Diatribes of Jay

This is a blog of essays on public policy. It shuns ideology and applies facts, logic and math to economic, social and political problems. It has a subject-matter index, a list of recent posts, and permalinks at the ends of posts. Comments are moderated and may take time to appear. Note: Profile updated 4/7/12

24 May 2015

Thank you, Mr. President! (An open letter)


[Memorial Day is not just for the dead. It’s also for the living, especially those whose intelligence, service and sacrifice have achieved much, and could achieve even more if we let them.]

1. Foreign and military affairs
2. The economy
3. Energy and the environment
4. Our armed forces and strategy
5. Justice
6. Health and education
7. Race and racism
8. Immigration
9. In general

Dear Mr. President,

You are now in what some describe as the “lame duck” phase of your presidency. I’m publishing this open letter to you now to let you know how deeply and enduringly grateful I and tens of millions of other Americans are for what you’ve done so far.

So President Obama, from the bottom of my heart, thank you, thank you, for all of this:


1. Foreign and military affairs.

Thank you for winding down the two gratuitous wars that your predecessor started in a spastic reaction to the 9/11 terrorist attacks.

Thank you for turning those impulsive and catastrophically mismanaged invasions and occupations into something resembling friendly and wise international assistance.

Thank you for not starting a third unnecessary war with Iran.

Thank you for building coalitions and using diplomacy and economic power to bring Iran to the bargaining table, and for pursuing a diplomatic solution to Iran’s nuclear ambitions.

Thank you for using similar means, and not open war, to arrest Russia’s aggression and annexation of territory in Ukraine.

Thank you for using air power, intelligence, drones and ninjas—and not the massive overkill of ground invasions—to fight Al Qaeda and the so-called “Islamic State” and to resist Assad’s medieval cruelty and stupidity.

Thank you for cajoling an international coalition to rid Syria of chemical weapons, whose work should reach fruition next month.

Thank you for cooperating with China, which created the monster and has to live near it, in containing North Korea’s insane tyranny.

Thank you for ending torture, illegal imprisonment and “black ops” worthy of a medieval tyranny but perpetrated in our collective name.

Thank you for trying to close the “Consitution-free zone” in Guantánamo and for making substantial progress toward that end.

Thank you for restoring our nation’s international reputation for respecting others, devising intelligent solutions, and knowing at least how to think.

Thank you—in Afghanistan, the Korean Peninsula, Iraq, Libya, Syria, Yemen, and the South China Sea—for seeking ever to build coalitions and consensus and rejecting the impulsive unilateralism of a Texas cowboy.


2. The economy.

Thank you for knowing that our national economy is now part of a global economy, and that economic leaders must lead.

Thank you for spending your political capital, over treacherous opposition, to pass a stimulus and the Sequester, which together barely avoided economic collapse.

Thank you for your wise and steady hand in reducing the federal deficit by 66%, and unemployment to 5.4%, which our expert Fed considers nearly “full employment.”

Thank you for saving our Yankee car companies, their reputations, and their employees, including their many talented engineers.

Thank you for your “cash from clunkers” program, which got obsolete and polluting machines off our streets and gave our car manufacturing a boost.

Thank you for promoting and signing the Dodd-Frank legislation, which seeks to prevent an early recurrence of bankers’ massive gambling and swindling that caused the Crash of 2008.

Thank you for recognizing that our nation must not follow the Soviet Union, or today’s Russia or Venezuela, in seeking to cure its economic ills by isolating itself.

Thank you for understanding that economic isolation is a penalty, not a strategy, and useful only as a deterrent, for example, in pressuring Iran and Russia.

Thank you for appointing Janet Yellen as Fed Chief, who will preserve the Fed as an expert regulator and guardian of honest labor—the last line of defense against yet another gratuitous financial panic.

Thank you for refusing to lower taxes on the rich yet again, in the face of already historic economic inequality.

Thank you for recognizing that the only way to real prosperity, let alone social peace, is sharing wealth.

Thank you for your effort to share prosperity by increasing minimum wages and continuing the social safety-net programs that barely got many of us through the Great Recession.

Thank you for doing your utmost to preserve the “American Dream,” which once led Japanese-Americans whose families were Interned and African-Americans under the thumb of Jim Crow to risk their lives to defend the very nation that oppressed them and their families.


3. Energy and the environment.

Thank you for understanding how grave a threat global warming is to our nation and our species, and how rapidly it is accelerating.

Thank you for knowing that no effort to decelerate it can succeed unless the world’s largest economy leads.

Thank you for making an informal deal with China, the world’s biggest polluter, to address this threat to our species.

Thank you for phasing out coal—the world’s most climate changing, polluting and (if properly costed) expensive fuel.

Thank you, as a one-time representative of a coal state (Illinois), for changing your mind and putting our species’ and our nation’s welfare above that of the state that gave you your start in politics.

Thank you for continuing subsidies for wind and solar energy, and for federal support for research on carbon-neutral fuels and other forms of renewable energy.

Thank you for doubling the future average fuel efficiency of American cars and light trucks, and for doing so by voluntary agreement with auto makers, rather than decades of litigation.

Thank you for continuing loan guarantees and federal backup insurance (aka “federal limitations of liability”) for new nuclear power plants, so that states and localities that wish to do so can take the risk of this workable, carbon-neutral energy source.

Thank you for allowing fracking for oil and gas to continue, with stronger environmental protection, so as to increase our energy independence, lower the prices of energy by half, and deprive petrostates of their power to blackmail us.

Thank you for opening up the Atlantic Seaboard for drilling, so that our nation’s rich elite, and not just relatively poor Gulf residents, can experience first-hand the “collateral damage” that often arises from extracting fossil fuels.

Thank you for allowing the north Alaskan drilling to proceed, as a final test whether the fossil-fuel industries can preserve an absolutely pristine environment, and whether the benefits of extracting a wasting resource justify the costs.

Thank you, most of all, for basing your energy policies and initiatives on facts, science and both short- and long-term consequences, instead of ideology, wishful thinking and interested parties’ propaganda.


4. Our armed forces and strategy.

Thank you for keeping the extreme sacrifice of our isolated, all-voluntary military forces ever present in your mind.

Thank you for thinking hard about how to deploy our troops, and for using air power, drones and ninjas wherever possible to reduce their casualties and harm to innocent civilians, aka “collateral damage.”

Thank you for working hard to give our homecoming troops the health care and benefits they deserve.

Thank you for having the courage and respect, unlike your predecessor, to observe and salute the coffins of those who gave their all for us as they come home to Dover Air Force Base for the last time.

Thank you for dispatching bin Laden, and for retrieving a massive trove of intelligence, in what may have been one of the most strategic ninja strikes in human history.

Thank you for recently dispatching the financial guru of the so-called “Islamic State” with another bold ninja strike, which captured his complicit wife alive and brought home another treasure trove of intelligence.

Thank you, in general, for making all our war efforts smarter, more focused, more accurate, and more cost-effective, especially as compared to invading and occupying two entire sovereign nations.

Thank you for never confusing the sacrifice of those who do their duty with the mistakes and blunders of those who directed them, especially before your term of office began.

Thank you for protecting gays from discrimination as they risk their lives and health to protect us.

Thank you for quietly killing the absurd “missile defense shield” in Poland and the Czech Republic, which would have protected virtually no one against missiles from Iran but might have destroyed our 70-year-old Pax Atomica by making the Russians nervous.

Thank you for trying hard to redirect our bloated military-industrial complex toward threats we are actually likely to face in the twenty-first century, including terrorism, asymmetrical warfare and cyberwarfare.

Thank you for seeking a proper balance of privacy and security, and for understanding that, if we ever suffer another 9/11-scale terrorist attack, let alone a nuclear one, we will have neither.


5. Justice.

Thank you for appointing Elena Kagan and Sonia Sotomayor to our Supreme Court.

Thank you, thank you, for appointing as superb a professional as Eric Holder as your first Attorney General.

Thank you for letting him, and perhaps directing him, to fight racism and injustice in places like Ferguson with incontrovertible evidence.

Thank you for changing your mind and doing your best to allow gays to marry.

Thank you, more broadly, for understanding that a country that intrudes into consenting adults’ bedrooms can never be free, no matter how often it claims to love “liberty.”

Thank you for speaking out against entrenched poverty and gross inequality, which will cause and reflect injustice as long as they exist.

Thank you for showing us, in your own comportment and the kind of people you appoint to high office, that justice is a matter of fact, wisdom, and hard work, not ideology.


6. Health and education.

Thank you, thank you, for getting health insurance for 12.5 million people (and counting) who didn’t have it before.

Thank you, thank you, for eliminating pre-existing-condition exclusions, thereby making health insurance real insurance, instead of a game of lawyers re-interpreting medical records after the fact.

Thank you for eliminating several numerical caps on insurance that cut off people’s benefits just when they most needed them.

Thank you for arranging rudimentary national and state-by-state online insurance markets, which are beginning to subject fat and lazy health-insurance monopolies to something resembling the rigors of competition.

