to pay for it. In 2009 president Barack Obama launched the American Recovery and Reinvestment Act, a stimulus programme aimed at getting the US economy back on track amid the devastation of the recession. EPB was awarded $111m to get its smart grid up and running. Less than three years later the whole service territory was built.

The fibre-optic network uses IntelliRupter PulseClosers, made by S&C Electric, that can reroute power during outages. The University of California at Berkeley estimates that power outages cost the US economy $80bn a year through business disruption with manufacturers stopping their lines and restaurants closing. Chattanooga’s share of that loss was about $100m, EPB estimates. The smart grid can detect a fault in milliseconds and route power around problems. Since the system was installed the duration of power outages has been cut in half.

But it was the other uses of that fiber that fired up enthusiasm in Chattanooga. “When we first started talking about this and the uses of the smart grid we would say to customers and community groups ‘Oh and it can also offer very high-speed internet, TV and phone.’ The electric power stuff was no longer of interest. This is what what people got excited about and it’s the same today,” said EPB vice president Danna Bailey.

Read the entire story here.

Image: Chattanooga, TN skyline. Courtesy of Wikipedia.

Idea Soup, tD

It’s Official: The U.S. is an Oligarchy

April 18, 2014 Mike

Until recently the term oligarchy was usually only applied to Russia and some ex-Soviet satellites. A new study out of Princeton and Northwestern universities makes a case for the oligarchic label right here in the United States. Jaded voters will yawn at this so-called news — most ordinary citizens have known for decades that the U.S. political system is thoroughly broken, polluted with money (“free speech” as the U.S. Supreme Court would deem it) and serves only special interests (on the right or the left).

From the Telegraph:

The US government does not represent the interests of the majority of the country’s citizens, but is instead ruled by those of the rich and powerful, a new study from Princeton and Northwestern Universities has concluded.

The report, entitled Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens, used extensive policy data collected from between the years of 1981 and 2002 to empirically determine the state of the US political system.

After sifting through nearly 1,800 US policies enacted in that period and comparing them to the expressed preferences of average Americans (50th percentile of income), affluent Americans (90th percentile) and large special interests groups, researchers concluded that the United States is dominated by its economic elite.

The peer-reviewed study, which will be taught at these universities in September, says: “The central point that emerges from our research is that economic elites and organised groups representing business interests have substantial independent impacts on US government policy, while mass-based interest groups and average citizens have little or no independent influence.”

Researchers concluded that US government policies rarely align with the the preferences of the majority of Americans, but do favour special interests and lobbying oragnisations: “When a majority of citizens disagrees with economic elites and/or with organised interests, they generally lose. Moreover, because of the strong status quo bias built into the US political system, even when fairly large majorities of Americans favour policy change, they generally do not get it.”

The positions of powerful interest groups are “not substantially correlated with the preferences of average citizens”, but the politics of average Americans and affluent Americans sometimes does overlap. This merely a coincidence, the report says, with the the interests of the average American being served almost exclusively when it also serves those of the richest 10 per cent.

The theory of “biased pluralism” that the Princeton and Northwestern researchers believe the US system fits holds that policy outcomes “tend to tilt towards the wishes of corporations and business and professional associations.”