Diatribes of Jay

This blog has essays on public policy. It shuns ideology and applies facts, logic and math to social 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.

25 July 2018

Waiting for the Crash


[For a brief note on a rare “conservative” who can think, click here. For things corporate CEOs can do to help keep the United States from suffering a decline and fall like ancient Rome’s, click here. For a comparison of quality in pols and reasons to recall our recent past, click here. For reasons why Trump’s trade war is headed toward a disastrous defeat, click here. For a brief note on how corporate rule is encroaching on American cities, click here. For our desperate need for voters to focus on good character, click here. For an analysis of facts and Kim’s myth about North Korea, click here. For a second post on training new voters, click here. For links to popular recent posts, click here.]

    “Men at some time are masters of their fates.
    The fault, dear Brutus, is not in our stars
    But in ourselves, that we are underlings.”     —William Shakespeare, Julius Caesar, Act I, Scene 2.
Two things about Donald Trump are now apparent. First, he’s the greatest con man in the history of a nation that invented the term “con man.” Second, his successful scamming of vast swaths of the American working class is not his own achievement. It’s a continuation of a scam invented by Rush Limbaugh and adopted by Mitch McConnell and the rest of the Republican Party. It’s not a perversion of GOP “policy” for the last decade or more, as many “respectable” Republicans insist in their umbrage, but its culmination.

How quickly we forget. The presidential election of 2008 came just months after the Crash of 2008—the worst financial panic since the one in 1929, which had triggered the Great Depression and ultimately World War II. The Crash and the bailouts of crooked bankers that followed would cause great “carnage” among the American working class, but that pain was just beginning. Still, the public was rapidly tiring of Dubya’s platitudinous stupidity and his unnecessary “forever” wars in Iraq and Afghanistan.

The bailouts had already begun. Goaded by then-Treasury Secretary Hank Paulson’s “chicken little” imitation, Congress and the executive had already spent or committed trillions in bailouts before Barack Obama took office as president. By my own inexpert accounting at the time, the bailouts totaled over $6.6 trillion by the day of Obama’s first inauguration.

What elected Obama was not just a wave of progressive sentiment. It was revulsion at a generation of government ineptitude—from Bill Clinton’s eager signing of the law that set the stage for the Crash, through those two unnecessary wars, to the middle class’ long-stagnating wages. With his superb education and intelligence, his academic bent, his humility and dry humor, plus his absolute moral rectitude, Barack Obama was the perfect leader to address these faults.

So Republicans were facing a progressive revival of biblical proportions. They were staring down the barrel of a decade or two of minority-party impotence.

What did they do? They came up with one of the greatest political scams in American history, perhaps in all of human history. They knew it would take at least a decade to turn the economy and their two unnecessary wars around. In the meantime, hard times would come and keep coming. So they decided to blame them all on the (half) black guy and trust in voters’ unconscious racism and faulty memory.

And that’s exactly what they did. As if to emphasize the depths of human depravity from which this scam came, they didn’t take the idea from the usual suspects. They didn’t get it from those who routinely delude the working class that lowering taxes on the rich, gutting regulation, and weakening the safety net will make them better off. Instead, they got it from Rush. The day after Obama’s first inauguration, Rush declared the GOP goal of making him a one-term president. Mitch McConnell took up the gauntlet a day or two later, followed by the GOP mainstream.

But they needed time to make the blame stick. So they dragged their heels on every legislative initiative intended to make things better. They begrudged the standard Keynesian stimulus needed to get the economy back on track: they let pass only the bare minimum “pump-priming” needed to keep the economy from collapsing. They fought the bailouts of our auto industry. They fought affordable health insurance tooth and nail, inventing the bogeyman of “death panels” to delude voters. When “Obamacare” became law notwithstanding their lies and deceit, they spent half a decade blaming it for everything from higher premiums to the common cold.

As I analogized in an earlier essay, they tried to make kids hate ice cream. And in the regime of the Great Con Man, they almost succeeded. They have battered affordable health care with propaganda, repealed some subsidies, and taken executive action designed to keep information about affordable insurance from the people. They’re on the verge of trying to resurrect exclusions for pre-existing conditions, whose outlawing by Obamacare made health insurance real for the very first time. That’s where we are today.