Thank you for beginning to question our “fee-for-service” health-care delivery system, one of the most economically inefficient pricing systems known to capitalism, which kills both empathy and personal responsibility.

Thank you for beginning to clean up the mess in our veterans’ health care and to give our wounded warriors the care and respect they deserve, not just patriotic lip service.

Thank you for supporting national standards for education, so that we truly leave no child behind and no longer suffer a few of our states to remain backwaters of human civilization.

Thank you for trying to impose national standards and educational improvements, insofar as possible, through voluntary and localized efforts, which promise to be quicker and more effective than coercion.


7. Race and racism.

Thank you for remaining, at all times, the adult in a roomful of jeering children.

Thank you for retaining the support of tens of millions of silent but sympathetic bystanders by acting always with dignity and restraint, despite the catcalls of racists and the legitimate cries of the aggrieved.

Thank you for patiently putting up with so much, in order that a generation (or two or three) down the road, no one will ever have to again.

Thank you for giving new hope and new confidence to a 12% minority of our people who have seen precious little of them in four centuries.

Thank you for showing tens of millions of whites like me how even an African-American whom we have come to know, respect and love—namely, you—takes daily hits from racism, and why we must all fight racism harder.

Thank you, in so doing, for reminding us of Another who once took big hits for our sins.

Thank you, in short, for keeping your eyes on the prize as only a grandmaster strategist blessed with empathy can.


8. Immigration.

Thank you for knowing that deporting honest kids (or their parents) who were raised here, and who speak American English like every Yank, gravely wounds innocent families and tarnishes our nation.

Thank you for doing something about it.

Thank you for forcing Republicans to choose between ethnic tolerance and exploiting cheap labor, on the one hand, and maintaing ethnic and cultural “purity” and excluding immigrants on the other.

Thank you for reminding us, gently but firmly and repeatedly, that those two approaches are fundamentally incompatible.

Thank you for pitting the Tea Party monster that the GOP spawned against its own business wing responsible for creating it.

Thank you for reminding us that we are a nation of immigrants, which has drawn strength from every once-despised group with gumption enough to run a gauntlet of suffering and danger to reach our shores.

Thank you for refusing to dishonor the French Lady with the Torch in our New York Harbor, who still welcomes ships from everywhere.


9. In general.

Thank you for your exemplary conduct and character, every day of your political career.

Thank you for having an exemplary family, for giving us the benefit of your wife’s many talents, and for showing us all what it means to protect innocent children no matter what.

Thank you for sparing us the kind of gratuitous scandal that turned Bill Clinton’s second term to dust.

Thank you for gathering facts and expert advice and thinking hard, as is your wont, before doing anything with serious consequences, despite others screaming for instant action and accusing you of “dithering.”

Thank you for having the wisdom, confidence and courage to change your mind when facts and circumstances change, or when new data emerge.

Thank you, in other words, for not “doubling down” on your own or others’ blunders, as so many pols have done from Iraq, to Syria to Ukraine and Vietnam.

Thank you for your consistently superb political chess playing, of which your clear popular majority in two presidential elections was just the beginning.

* * *

The Iranians and Russians, and even our allies, have no idea with whom they’re dealing. But those of us who’ve seen you in action, in this still consummately racist nation, know well. As we mull the threats we face as a nation and a species, we take comfort from that knowledge, as we will for nearly two more years.

No doubt I’ve neglected some of your achievements or underestimated their significance. If so, I’m sorry. There have been so many.

I had hoped to wait to thank you until you left office, when there would be other cataloguers of your achievements and successes on whose work I could draw. But that would be too late.

If only more of us could reflect on all you have done for our nation already, against what opposition and at what cost, your administration might enjoy a small portion of the empathy it has so graciously bestowed on others. Then you might yet get the “honeymoon” you never got and deserve now more than ever.

You might, for the first time in your tenure as president, actually see the deference, respect and cooperation due any president—let alone one as wise, careful and good as you. It is in that perhaps Quixotic hope that I publish this insufficient catalogue of your many achievements so far.

With the deepest respect and gratitude for what you have been and what you have done, and for the enormous potential for good that you still command,

Jay

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21 May 2015

Electric Geezermobiles


[For both readers and me, it’s hard to be ruthlessly analytical and deadly serious all the time. The post below provides a bit of relief, in the form of not-so-improbable engineering whimsy. For more serious recent fare, click these links for: coping with our brave new corporate world, and what to expect of bonds and interest rates.]

Some things are counterintuitive but not too complex. Einstein’s special theory of relativity is one. It’s equations involve only simple algebra; they don’t even use calculus. Yet the theory predicts important and counterintuitive results of velocities near the speed of light—dilating time, contracting length, increasing mass, and mass-energy conversion (E = mc2)—that are now standards of both science and science fiction.

So it may be with electric cars. I’ve already penned an essay discussing how their makers have mostly missed the boat, trying to build electric cars that look and act just like gasoline buggies.

But what if they’ve also missed their best market? What if it’s not youth, who have enough trouble today just paying off college loans and getting decent jobs? What if it’s not the rich early-adopters who buy Teslas, when there are so many other competing luxury brands? What if it’s not even the harried homemaker, who needs only a short range to do the shopping, take the kids to school and make it to a close-by part-time job?

What if the best market for electric cars is geezers like me?

At first glance, that may seem counterintuitive. Geezers adopt something entirely new? Don’t we all revel in nostalgia? Don’t we lust in our hearts for the dirty, noisy, polluting power of big cylinders filled with massive, precision machined pistons and exploding mixtures of gasoline and air? Don’t the men especially recall the joy of crawling under a dirty chassis, lifting heavy, greasy parts, pushing the old torque wrench, and hearing the primal roar when it all comes back together again?

Maybe not. We geezers also like clean, quiet, light and simple things. More than other drivers, we would like to be able to plug our cars into our garages when we finish our rounds, rather than drive to unsafe gas stations, let alone in rain, ice, wind or snow.

More to the point, retired geezers by and large have the cash and the leisure to experiment. As a rule, we don’t drive long distances. And we would like machines that don’t pollute our garages with dripping oil, brake and transmission fluid, not to mention gasoline fumes and carbon monoxide.

What do we geezers value most? Health care. As we age, we return or move to crowded cities, or to equally crowded substantial suburbs, seeking good doctors and hospitals nearby. Most of us aren’t going to be driving more than 50 miles a day, at least not often. So we don’t need over 100 miles in range.

Most of us don’t even drive every day. So we can buy a solar array and drive on the sun, charging and driving on alternate days. Youngsters and young families, who have to go to school or work every day, can’t do that. So maybe we geezers, who have the age, retirement leisure and (in our retirement funds) liquid cash to experiment, are the best market for electric cars today.

If so, what kind of electric Geezermobile would please us most?

First of all, it would be light. At least everything but the battery pack, which stores the motive energy, would be light.

Why? Recall Newton’s Second Law, F = ma. The force required to accelerate a mass is equal to the mass times its acceleration.

In electric cars, the propulsive force and the range are proportional to the mass of the battery, which stores the energy and supplies the force. But according to Newton the resulting acceleration is inversely proportional to the mass of the entire car, thus:

F = X (mbatt) = (mbatt + mrest) a, or

a = X / (1 + mrest/mbatt).

Here X is an engineering constant relating the electric motors’ accelerative force to the battery’s mass. For present purposes we need not know it precisely.

This equation is fundamental to electric-car design. It shows that you maximize the car’s acceleration and performance, plus its range, by minimizing the ratio of the car’s non-battery mass to its battery mass. That’s not counterintuitive, but Newton confirms it with math.

Teslas get superb performance by minimizing that ratio with massive batteries. As a result, the Model S is a heavyweight, tipping the scales at 5,000 pounds. But there’s also another way: you can maximize performance and range by minimizing the mass and weight of everything else in an electric car besides the battery.

So how would I design my Geezermobile? It’s chassis would be made of light, strong aircraft-grade aluminum. Its body would be light, strong carbon fiber, as in Boeing’s Dreamliner. To improve the safety of a light vehicle, the aluminum chassis would have crush points or crash-only shock absorbers that collapse but keep the cab and battery intact in an accident. (A friend’s old 1978 Caddy has such an arrangement—two big shock-absorber-like supports for the massive rear bumper.)

For stability in rain, ice and snow, every wheel would have its own electric motor. So each motor would have roughly one-quarter the size and power of the single ones, or one-half the size and power of the dual ones, that most electric cars now use. These smaller motors could easily hide in their own wheel wells, leaving plenty of crushable chassis space for both front and rear trunks. (As is customary now, the battery pack would be large and flat and lie in or below the chassis, in order to distribute its weight evenly, lower the car’s center of gravity, and improve cornering.)

High-power solid-state electronics would not only control power and speed and provide regenerative braking, as they do today, even in hybrids. They would also provide instantaneous, all-wheel traction control for the resulting, fully independent four-wheel drive. Insofar as we Geezers are concerned, two-wheel drive would become as extinct as the Dodo, along with mechanical trans-axles and differentials. Spinouts and 360s in rain, ice or snow would be much less frequent.

The front trunk would contain the seldom-used spare tire, jacks and other tools, plus room for luggage. The rear trunk, being more accessible in parking lots, would be the workhorse. It would have a solid, rollout basket, for ease of loading heavy groceries and other shopping loot without stooping, which pains us geezers.

Instead of a gas-tank outlet, the Geezermobile would have a fifty-foot long power cord coiled on a spring-loaded retracting spool like those in vaccuum cleaners. If a geezer were ever so risqué as to have a tryst in a motel, he or she could park right in front of the room, spool the power cord through the window, and recharge the car during an afternoon delight. You don’t have to be an adman to think of the delicious possibilities for advertising that.

The power plug would be a standard three-prong (grounded) plug that fits in any three-prong outlet. A separate, exterior compartment near its portal would contain physical adapters for 240 volt, three-phase or any other power exotica. There would be no fiddling with switches or adjustments: solid-state electronics would sense the voltage, phase and other power parameters and do all the thinking, just as they do now in virtually every charger for laptops, tablets and mobile devices.

The interior electronics would be entirely user-friendly. Audio and cell-phone controls, along with cruise control, would be mounted on the steering wheel within easy reach. Automatic Bluetooth would integrate the driver’s cell phone, tablet and mobile music with the car’s audio system. “Trainable” oral commands would control everything.

Rear-facing backup cameras would ease stiff necks. And cup holders would be in every conceivable, reachable place. There would even be a small blanket compartment, on the back of the front passenger seat for easy access by the driver. It would hold a blanket, and maybe a small, plush head pillow for off-road naps. (Remember our Bill of Rights’ unwritten guarantee: every geezer has the inalienable right to a nap daily. Why not take it in your quiet electric car, to music from your own iPod?)

Finally, the electric Geezermobile should have high or user-adjustable ground clearance. Those of us who still live in the country, like me, need that.

Could my Geezermobile reproduce the Tesla’s head-snapping acceleration? I don’t know. You’d have to know the precise value of X for that. Maybe not.

But we geezers probably shouldn’t drive cars that accelerate too much faster than others on the road. We might hit something or provoke road rage. We geezers don’t want to do that, do we? Better to stay invisible, except when among friends and loved ones.

We geezers should be happy with reasonable speed and pep, not to mention a clean, quiet, simple, exhaust-free car that we can “fill up” in our garages and that will free us from going to gas stations ever again. Whenever we can, we should drive on the sun and keep fossil fuels in the ground, where God made them. I, for one, would be quite happy doing that.

Footnote. Einstein’s other theory of relativity—the general one—is the toughie. It requires tensor calculus. The ability to “visualize” multidimensional spaces doesn’t hurt. That theory, not the special one, is the one that only a dozen or so people worldwide probably understand well. But the special theory should be taught in every high-school physics course, if it’s not already. It’s as basic to physics as evolution is to biology.

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11 May 2015

Embracing “Corporate Governance” and the TPP


[For comment on Senator Warren’s response to the President on the issues discussed in this post, click here.]

Introduction
Decentralization
Adaptability
Beneficence
The Trans-Pacific Partnership (TPP)
Conclusion
Elizabeth Warren’s response to the President

Introduction

The term “corporate governance” is in quotation marks because it has a delicious ambiguity. In law and business schools, it connotes how shareholders, directors and managers run business corporations. This essay deals with something entirely different: how business corporations are coming to rule the world.

Take Apple, for instance. It now has bigger cash reserves than France.

France itself is nothing to sneeze at. It’s one of the five permanent members of the UN Security Council. It’s one of the five national governments that are trying to get Iran to renounce nuclear weapons. It was among the victorious allies in the two greatest wars in human history.

Today France leads the world in the percentage of electricity that it gets from non-global-warming sources, in its case nuclear energy. It showed the world how not to achieve “liberté, egalité, fraternité” in its bloody 1789 Revolution. And if you study any achievement of the human mind or spirit—whether in math, science, philosophy, literature or music (but government not so much)— you will encounter lots of French names.

So despite incessant derogation by the ignoramuses at Fox, France is still a minor heavyweight in the global arena, as it has been for several centuries. But Apple, a corporation less than forty years old, is now significantly richer than France. And if we take Apple’s “population” to be its 80,000 full-time-equivalent employees in 2013, and compare them to France’s 66 million people in the same year, then Apple is approximately one thousand times richer than France on a per-capita basis. Apple’s 2014 revenue per employee was nineteen times France’s 2014 GDP per capita.

I mention these figures not to exalt Apple or belittle France. They’re just a small part of a global trend. In a not-too-recent essay, I noted two interesting facts. First, in 2010 any two of the top eight Fortune-500 corporations could have retired all of California’s then-much-maligned state debt in a single year. They could have done so out of their annual profits alone, with money left over. And California has the world’s eighth largest economy.

Second, all of our Yankee corporations together could have have paid down our entire 2010 national debt, again out of profits alone (assuming they didn’t decline), in less than nine years. If we ever get to a balanced federal budget again, it’s going to take our federal government a lot longer than that to reduce debt to zero.

These facts and figures are just the tip of a big but little-known iceberg. Grover Norquist and his ilk already have won. Business people and so-called “conservatives” have accomplished an amazing feat. They are drowning governments worldwide in a bathtub and replacing them, in large measure, with business corporations. This is not just “privatization.” It’s something bigger, more consequential, and much less examined.

Actually, the bathtub is full of debt, not water. Money is not just the mother’s milk of politics; it’s also a vital prerequisite for doing anything good or new. A long, cold bath of debt immobilizes government and eventually will make it partly, if not wholly, irrelevant, whether or not it actually drowns.

In the respect, we Yanks are not unusual. Most of the developed world is in the same fix. We Yanks are just in the vanguard of a growing global trend.

I know, I know. Governments are still around. So is the Catholic Church. But it’s not quite the same behemoth it was about a millennium ago when it ruled the Western World, or later when King Henry VIII had to seek its head’s royal dispensation to annul his marriages and remarry.

Like old soldiers, great human institutions seldom die. They just fade away. Ask Pope Francis, who can no longer rule or even influence anything outside the Church, or much inside it, except by the force of his extraordinary personality.

So eventually it may be with government, at least as we know it today. Already the vast bulk of the economic activity that makes us humans modern, drives our technology-based culture, and constitutes “progress” now occurs under the aegis of corporations, not government.

Corporations make our cars, trucks, buses, planes, trains, computers, mobile devices, clothes, houses, the materials in them, and the tools to make and maintain them. Corporations produce nearly all of the food we eat; the family farm is nearly extinct, at least in the OECD. Corporations organize, maintain, run and repair the Internet, our record-keeping devices (now largely in the “cloud”), our air and rail traffic systems and our highways. They deliver our rail, truck, ship and air freight, maintain our health care, and provide our entertainment and leisure travel, including pleasure cruises. They even make nearly all of the weapons and weapons systems that our armed forces use.

Governments today retain only a handful of key functions. They provide social safety nets. Through police and courts, they keep public order and enforce the rules under which businesses operate; they also propagate those rules abroad, creating a cooperative international order. Through regulation, they avoid the most extreme harms that corporate greed or stupidity might cause, including financial panics. They also educate us, at least insofar as we have not already privatized education. And (except for tiny Costa Rica, which maintains no standing army) they maintain the grossly overinflated and exorbitantly expensive military forces that protect us all but also pose serious and continuing threats of war.

Recall those nuclear arsenals, which reach thousands of city-destroying weapons in Russia and the US? Recall the millions-strong standing armies, and the vast air forces and navies, mostly waiting around or spoiling for a fight? They represent the most notable power that governments still command: the power to coerce and destroy. Except for educating us, regulating business, keeping order and providing a social safety net, the power to do good and to improve our daily lives now resides mostly with corporations, which have all the money.

After saving the global economy from the Crash of 2008 and bailing out the bankers who caused it, governments worldwide are wallowing in debt. Greece is just more in debt than most. The Reagan Revolution, which most developed countries have emulated, has put taxpayers worldwide in no mood to give governments more money and more power. Corporations, on the other hand, enjoy a huge surplus: a collective $2 trillion cash hoard. And that’s just corporations headquartered in the United States.

The practical implications of this global transformation in human governance are every bit as profound as the tectonic societal transformations of earlier epochs. They match the impacts of the transition from church to state (including the Protestant Reformation), the change from monarchy to parliamentary democracy, and the more recent transition from executive-legislative rule to the modern regulatory state, with all its central banks. But in the long run, the transition from government by states to government by corporations may be the most important.

Complain about it if you like. There’s plenty to complain about. Just ask people who’ve tried to get a customized product or service, or to fix a billing error, by contacting a large corporation, especially through one of those ghastly telephone queues. The Kafka-esque dysfunction, disorganization, miscommunication and high-handedness that often emerge rival those of the worst bureaucratic states of yore, even the much-maligned socialist ones.