Then Great Con Man Donald Trump dropped the other shoe. After a decade of the GOP blaming Obama for the hardship that former presidents and bankers had caused, Trump now claims credit for our healthy economy. Never mind that Barack Obama and the Dems had forged that success out of carnage with sensible—and often standard—economic policy. Every economic expert knew that it would take most of a decade for the economy to recover, and it did. So now Trump takes the credit.

But here’s the thing. Nothing the GOP has done under Trump, and nothing it tried to do under Obama, is in the least responsible for the present economic “boom.” Perhaps the resilient American economy would have recovered in a decade anyway. More likely, the driving force for the recovery was the sensible and steady economic policies of the Dems, at least as much as the GOP opposition would allow.

But whatever the cause, healing an economy as large and complex as ours takes time. As Obama himself analogized, our economy is a great ocean liner, not a day-sailer. It takes years to turn our great ship away from a storm, and years to drift back into one.

And drifting back into a storm is precisely where we’re headed. How can we be sure? Because the GOP is in control of all three branches of government. And the current GOP is nothing like your father’s or grandfather’s GOP. It has become the party of the three D’s: distraction, delusion and deception.

Today’s GOP’s greatest success has nothing to do with real policy, the real economy, or any other aspect of reality. It “won” by convincing a large portion of our working class that Obama, who actually helped save us from the Crash of 2008, had destroyed our economy and health insurance, and that the GOP and Trump, which did nothing but resist Obama’s efforts, were the ones who saved us.

The flip side of this Great Con is of course the absence of any real, coherent plan. For two generations, the GOP has sought leadership of government only in order to belittle and downsize it, not to run it well. The GOP has won election after election not only with the three D’s, but by preying on voters’ selfishness, with slogans like “It’s your money!”

But selfishness is not a plan. It’s a vice. And from the moment he entered office, Trump has ignored a simple plan that might have insured skilled workers good jobs for years to come.

Our own American Society of Civil Engineers says we need to invest $ 2 trillion in our infrastructure just to bring it up to standard, let alone to the level of current progress in Europe and Asia. That money would have created millions of good, skilled jobs building infrastructure in our own country (which by its nature doesn’t permit outsourcing). But what did Trump do instead, as his chief legislative priority? He spent three quarters that much—charging $1.5 trillion on our national credit card—to give huge tax breaks to rich people and corporations, which didn’t need them, didn’t ask for them, and didn’t deserve them.

The infusion of cash to the underserving has continued, for a time, the stock-market boom called the “Trump Bump.” If you watch the Dow or the NASDAQ, you might be deceived. But the punchbowl will run out, and the party will end, as the rich and corporations hoard, invest or misuse their windfall, or simply pass it on to shareholders. That process is well under way.

Now Trump has begun a global tariff war, taking us back to the Smoot-Hawley tariffs that helped cause the Great Depression and the greatest war in human history. At the present level of some $34 billion, his tariff “war” is just nuisance to the global economy. Maybe Trump intends to keep it that way: almost everything he has done, except the Tax Scam, has been more show and bluster than substance. But if Trump goes on to the next level—$500 billion of new tariffs against China alone—our great economic ship will begin to take on water and list to the right.

It might be otherwise if Trump had a plan. He might, for example, seek to build American industries and create American jobs under the tariff umbrella, by organizing investors to start or re-start factories. He might even break with Republican orthodoxy and create jobs with government subsidies. But to my knowledge, he hasn’t done so much as organize a conference of investors. He’s just hoping that Xi Jinping, one of the smartest leaders in human history, will cave and maybe give us a plan to resurrect our most important manufacturing and keep our trade secrets to ourselves. Good luck with that!

No, continual scamming has its consequences. There comes a time when the piper must be paid. You cannot run a great nation on distraction, delusion and deception forever. You cannot make blaming and selfishness the cornerstones of economic policy. You cannot leave our decaying infrastructure to rot while paying off the rich men (they are nearly all men!) who fund your distraction, delusion and deception. You cannot do so, that is, without expecting another financial panic and another, probably global, downturn.

Of course no one can tell exactly when or how the crash will come. But ’twill come. It could begin with another stock-market crash arising from the twin effect of aimless tariffs and higher interest rates. It could be an out-of-the-blue crash arising from massive global corruption, gun-running and drug trade made invisible by block-chain cryptocurrencies. It could be yet another unnecessary war. Or it could be simply that our ship of state, drifting aimlessly without any perceptible plan or direction, wanders into another tempest.