And if you like personal freedom, consider the corporate airlines that, just a few years ago, kept passengers prisoner for hours at a time, in stinking, overheated planes with overflowing toilets, stalled on the tarmac, simply because they didn’t plan well enough to have landing slots and equipment to debark them. I often wondered why the passengers didn’t sue in droves for false imprisonment. Eventually, the government came to passengers’ assistance with regulations and stiff fines. But for about a year, actual imprisonment (albeit temporary) of paying passengers in corporate aircraft “jails” became routine.

Yet if there’s a lot to complain about, there’s much to inspire wonder, too. If you’re in what remains of the middle class, you can fly across the country or around the world—all in less than a day—for a fraction of a month’s salary. And the risk you incur is so small that no one fears flying anymore. No more seven years of indentured servitude for intercontinental travel! That only comes when you try to go to college and take a loan from your friendly corporate student loan shark!

You can videophone anyone, anywhere in the world, from a mobile device you can hold in your hand. And if you’re clever, you can do it for zero marginal cost (additional cost per call). Doctors can peer into your innards and your brain, while you’re awake and fully conscious, without harming you. All these things and much more corporations make not just possible, but routine.

Yet this essay is not about the many spectacular achievements of corporations, which we all take for granted. It’s about the implications of corporate governance for our human cultures and our species. It’s about the slow but apparently inexorable transition from church to state to regulatory state to corporate governance. It’s about how corporations rule us, even now, in an odd and non-traditional but nevertheless very real way. It’s about what that rule means for our species’ collective future.

As faithful readers of this blog know, I’m a progressive. If it were up to me alone, I would probably moderate and retard the ascendance of corporations. I would certainly erase Citizens United and its bizarre underlying philosophy that corporations are “people” or “citizens.”

But it’s a little too late to deny reality. Corporate dominance of our human culture is an accomplished fact, just like global warming. It’s no smarter for progressives to deny the one than it is for so-called “conservatives” to deny the other. We must accept facts, analyze them and try to understand them.

Then, and only then, can we figure out how to bring reality nearer to the heart’s desire. The purpose of this essay is to begin that analysis.

Decentralization

Uncharacteristically for a progressive, I have sung corporations’ praises on this blog. The primary reason is decentralization. Since corporations formed for trading and exploration “discovered” the so-called “New World,” corporations have been the principal instrument for decentralizing human economic power and activity worldwide.

Decentralization is one of the most important drivers and effects of human social evolution. As primates on the African savannah, we evolved in small clans, mostly of thirty or fewer individuals. With small clans and simple needs, it was possible to have a single alpha male rule the roost.

The alpha male kept order, organized clan activity and resolved disputes. He was the prototype king. Transitions of power were simple: a short physical contest between a challenger and the ruler. It was quick and easy, except maybe for the loser. The clan and the system went on, and transition costs were minimal.

That was the governmental prototype that our biological evolution gave us. But it had and still has within it a fatal logical and practical contradiction.

Individually, we humans are small, weak, and (in our naked state) poorly armed. Individually, we are not nearly as smart as we think we are. In fact, most of us are rather stupid; we don’t analyze or reason but learn by rote and react with reflexive ideology or religion, or (worse yet) learned fear and hate.

It’s only when we get together and cooperate that we become anything like smart and effective. At least we become effective enough to out-compete and indeed to dominate other species on our small planet.

But how can we cooperate well if a single alpha male makes all the key decisions? How can we exploit the differing intelligences, strengths, aptitudes and training of all a clan’s individual members? How can we be sure that a stupidity, incapacity or idée fixe of a clan leader doesn’t impair the benefits of full cooperation, destroy social cohesion, lead to disastrous blunders, and even provoke clan breakup?

Today those questions are much sharper, and the problem much worse. Now our human “clan” is over six billion strong, and it manages an incomparably more complex society of global scope. Just imagine your gifted airline pilot trying to program, let alone design, your computer. Or the brilliant linguist who teaches your child Mandarin trying to excise your bladder cancer. Or either one trying to run a nuclear power plant or plastics factory, or captain a cruise ship.

If a single alpha male tried to make all the decisions that must be made, globally and daily, to run our incredibly complex global economy, the entire system would plunge into chaos. Yet, astoundingly, that’s pretty much what our nation-states try to do today.

Every single developed nation has a single individual as supreme leader. Except for Angela Merkel and a few others, that individual is an alpha male. Biological evolution is hard to shake.

The leader’s title and real power vary. He can be “president” or “prime minister.” Or a single alpha male can switch titles like masks, as in Russia or Turkey. But the fact remains: in most nations today, a single alpha male ultimately makes all the decisions critical to a culture’s day-to-day operation, progress, development and even survival, especially those relating to war and peace. And he makes those decisions regardless of any specialized aptitude, education, training or experience.

There are a few exceptions. China has a seven-member committee. Its two top leaders are members, but so are five others. And each of the top leaders must have served a five-year (and sometimes a ten-year) “apprenticeship” on that committee before assuming one of the two top jobs. No other nation, to my knowledge, has such an effective way of insuring adequate experience and cooperation among top-level leaders.

Oddly, Iran is also an exception. It has the Ayatollah, and it has a duly-elected president. No one outside Iran can figure out who’s the top dog. Maybe there is no top dog. Maybe decisions are fluid and negotiable among the two, depending upon subject matter and the views among a wider circle of elite. If so, Iran’s present form of government may be more advanced than the cabinets of most presidents and prime ministers, in which a single alpha male always makes the final decisions and others execute it. Aren’t two heads better than one?

But I digress. The single-alpha-male governance model is nearly universal. It feels so “right” because it’s a product of our biological evolution.

Yet if we humans are to progress much further, and to avoid self-extinction, we’ve got to overcome our physical evolution and abandon that model. The smarter we get, the more technology we discover, the broader our perspectives and our collective capacities become, the less a single supreme leader making all high-level decisions makes sense.

Enter the corporation. It preserves the alpha-male evolutionary model, with an occasional alpha female. It has a CEO. But it does so on a much smaller scale. It accommodates and encourages division of labor and specialization by focusing on a single business or industry. In a competitive capitalist system, it allows competitors, each also run by an alpha leader, to work in the same business or industry. So if one clan’s leader fails, another’s might succeed at the same thing.

Corporations in a competitive environment thus give obeisance to our biological evolution in the structure of their internal leadership clans. Yet at the same time they reduce “clan” size down from the monstrous and unmanageable populations of modern nation-states—and from our 535-member dysfunctional Yankee Congress—to a more tractable level. In smaller and many start-up companies clan size actually mimics the small scale (less than thirty members) of our biological-evolutionary tribal clans.

Corporations are thus a vital part of our human social evolution. They are a logical and practical solution to the dilemma of our biological evolution: how to run a complex global society of going on seven billion people on the model of a thirty-member-maximum clan with a singe alpha male leader.

Corporations are not the only answer to the contradiction between our biological and social evolution. Another is federalism—creating a number of semi-independent states within a federal governmental structure. Each state has its own alpha leader, but all can develop and compete separately, decentralizing power and encouraging further social evolution. Size of leadership clans decreases, the total number of leaders increases, and the probability of successful experiments in leadership grows.

Our Yankee federalism is one of the most carefully designed versions, but almost every major power has something similar. At least states as diverse as the United States, China, France, Russia and Switzerland do.

Another common answer to the contradiction is the regulatory state. Our Federal Reserve and other central banks are prime examples. Throughout the history of capitalism, our species has endured totally gratuitous financial panics, crashes, recessions and depressions simply because misguided or self-seeking private bankers screwed up. Now, in addition to all those private, self-seeking bankers, we have a few expert bankers, with superb aptitude, training and experience, one of whose jobs is making sure that financial system doesn’t crash. Like air traffic controllers and the Nuclear Regulatory Commission, these experts can do things (and prevent disasters) that no generalist alpha president or prime minister ever could.

The contradiction and conflict between our biological evolution and the needs of our increasingly complex global society will never end. They are literally written into our DNA and our ongoing history. But so is the ability to use our extraordinarily flexible brains to adapt our social environment to current needs.

Today corporations play a major role in managing our evolutionary conflict, perhaps the leading role. In doing so, they decentralize our species’ social organization and help remove it from the corruption and fuzzy certainties of politics.

Adaptability

After decentralization, adaptability is the modern business corporation’s second great advantage. That’s not surprising. Adaptation is the touchstone of all evolution by natural selection, whether biological or social. An entity that can adapt to new or changing circumstances can survive longer and better than others.

Corporations can adapt in much the same way as living organisms do. Much like natural organisms, they can be born, they can die and they can be “eaten” by other entities. In this limited, metaphorical sense, they are “organic.”

Any small clan of people can give birth to a new corporation. All they have to do is get together, make up their minds, and follow the local rules of the state of formation. If the founding clan doesn’t have all the money required to start a business, it must also convince outsiders to invest it. Today, organized capital markets with electronic assists, such as “crowd funding,” make doing that easier than ever before.

Sixteen years ago, I formed a small corporation called an “LLC” (limited liability company) in about an hour. I did it over the Internet, under the laws of my state. The whole thing cost about $150 because I did my own lawyering.

The process was much simpler and easier than the painful labor that women suffer in giving birth to a real, biological baby, let alone the nine-month gestation period. It was almost as easy as digging a small hole, putting a plant in the ground, covering it with soil, watering it and throwing some compost on.

Eventually my little corporation withered away, due to neglect on my part. It became part of the economic forest undergrowth. But its process of formation wasn’t that different from the one used by the two engineers who formed Tesla, before they got the illustrious Elon Musk to buy control and become CEO.

Once formed, corporations can grow, split (spin off), be “eaten” (in mergers or acquisitions), or die (in bankruptcy or dissolution) much like organisms. They can also grow and prosper. If they prosper and win the game of survival, they can even, like Apple, become the most valuable corporation on Earth, with cash reserves larger then France’s.

Nations and their federal subdivisions are not nearly so flexible or adaptable. Laws, custom and tradition tie them down, as do indigenous populations with all their native cultures and tribalisms.

Nations hardly ever die. They continue in name only, even in advanced stages of decay, as do Libya, Somalia, Syria and Yemen today. Unlike corporations, nations and their political subdivisions can’t shed people and lines of business as corporations can, at least not without genocide or other atrocities that the modern world frowns on. For better or for worse, they must accommodate the people who live within their borders. Or they must spin off, like Pakistan from India, or break up, like the former Soviet Union.

So for organizing economic and productive activity, corporations are far more flexible and adaptable than nations. It’s no wonder that the vast bulk of economic activity, including trade, now takes place under their umbrellas. If we had to wait for nations to form and dissolve like corporations, or to goad their bureaucracies to approve and fund our numerous modern innovations, our scientific, technical and economic progress would advance orders of magnitude more slowly than it does today.

Beneficence

Decentralizing and adaptability help explain why we have so many corporations and why they are so important. They solve the dilemma of a species evolved to follow a single alpha-male leader in small clans, but which wants to run an impossibly large, diverse and complex global economy.

Yet for more granular political analysis, corporations’ beneficence (or lack thereof) is the chief question. We know that corporations provide marvelously beneficial products and services in exchange for money. We use them every day.

But are there any side effects? Do things like pollution, abuse of workers, political corruption, and demagoguery in the guise of “public relations” detract from, and perhaps even outweigh, the good that corporations do?

In the abstract, corporations are neither moral nor immoral. They are amoral. They are simply a means of organizing human activity, especially economic and productive activity. (This essay does not address the many non-profit corporations, including charities and universities, which mostly try to do good, and which sometimes also deliver products or services.) Whatever good or bad they do depends on precisely what they do and how they are run. It also depends on how we view their general purpose, in the abstract, apart from any particular corporation’s goals.

For most of the last century, a relatively new view of corporations’ goals has been in political vogue. It holds that corporations exist only to make money for shareholders; that is their only purpose. If they don’t actually do that, they are violating the ethos of corporate governance, if not the law.

This view arises from a century-old case involving Ford Motor Co. in its heyday, when it dominated the auto industry and was supremely profitable. After years of making record profits, it had accumulated a large cash hoard. Henry Ford wanted to stop paying special dividends to shareholders so he could invest the money in new plants, decrease costs, increase sales and lower prices. Not-so-patient shareholders, including Dodge (who wanted to start a rival car company) sued to get their dividends, and they won.

In making its decision, the Michigan Supreme Court seemed to characterize Ford’s goals as eleemosynary. It penned the following extraordinary passage:
“[Henry Ford’s] testimony creates the impression . . . that he thinks the Ford Motor Company has made too much money, has had too large profits, and that, although large profits might be still earned, a sharing of them with the public, by reducing the price of the output of the company, ought to be undertaken. We have no doubt that certain sentiments, philanthropic and altruistic, creditable to Mr. Ford, had large influence in determining the policy to be pursued by the Ford Motor Company . . .

A business corporation is organized and carried on primarily for the profit of the stockholders. The powers of the directors are to be employed for that end. The discretion of directors is to be exercised in the choice of means to attain that end, and does not extend to a change in the end itself, to the reduction of profits, or to the nondistribution of profits among stockholders in order to devote them to other purposes.”
This decision came down in 1919. The best that can be said for it—if anything good at all can be said about its stilted language and conclusory reasoning—is that the nation and global business have long ago left it behind. If you took the foregoing passage literally, it would have outlawed the “driving for market share” approach that allowed Japanese car makers to penetrate and ultimately dominate the American car market. It would also have outlawed the R & D expenditures that every business corporation, especially those involved in high technology, routinely makes today. If building new plants to increase sales and lower costs and prices is unlawfully stiffing the shareholders, how could investing in research with no known or predictable results not be?

The Michigan Supreme Court’s decision represented an early apotheosis of short-term thinking. It was an attempt, fortunately unsuccessful, to strangle Henry Ford’s prosperous and egalitarian consumer society in its crib. It was unfortunately emblematic of jurists’ frequent inability to understand or appreciate how the physical and social engineers who built this nation think.

From this case and others like it, later observers concluded that corporations exist only to make money for shareholders. The law has moved on in the last century, but not nearly as much as routine business practice. So a key question for our era is whether our modern courts will finally inter the ghost of this impossibly impractical and wrong-headed decision.

More modern legal decisions wisely leave the tradeoff between dividends and business investment to corporate directors’ business judgment. This is especially so in Delaware, where most large Yankee business corporations are incorporated today. But there is no universal norm yet, and there may never be, because corporate law is mostly state law, which varies from state to state. Decentralization does have its discontents.

If anything in our Yankee culture might support the sole-purpose myth, it’s Wall Street. Wall Street will, we are told, “punish” a company that doesn’t make money for shareholders by tanking its stock price.

But even that’s an exaggeration. Until recently, Apple distributed almost nothing to shareholders, despite having one of the largest cash hoards in corporate history. Now it offers shareholders dividends and occasional cash buybacks of shares. But both are miserly compared to those of corporations with a long history of dividends and buybacks.

More to the point is a recent Forbes article about Apple and its CEO, Tim Cook. Apparently someone at a shareholder’s meeting accused Cook of trying to “do good” instead of maximizing returns on equity and distributing the resulting returns to shareholders.
“Cook replied–with an uncharacteristic display of emotion–that a return on investment (ROI) was not the primary consideration on such issues. ‛When we work on making our devices accessible by the blind,’ he said, ‛I don’t consider the bloody ROI.’ It was the same thing for environmental issues, worker safety, and other areas that don’t have an immediate profit. The company does ‛a lot of things for reasons besides profit motive. We want to leave the world better than we found it.’”
It would be hard to conclude that Wall Street (or anyone else) has “punished” Apple for these or any other acts of do-goodery. Apple is the most valuable corporation in the world. It’s also over 60% owned by institutional investors, i.e., by professionals, most of whom work on Wall Street.

Today, many other corporations are experimenting with do-goodery. Some do so by increasing their minimum wages, without government compulsion, as Henry Ford once did in creating our modern consumer economy. Others spend to reduce pollution, reduce their own carbon footprints, invest in cheap, renewable energy, or offer women benefits like day care and pregnancy leave, which makes it easier for them to hold down the dual jobs of worker and mother. Starbucks is sending its baristas to college.

Some of these things, such as investing in renewable energy, can raise the bottom line, at least in the long term. Some may not. It’s hard to see how generous pregnancy leave makes corporations money, except perhaps in the long term (by attracting female customers and female workers and retaining the good ones). Similarly, Starbucks’ college plan has no obvious immediate effect on the bottom line but expenses.

But no intelligent person, whether in court or on Wall Street, ought to say “no” to corporate do-goodery absent clear evidence of management’s abuse of authority or self-interest. In general, modern law agrees. It judges business management’s conduct by a so-called “business judgment rule.” Except in conflict-of-interest cases, that rule doesn’t even require reasonable care, i.e., the absence of negligence. All it requires is good faith, which is to say the absence of a provable corrupt or otherwise bad motive.

In another essay, I advocated abandoning this lax rule for systemically important bankers, in order to stave off the next financial crash. But for the vast majority of businesses in the real (nonfinancial) economy, there is no crying need to abandon it. It remains the law in most jurisdictions, and it makes sense. Business management must have elbow room to work, and occasionally to fail, as long as the failure doesn’t threaten our whole economy.

As for Wall Street, the general rules for beneficence that it imposes on businesses is, or should be, even laxer. Why? Because doing good can build brand identity and increase the value of a corporation’s goodwill, which is an actual balance-sheet asset. It can also boost the reputation of a corporation and its products, especially in today’s social-media environment. Eventually, more “likes” mean more money, or at least that’s the theory. Everyone wants to “monetize” likes on social media, and the good guys ought to have a better chance. And in the event of bad corporate behavior, modern social media can crush a business’ reputation overnight.