Fortunately for our species, a new unnecessary war seems the least likely of these misfortunes. Trump is not just a skilled con man, but a bully. Like most bullies, under his bluster he’s a coward. Anyway, his expert military advisers and underlings will likely stay his hand.

Trump can’t fire nuclear missiles himself. There’s a long chain of command under him, run by well-educated, dedicated and disciplined warriors—words inapplicable to our commander-in-chief. So the chance of war is much smaller than the chance of us wandering into the economic wilderness, led by a man and a party whose only notable talents are distraction, delusion and deception in the cause of blame.

I’ve been out of the markets since February 2. No crash has yet come, but it took nine months for the 2008 Crash to come after I sold out in December 2007. I’ve left some money on the table as the bully corporations—Amazon, Apple, Facebook and Google—increase their power and spread their influence under a government that has forgotten what “antitrust” means.

But I have absolute confidence that a new crash is coming. Just how and when are hard to see. A ship with no course, no plan, no fixed direction and a con man at the helm is never far from danger.

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posted by Jay Dratler, Jr., Ph.D., J.D. @ 7/25/2018 10:15:00 AM   0 comments

21 July 2018

Reihan Salam

[For things corporate CEOs can do to help keep the United States from suffering a decline and fall like ancient Rome’s, click here. For a comparison of quality in pols and reasons to recall our recent past, click here. For reasons why Trump’s trade war is headed toward a disastrous defeat, click here. For a brief note on how corporate rule is encroaching on American cities, click here. For our desperate need for voters to focus on good character, click here. For an analysis of facts and Kim’s myth about North Korea, click here. For a second post on training new voters, click here. For links to popular recent posts, click here.]

Rarely does this blog see reasons for optimism in a pundit or media maven, let alone one who styles himself a “conservative.” Most of them fall prey too easily to deliberate distraction, or, in the so-called “conservative” realm, serve as blatant propagandists. The last pundit to inspire my optimism was David Leonhardt, a left-leaning commentator with an incisive mind and extraordinary understanding of quantitative economics, who now runs the New York Times’ opinion page and newsletter.

Yet here I am, writing about a conservative thinker whom I never heard of before this month. His name is Reihan Salam.

Salam sports a long string of writing and thinking accomplishments. I became aware of him when, for the last two weeks, he replaced David Brooks opposite Mark Shields in the PBS News Hour’s weekly review of political events.

I hope the replacement will be permanent.

Don’t get me wrong. I like and admire David Brooks. His “aw shucks” manner makes his sometimes fuzzy conservatism endearing. More endearing still is his open and absolute disdain for Donald Trump and his realistic worry that Trump as president will destroy Brooks’ own political party, if not our democracy.

But disdain is not a solution, and Brooks and Shields have become too cozy and comfortable. They obviously like each other, and their mutual desire to show it belies the ongoing crisis of our presidency and our democracy. Shields has a slight edge on Brooks in specific facts, but I rarely learn much from their dialogue that I didn’t already know, besides occasional reports of the attitudes of important newsmakers. Like the establishments of the two parties they represent, Shields and Brooks resemble tired warhorses who can’t see beyond old struggles to new horizons.

Salam exudes new ideas from his pores. He’s a true libertarian—a man raised in a Muslim household who reportedly supports gay marriage and legalizing prostitution and illegal drugs. Yet at the same time he reportedly favors curbing alcohol abuse with higher taxes, reducing urban gridlock with congestion taxes, and advancing social mobility in cities by means of less restrictive zoning policies.

My admiration for Salam has nothing to do with all this, which I learned only upon investigating his background for this essay. What struck me most was his unique and refreshing view of Donald Trump revealed this Friday.

Salam is a brilliant and articulate speaker well acquainted with nuance. He, too, is appalled (perhaps too facilely) by Trump’s incompetence, inconsistency, and constant blunders. But unlike most establishment figures in both parties (with the GOP mostly off the record), he doesn’t think the sky is falling on our democracy.

Trump’s Helsinki fiasco, Salam believes, has had a useful unintended consequence. It has motivated both paralyzed Democrats and the Republican establishment, which has generally been supine to Trump, to take a much harder line on Russia. As background, Salam noted late-2017 legislation that lets Congress impose sanctions on Russia without the President’s consent, which, Salam said, the president himself signed. Salam didn’t say whether Congress has or ever would use this legislation, but at least it shows that our lie-addled nation is not totally without checks and balances.

There were other ways in which Salam justified faith in the durability of our institutions. Among them was the contrast between Trump’s fawning over the brutal dictator Kim and Kim’s complaint, after Secretary of State Mike Pompeo’s visit, of “gangsterish” demands by the US.

Salam’s own personal story is also proof of America’s resilience. His parents were born in Bangladesh, and Salam was born in Brooklyn. Through Stuyvesant High School, Cornell and Harvard (as an undergraduate), Salam worked himself up to the heights of the “conservative”—and therefore now the ruling—establishment in one generation. In a moribund GOP riven by discord, sycophancy to the rich, and blind faith in simplistic ideology, he seems to serve as one of the GOP’s key idea men.

Salam is no superman. Perhaps conscious of his brains, he’s too strident and overbearing, and he needs to tone it down. And he seems to ignore the risk that the bad might drive out the good in Trump’s Administration, as in the cases of most dictators’—a catastrophe I have feared, if not predicted.

But it was refreshing to see a man full of new ideas that our propaganda-war-weary pols and pundits seem incapable of thinking. It was even more comforting to see such a man justify (with facts, not just faith!) confidence in the resilience of our institutions, even (perhaps especially!) in the face of a buffoon-president like Trump.

Only time will tell whether Salam can justify my excitement at the prospect of original analysis. But for now, I want to see and hear more from this guy. He’s a commentator who provokes thought, not just choosing sides. Both his personal story and his new analysis inspire confidence in our national capacity for renewal.

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posted by Jay Dratler, Jr., Ph.D., J.D. @ 7/21/2018 12:09:00 AM   3 comments

13 July 2018

What Can CEOs Do?

[NOTE TO READERS: The essay below and yesterday’s look at two sides of the same coin. It’s best to read both together, but if you read only one, start with the one below.

For a comparison of quality in pols and reasons to recall our recent past, click here. For reasons why Trump’s trade war is headed toward a disastrous defeat, click here. For a brief note on how corporate rule is encroaching on American cities, click here. For our desperate need for voters to focus on good character, click here. For an analysis of facts and Kim’s myth about North Korea, click here. For a second post on training new voters, click here. For links to popular recent posts, click here.]

Several essays on this blog have noted a megatrend of our age: the slow but steady replacement of government power and functions with corporate “rule” and activities. (See this summary, this note on the phenomenon in cities, and this caution about the effect “corporate rule” on human rights.)

For two reasons, the United States is advanced in this trend. The first is the governing philosophy of the Republican Party, now fully in power. For two generations that party has pushed “starving the beast” of government in favor of the “private sector,” meaning primarily corporate activity. The second reason is the extreme ease of starting and financing corporations in the United States, accompanied by general respect among business people and the public. Our laws, banks, and several vibrant stock markets, as well as Internet innovations like “crowd funding,” make starting and funding a business corporation especially easy here. Business corporations are part of our national cultural DNA as Americans.

So we are in the vanguard of the megatrend. But it’s not just a matter of culture or partisan politics. It has deep roots in our entire species’ biological evolution. In the wild, we organized ourselves in small clans of thirty or fewer individuals led by an alpha male. Corporations allow us to mimic that evolutionary scheme of organization, on a larger scale, while accommodating the increasing specialization of knowledge and function that our complex high-tech society requires.

Our species’ organization of economic, technical, and productive activity in specialized corporations is not going away. It’s going to grow and change in our new millennium, often at government’s expense. Eventually, corporations may supplant most of the functions of today’s government, just as the State once replaced the Church (in the West), and legislatures and cabinets replaced monarchs during the last half-millennium. In comparison with governments, which today try to manage impossibly large numbers of people, corporations are more decentralized and diverse, more flexible and adaptable, and potentially more beneficent.

But in its present incipient phase, the megatrend poses a big problem, especially in the United States. Although corporations are really only legal abstractions, they have many of the characteristics of individual organisms. They can—and often do—value their own individual survival, growth and prosperity over everything else.