So the notion that corporations exist only to make money for shareholders, regardless of their impact on larger society and the evil or harm they may do otherwise, is at best a dismal urban myth. At worst, it’s a vicious lie. For shareholders, it’s an excuse to second-guess public-spirited and far-sighted management. For managers, it’s an excuse to be greedy and thoughtless and to think short term. For employees and progressives, it’s an excuse to demonize the corporations that provide virtually all our wealth and creature comforts and that now are in the slow process, collectively, of taking over our world.

Whether corporations work for good or evil depends, of course, on who leads them. The same is true for nations. But there’s a big, big difference. Several orders of magnitude more corporations exist than nations. So CEOs as a group have a lot more opportunities to distinguish themselves by doing good (or doing evil) than presidents and prime ministers have. Because their individual constituencies are much smaller, they have less temptation to pander to zealots and fringe groups. And citizens, aka “consumers” in this context, have a lot more opportunities to redress their grievances through consumer choice, at least when there is competition. All this is a benefit of decentralization, which takes us back to the first advantage of a corporate world.

The Trans-Pacific Partnership (TPP)

The Trans-Pacific Partnership is a small, interim step in the centuries-long process of transitioning from mostly political governance to mostly corporate governance (in the sense of this essay). It’s primarily an extension of international trade—the only traditional and reliable interaction by which differing human cultures have interacted without war. That’s all to the good.

But controversy has dogged the TPP. It seems to arise from three principal sources. The first is secrecy. Drafts of the proposed treaty are still unavailable to the public. What’s in them is known only to government officials and corporate lawyers and lobbyists. When things this big are secret, it’s hard not to worry.

Second, opponents of TPP fret about the so-called “fast track” approval that Congress is contemplating. By requiring only an up-or-down vote, with no amendments, it gives the executive branch pretty much carte blanche in negotiating the deal.

That might be a bad idea if Congress were sentient and functional. But with Congress in its current puerile ideological and dysfunctional state, it might not be such a bad idea. At least our executive branch has credible trade experts who know something besides ideological scripture, and it can call on more if need be. Congress today has far fewer clear thinkers, let alone experts, than ideologues and demagogues.

The primary argument against a fast track is that it might downplay the importance of significant flaws in the agreement, as long as it is, on balance, beneficial. Ideally, the people’s representatives ought to be able to see and debate those flaws before the deal becomes law. But the present level of quality of those representatives, plus their impractical and ideological mindsets, significantly weakens this argument.

According to Senators Elizabeth Warren and Bernie Sanders, one of the TPP draft’s significant flaws is the third and final source of controversy. Apparently a murky provision would allow corporations to sue our federal and state governments if their laws governing such things as environmental and worker protection cut corporate profits.

I have heard no one claim that this provision would invalidate such protection or permit injunctive relief, thereby effectively rewriting our laws. The claim is simply that corporations could get compensation for losses of hypothetical profits that such laws cause. Their doing so would put tax-paying voters in the difficult quandary of having to pay more taxes or reduce the government protection they rely on.

Like the President, Elizabeth Warren is a former law professor. Like the President, she is a reliable and trustworthy source of information and a center of genuine empathy for ordinary people. Since the two are at apparent odds on this point, it’s hard to know whom to believe and whom to support.

I’m not sure that seeing the language of the provision at issue would be any help. To my knowledge, the President has not questioned that such a provision exists, or that it might operate as Warren suggests.

So I cannot question the knowledge, motivation, sincerity, honesty or empathy of either side in this debate. The only way I can begin to decide is by comparing experience and perspective.

The President has held his office for over six years. Warren has held her senatorial post for over two years. Warren has vastly superior knowledge and expertise in finance, especially the type of finance that confuses, swindles and sometimes defrauds consumers. But the President has handled a much broader portfolio for much longer.

So the President likely has the big picture. Warren may be reacting to a provision that, if in favor of banks, might be disastrous to unprotected consumers. Whether it will be so in favor of industrial companies, which provide the bulk of international trade, is a matter of judgment.

The President, apparently, has made an executive judgment that TPP is worth pursuing. There are several plausible reasons why.

First, TPP might provide a “win” for the US and its allies in commercial competition with China, which has its own regional trade treaty already in place. Second, international corporate governance is coming, willy nilly, and the United States must play a key role in it in order to retain its global leadership position and its number-one economy.

Our multinational corporations are not just economic “ambassadors.” They are the infrastructure of our “soft power.” Having a treaty that helps them keep their leading role in world affairs is important to our economic and political future.

Third, even if the suspect provision works as Warren describes, US corporations might be able to raise environmental and worker protections in foreign nations as much or more than foreign corporations could lower ours. For example, US corporations might claim compensation abroad for a loss of profits due to an unfair competitive disadvantage that weaker environmental and worker protection abroad gives foreign businesses.

Fourth, given a level playing field, US corporations, with their better educated and more experienced management, might be able to extend their influence abroad, creating more jobs here at home. Next to the Germans and Japanese, no nation has more recent and longer experience managing modern businesses in foreign countries than ours. (The Brits seem to have lost their touch and to be turning inward.)

Fifth, foreign corporations may have an intrinsic disadvantage in using the suspect provision because foreigners (especially in Asia) are considerably less litigious than we Yanks. Many, if not most, would rather compete than sue.

Sixth, protecting workers and the environment is good long-term policy for any nation. Developing nations will be unlikely to promote short-sighted corporations rather than cleaning up their act, if only because of domestic worker and public pushback. Seventh and finally, what corporations do, whether at home or abroad, depends on their management and the strength of its foresight. It seems rash to torpedo an otherwise good deal just because a few might be evil.

Of course the foregoing paragraphs are speculation. I have no inside information as to why the President supports the proposed pact so strongly. But I trust his judgment. He never fails to see the big picture. He’s a superb political chess player who doesn’t mind sacrificing a pawn or knight to save his queen. Sometimes that’s what you have to do to win.

Conclusion

Corporate governance, in the sense used in this essay, not only exists. It’s also growing steadily, as anyone with eyes can see.

To verify this point, just consider your own personal interactions. For most Americans, interactions with government are confined to tax time and retirement (or preparation for it), unless they are suspected of a crime or employed in government or the military. Yet every American deals with corporations—and must obey or suffer their non-negotiable contract terms and policies—at least once a month, as well as whenever flying, using a cell phone or the Internet, watching cable or satellite TV, buying, building or renting a home, banking, or questioning or paying a related bill.

Today big business is far more a ubiquitous and intrusive presence in the lives of ordinary citizens than government is or ever will be. The only reason most of us don’t notice this fact is that big business has many heads and hats, as befits its decentralization.

Yet collectively the corporate hydra is by far the dominant presence in our modern lives. This is so today, and the trend will only grow for at least the rest of this century. Likely it will continue to grow until some other human institution than the corporation provides a better solution to the dilemma of our biological evolution.

Any change so large and sweeping as the transition to corporate rule can be scary. But is corporate governance, on balance and in general, self-evidently a bad thing?

I think not. The most catastrophic forces in human history—and the motivation for the bloodiest and most senseless wars—have been religion and ideology, religion’s political cousin. Individual corporate managers may have both, but corporations themselves have neither, for two reasons. Despite our Supreme Court’s fuzzy musings, they are not really sentient. They are abstractions that must act through real people. And no successful business can afford to alienate potential customers for abstract reasons of religion or ideology.

Although making money is not corporations’ only purpose, it is probably their primary purpose. That makes them, and their CEOs, much easier to influence, on average, than the political, national and religious leaders whom they are replacing have been throughout human history. Try to bribe the Taliban, an anti-abortion extremist, or a Tea Party zealot, and see how far you get!

Citizens and movements are beginning to understand this point. Protests and boycotts have made large corporations raise their minimum wages, often before governments have done so. Social media have pushed corporations to change and improve their products. Corporate pressure has forced two states—Indiana and Arkansas—to reconsider laws that would permit, if not encourage, businesses there to discriminate against gays. Boycotts have almost forced the Wretched Apostle of Fear and Hate Rush off the air.

Corporations are amenable to economic pressure, while governments are not. If you don’t pay your taxes, you go to jail. Yet you are free to shun a particular corporation’s goods or services, and to organize others to do so, whether to protest a corporate action or policy, to patronize a competitor (except to squelch competition itself), or just to do without.

If you want a good example of the impotence of government and the power of pressure on corporations, consider so-called “superbugs.” For at least four decades, science has known that factory-farm corporations, especially chicken farms, create multiple-antibiotic-resistant bacteria that can kill people. They do so by using antibiotics routinely in animals that are not sick. This practice converts the animals, collectively, into a vast, living, accelerated-evolution factory for antibiotic-resistant bacteria.

Today some 23,000 of us Yanks die from these bugs every year. Yet in four decades, government, in the form of the FDA, has been powerless to take the simple and essential step of banning routine use of antibiotics—even those used to cure humans—in animal husbandry.

Why? Because pols in hock to factory-farm businesses have hamstrung the scientist-regulators at the FDA. In the 1970s, the culprits included a Southern Democrat. Now they’re mostly Southern Republicans. Party doesn’t matter. Only money does.

Enter “corporate governance.” Recently two major corporations (MacDonald’s and Tyson Foods, the world’s biggest factory chicken farmer) have promised, respectively, not to buy and not to produce chicken raised on routine use of human-useful antibiotics in animals not sick. Their chief self-confessed reason: customers demanded the change.

So after government had failed for four decades, pressure on corporations succeeded. Maybe a decade or two more down the road, seniors will no longer have to die from ordinary urinary-tract infections, and people breathing and eating the dust near factory farms, which is laden with multiple-antiobiotic-resistant bugs, will no longer get infected. Better late than never.

Amenability to pressure is not the only apparent advantage of corporate governance over what passes for democracy in America these days. Pols pander to extremists relentlessly because extremists vote more often than reasonable people and are overrepresented in our national legislature, because extremists and other zealots control primary elections, and because we no longer have majority rule in Congress. With few exceptions, corporations don’t pander to anyone, let alone extremists, at least not on an ideological or religious basis. They understand that pandering to some customers on non-business-related issues can alienate others, so they go strictly by the numbers—their sales revenue. Hence their protective attitude toward gays.

Finally, look at the general quality of leaders. How many national pols, let alone state or local ones, can match the average big-company CEO in brains, education and experience, let alone diplomacy, “people skills” and practicality? How many pols have a fraction of the experience in elective office that the average corporate CEO has in managing his or her business, or in his or her industry? The transition from rule by government to rule by corporation might simply bring us higher quality, more focused, and more experienced leadership, as well as more diversity and decentralization.

So cheer up, my fellow progressives! The government that we relied on for our safety net and personal protections is drowning in a bathtub of debt. At least it’s gasping for breath. The Grover Norquists and the selfish among us are winning, if they haven’t already won.

But the advice “Be careful what you wish for!" may apply with special force to these avid fans of greed. Corporate rule may bring us less fuzzy and vapid ideology and religion, more vigorous competition, more practical solutions based on facts and evidence, and better, smarter leaders, albeit more widely dispersed.

For the most part, corporate CEOs are reasonable, practical people, if only because no CEO who managed by a “Little Red Book” of ideological dogma could survive in business very long. At least most CEOs don’t repeatedly demonstrate, in their public statements, the extreme stupidity that our pols often do, especially when talking about gender, rape or abortion. Remember the absurd comments about “legitimate” rape and the spontaneous abortions that “illegitimate” rape supposedly causes to occur naturally? Few or no people stupid enough to have made those comments could make CEO of a major corporation, unless perhaps they were majority stockholders’ siblings.

Not only are corporations amenable to simple commercial and social pressure. They are subject to civil lawsuits, as well as to reason. In contrast, government and government officials are immune from suit for official actions, under a doctrine known as “sovereign immunity.” In addition, corporate shareholders’ and directors’ meetings, unlike our Congress, still operate on the principle of majority rule, so shareholder activism and independent directors can make a difference.

No doubt many people wailed and quaked in fear as noisy and disputatious parliaments replaced royal rule. But in the long run, democracy proved to be much more resilient and much better for the people than monarchy.

Now democracy is showing its age and infirmities. Fighting the fuzzy thinking and fuzzier ideology driven by negative TV ads and vast propaganda empires like Fox’ may be a losing game, especially when only 30%, mostly zealots, vote in primaries. It may be easier to address pleas for constructive change to well-educated, largely ideology-free business leaders, especially when appeals to do good also suggest increasing the bottom line simultaneously. The explosion of corporate investment in solar energy is just one beckoning example.

Imagine a world in which key decisions on the economy, energy, industry, banking, science and infrastructure were made by men and women without reference to ideology or religion, without pandering to plutocrats, extremists and morons, and without relying on demagogic negative attack ads. Instead, imagine a world of such decisions made on the basis of data and proven expertise, as one might expect of a rational society.

Imagine a nation ruled by a large number of truly elite people with superior intelligence and education and vast practical experience, rather than 535 mostly inexperienced money grubbers, many of whom are also demagogues. Imagine a world in which the awesome propaganda power of so-called “public relations” is used just to sell defective products, not defective leaders and defective ideologies, let alone fear and hate.

Imagine a world, in short, in which every government is more like China’s, with its new Mandarins and technocratic majority rule at the top, but without its over-centralization and ritual references to a long-vanished “Communism.”

Don’t fight too hard against the coming of that world. It’s never a good idea to fight evolution, whether biological or social. For whether you fight it or not, evolution is bound to prevail, at least as long as our species itself survives.

Footnote. The probable “blessings” of corporate rule depend heavily on free, fair and vigorous competition. If businesses collude or combine to avoid competition, as they often do, the result will be bullying and tyranny, but without due process or other legal constraint. (Our Constitution limits only “state action,” not private action.)

What we Yanks call “antitrust law” and the rest of the world calls “competition law” therefore is and will be absolutely vital in assuring that the theoretical advantages of decentralization, adaptability and beneficence become real. It’s encouraging to see the Comcast-Time Warner merger dead and European competition-law authorities working vigorously to contain online bullying. As government grows weak, it must prevent corporate bullying and tyranny from replacing the last century’s dismal governmental tyrannies, if only in a particular industry or segment. Vigorous competition—and breaking up any entities too big to fail—can do that.

Elizabeth Warren’s response to the President

Last night (5/13/15), the PBS News Hour gave Senator Elizabeth Warren a chance to explain her views on the TPP and respond to the President’s criticism.

And what a response it was! Anyone who thinks she is not presidential material should watch it and reconsider.

Warren made two points, both of which are valid. First, she noted that 85% of the people “in the know” about the treaty and involved in its drafting are high-level corporate executives or their lobbyists. From this fact, she concluded that the drafts are necessarily slanted toward corporations’ interests, and away from working people’s. I agree.

Second, Warren noted that the “fast track” authority now before Congress would last six years, apply to succeeding administrations, and reduce the Senate voting margin required to approve TPP and future treaties from 60 to 51 votes. In other words, for six years, future corporate forces will able to pass corporation-friendly trade treaties by a simple majority vote, without having to worry about filibusters—although perhaps Senate holds might still apply.

Every aspect of Warren’s appearance was exemplary: her manner, her near-perfect elocution, her clear diction, the pacing of her speech, and her pleasant but determined mien. She practically stared the camera down. Her simple language—including repeated use of the phrase “grease the skids” for fast-tracking—exemplified the kind of “Great Communicator” that the President sometimes can be, and that Bill Clinton was in his best moments.

So it was easy for me to feel inspiration and admiration for Warren approaching awe. In four or eight years, after she acquires necessary expertise in foreign and military affairs, I can imagine supporting her campaign for president with my money, my voice and my primary and general-election votes. I can imagine cheering my lungs raw for her.

But in our sad reality of today, I reluctantly adhere to the views expressed in the foregoing post. As talented as Warren is, and as right as she may be in the abstract, the corporate juggernaut simply has too much momentum. Today its momentum is too great for any single senator to stop, let alone one from Massachusetts—the state universally acknowledged for decades as being our most consistently liberal and progressive.

There are two other reasons why I view Warren’s present crusade against fast-track and the TPP (at this moment only) as making her something of a Doña Quixote. First, I am firmly on record, on this blog and on another dedicated to that purpose alone, as adamantly opposing filibusters and other departures from majority rule in Congress.

If everyone who saw a temporary and transient advantage from filibusters pursued it, we would never get rid of them. Because so many have done just that, we still have them, despite their gross overuse on an historical basis. Consistency and practicality require me and like-minded thinkers to oppose filibusters even when they might support our own ideological agenda.

Second, corporate power seems most bad when it “goes political.” When owners or executives of corporations, like the Koch Brothers, get the odd notion that they can use their great wealth to become de-facto rulers, they act execrably. They buy fuzzy and simplistic general mantras like “lower taxes,” “less regulation,” “more freedom,” mostly without coherent thought. Then they try to make the public dupes and the pols they buy shameless lackeys.

The odd thing is that good CEOS don’t do that in running their own businesses. They hire professionals and listen to them. The live by facts, math, logic and science, not wishful thinking or simplistic mantras. Above all, they are realists and pragmatists.

So what makes them, or at least some of them, such atrocious excuses for leaders when they think they can rule the land with their cash? God only knows.

When they are not trying to do that, owners and managers of corporations apply their often superior intelligence and usually superior education and experience to specific, practical problems of policy. Then they act much as they would in running their own businesses. They are focused, practical and realistic. They push forward such beneficial things as building and using windmills and solar arrays, fighting disease, better policing, and ending discrimination against gays.

This history perfectly fits my theory of decentralization. The primary social-evolutionary purpose of corporations is decentralizing human leadership: slicing it up into smaller pieces defined by industry, business, field of technology, area of learning and type of expertise.

Corporate business is the organizational side of individual specialization and division of labor. That’s why the era of corporate conglomeration now receding was so retrograde to human evolution, and such a gigantic business mistake. Today GE is showing the way back from that blunder, as it divests its lines of finance, at least those unrelated to purchasing its advanced industrial gear. GE now knows, better than most, that “sticking to your knitting” is not just a recipe for success, but the fundamental rationale for humans having invented corporations in the first place.

So like the President, I believe Senator Warren is wrong on this one. Her wrongness on this single initiative doesn’t belie her tremendous talent, her awe-inspiring and growing political skill, her dedication to improving the lot of working people, or her potential as a future president. I think the President understands all this.

But to get to the world that Warren, I and millions of others would like to see, she and we will have to find a smarter, better path. We’ll have to find a way not to fight corporations for general governance of society—a battle we are ill-equipped to fight and are likely to lose. Instead, we’ll have to enlist their better angels (including Apple) to help us solve societal problems, as enlightened CEOs come to understand their modern leadership roles and their responsibility to do more than just make money for shareholders. We’ll also have to find more effective ways to persuade voters, policy makers and other corporate leaders that what the Koch Brothers are doing is a perversion not just of democratic governance, but of business’ role in it.

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04 May 2015

Obamacare, Gay Marriage and our High Court


[For a recent post on events in Baltimore, click here.]
    “I mean, if Sue loves Joe and Tom loves Joe, Sue can marry him and Tom can't. And the difference is based upon their different sex. Why isn't that a straightforward question of sexual discrimination?” — Chief Justice John Roberts, in oral argument on Obergefell v. Hodges
Like him or not, you have to admit that Chief Justice Roberts has an incisive mind.

Our Supreme Court relies on abstractions far more than on practicalities and the real needs of real people. Sometimes the abstractions are fuzzy ones like treating corporations as phantom people. Hence Citizens United. But if you like abstractions, you won’t find many judicial minds that can handle them better, and make them simpler and clearer, than John Roberts’.

No other Justice signed onto his opinion upholding Obamacare’s mandates. But it was simplicity itself. The mandates are a tax, Roberts wrote. Congress can tax. So they are within Congress’ constitutional power.

Simple? You bet. But also brilliant on many levels.

Congress didn’t call the mandates a tax, to be sure. But for smart people (and, one hopes, jurists), a name is just the label on the box. It’s what’s inside the box that matters.

Roberts understood that the mandates are a tax because their primary purpose is to raise money. No one in Congress (or anywhere else) wanted to bash people too poor or too misguided to buy health insurance. No one wanted to make their lives even harder than lacking health insurance already does.

Advocates of broadening the blessing of health insurance just wanted to raise money to finance it. That’s a tax. The contending label—a penalty—just wasn’t as credible. The mandates may in fact discourage some free riding, but their primary purpose was and is to raise money, which they do indirectly even as they penalize.

Roberts also understood history. Poll after poll after poll said that around two-third of us Yanks want a single-payer option. We would all like to be able to enroll in something like Medicare before we turn 65. So why don’t we have that option? Because it would cost money, a lot of money.

Ever since Ronald Reagan led the Boomers’ revolution of selfishness with the rallying cry “It’s your money,” taxes have gone relentlessly down. His revolution may have reached its high-water mark in the first decade of this century. There was no way then, and probably now, too, that any Congress in Yankeeland would pass a tax big enough to fund Medicare for all.

So the President and his allies in Congress used a time-honored political ploy. They hid the ball and used a false label. They imposed a regressive tax upon young, healthy, health-insurance refuseniks so they could get a bill through Congress and insure some twelve million people (and still rising) who wanted insurance but didn’t have it.

The bill they came up with was awkward, ungainly, and far far, too long and complex. But it did the job. And it did it by letting Congress fool itself and the people by calling a tax something else.

The Chief Justice called a spade a spade, as any good jurist should. He also chided Congress, impliedly and gently, for trying to pull the wool over the people’s and history’s eyes. But that was mere peccadillo, a little white lie among old marrieds. Millions of people now have gotten insurance and, with it, access to the world’s best but most expensive health care.

Now comes gay marriage. If “Joe” in Roberts’ example is bisexual and can’t make up his mind, a law barring gay marriage directly disadvantages Tom in favor of Sue. It’s hard not to see discrimination in that.

Sure, if the indecisive Joe chooses Tom, they can still go to a lawyer and have a contract drafted. But that contract would have to be long, complex and clever.

In the end, it could never have exactly the same effect as marriage. Why? Because (among many other things) contracts to make wills are unenforceable in most jurisdictions. No mere contract can produce the same effect as state laws governing the effect of one’s demise without a valid will, let alone such things as community-property and dower rights.

So Joe and Tom would have to spend a lot of money for legal work, and they still wouldn’t have what Joe and Sue could have by paying a few bucks for a marriage license. How does that scenario not discriminate? Justice Roberts knows how to put the right label on the box.

Justice Kennedy has a different mental fulcrum. He frets about the hubris of “changing” a definition of marriage that has lasted for millennia.

But Justice Kennedy ought to realize he’s a bit late. What compels change in our definition of marriage (for civil and legal purposes, not religious ones) is not he or the Court. Thomas Jefferson, our Civil War, and Abraham Lincoln were there first.

When Jefferson wrote “all Men are created equal,” he obviously wasn’t thinking much about himself. He was a slaveowner all his life. Of all his slaves, he freed only his beautiful mistress, Sally Hemmings, and her children by him. The natural consequences of his beautiful language would have changed his own life completely, but he didn’t live to see them.

It took our bloodiest war ever and Abraham Lincoln’s political genius to enshrine the national credo that Jefferson drafted in our positive law: our Civil War Amendments (13th through 15th). Once that was done, the dominoes began to fall: slavery, bans on interracial marriage, bans on interracial sales of real property, discrimination in housing, discrimination in restaurants, discrimination in voting. Could bans on gay marriage be far behind?

It’s a shame that today’s jurists feel they have to hide their wisdom behind a veil of fuzzy abstractions. You can thank Justice Anonin Scalia, the Darth Vader of American jurisprudence, for that. For him and his “original intent” minions, considering people, practicalities and consequences in the real world is making “policy,” and therefore outside the bounds of judging. These jurisprudes (pun intended) would rather guess at the wishes of Founders dead for over two centuries—like the Taliban divining the mind of Mohammed—than think for themselves as Solomon did.

What a different nation we might have if our Justices tried to emulate Solomon! They would have understood that giving mighty corporations (and therefore their owners and managers) the same rights of speech as ordinary people would drown out the people’s speech, corrupt our entire political process, and make our democracy a sham. They might have balked at exalting the bullies on Fox and their secret counterparts, the producers of attack ads.

More to the point of this essay, a bit of Solomonic wisdom might allow our Justices to examine the goals and motivations of advocates and opponents of gay marriage. Advocates just want the rights, benefits and privileges that everyone but gays now has. Opponents want to stop them. Why? Not because gay marriage harms them or marriage in any real way, but because they just don’t like the idea.

In essence, those who want to ban gay marriage want to control others’ lives because of a purely abstract and mostly religious distaste. How American is that?

After having made what may be the most consequentially and catastrophically stupid decision in the Supreme Court’s entire history—Citizens United—our Court, I hope, will dip its toes gingerly and delicately into the forbidden waters of “policy” this time. I hope it considers the real needs of real people, the slow and sporadic progress of our nation toward its historic credo of equality, and the consequences of a decision one way or another in the nation we have now, not in long-vanished Colonial America.

Our good Justices might even consider their roles as de-facto leaders of our culture, which is still the spearhead of human social evolution. Having done so much damage by looking backwards at fuzzy abstractions, they might bring themselves back to the real needs of real people on this Earth in this day. If they do so, I expect and trust they will strike down discriminatory bans on gay marriage by at least a 6-3 majority.

Footnote 1. How people who repeatedly tar Obama as a “socialist” can complain about this false labeling beggars the imagination. False labeling is a tried and true refuge of political scoundrels of all types. It’s the tool they grab reflexively when they have nothing that actually works. Our Supreme Court has the power and the duty to put the right label on the box.

Footnote 2. How people can blame Obama for this mess of a law mystifies me. Our over-lawyered Congress and its staff drafted it, negotiated it, debated it and passed it. All Obama did was ask for it and, eventually, support it as better than nothing, which it is. Just ask the 12.5 million-plus people who have health insurance for the first time.

Footnote 3. Like the “war on terrorism,” the notion of “harming marriage” is a self-evident absurdity. How do you make war on a noun? How do you harm it? It’s not sentient. It’s not even alive or physical. It’s an abstraction. In reality, “harming marriage” is just a euphemism for “I want things my way but can’t say why.”

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