When that happens, a vacuum of focus and action can arise. No one may be “minding the store” of activities that lie outside the collectivity of corporations’ individual businesses. And no corporation may want to mind that store because there’s little or no profit in doing so. Examples of neglected social enterprises include defense, intelligence and counterintelligence, protecting the environment (and, by doing so, public health), medical and other basic scientific research, and of course the “safety net” for ordinary human individuals.

There may be products and services than can be useful in each of these enterprises, which can be sold for profit. But there is little or no profit in the enterprises themselves: organizing and marshaling defense, conducting intelligence and counterintelligence activities, setting rules and regulations for (or imposing taxes on) pollution, doing basic scientific research that has no real present prospect of producing useful goods or services, and helping people left behind by the system so they don’t beg or die in the streets.

There are no market mechanisms for these enterprises simply because there are no markets for them. In corporate parlance they are “cost centers,” not “profit centers.” Yet they are vital for any healthy society.

Traditionally government has managed these enterprises because there is no financial incentive to do so. They are “collective” enterprises in the largest sense: they benefit and must be financed by the largest societies, which in today’s world means nation-states. (Collections of nation-states like the EU may some day subsume these functions; but today this trend is only a work in progress, in its early stages.)

Today the United States is less a popular democracy and more a corporate oligarchy. (If you want proof, read the abstract or the entirety of the latest academic study, or this summary in a BBC review, or just consider the predominant effect of the Trump Tax Cuts.) So corporations collectively rule the roost. The mechanisms of their rule are not particularly important—PACs, “dark money” political contributions, lobbying, money-burning litigation, etc. What is important is a simple fact: corporations and their rich managers and shareholders collectively set the direction and policy of this nation. The people at large do not.

So what have corporations and their fellow travelers done with their plenary power over these non-market enterprises? They have starved them, just as they have starved government, by lowering taxes again and again. Since its post-war peak, the individual tax rate for the highest-income earners has plummeted from 91% to 39.6% today. And still our corporations use their oligarchical control of Congress to seek greater cuts. Meanwhile, promising researchers in medicine, biology, physics, and chemistry, including the big batteries that will smooth our path to renewable energy, go without government grants to fund their basic research. Corporations and private industry do not fill the gap because the research is too risky and lacking in clear direction to describe in a spreadsheet.

When ancient Rome decayed due to corporate neglect of the common interest, the main field of neglect was defense. Roman businesses drained the state treasury so much that Rome no longer could afford citizen soldiers. Instead, it had to resort to mercenaries and semi-slaves, making its army less invincible and less loyal, and eventually turncoat in part.

But today, in America, the neglected common fields extend far beyond defense. Ancient Rome didn’t have science or basic research. Science as we know it today began during the Renaissance, with Galileo. Rome also didn’t have pollution control. It didn’t even know about pollution. Many historians believe that lead in the drinking water of the elite, who ran lead pipes to their homes, accelerated Rome’s decline by causing mental illness in such people as Emperors Nero and Caligula.

Ancient Rome also didn’t have a safety net, or even a police force. It didn’t have universities. So when the ancient equivalent of our business corporations in effect took over the Roman Senate, there weren’t nearly as many important common “national” enterprises to waste.

The irony of the present-day America is that a “defense” product of the twentieth century, nuclear weapons, makes us far more secure than Rome ever was. No one is going to attack us at home while we have the world’s most accurate and fearsome nuclear arsenal, or even the second best. But just as happened to ancient Rome, neglect of our defense can cause “barbarians” to nibble around the edges of our “empire,” as they are doing right now in Ukraine, the Baltics, Eastern Europe, and the South China Sea.

Just days ago, news reports lauded Apple’s commitment to spend $300 million in China developing renewable energy sources for Apple’s own operations. That’s a prime example of a corporate CEO taking a broader view than immediate profit and making his enterprise a better corporate citizen. (Renewable energy is actually cheaper than other kinds, but making it cheaper requires taking a long view.)

But that’s far from enough. Apple is a leading member of the corporate oligarchy that rules this nation. It leads by virtue of its advanced products and services, and simply by the fact that it’s the world’s most valuable corporation.

So Apple—like its lesser colleagues—must take responsibility for making that rule effective and beneficial in the long run. Its wise rule must extend far beyond direct effect on its own operations. That means addressing those vital but neglected spheres of common activity that “starving the beast” has deprived of money, energy and expertise for nearly two generations.

The corporations that rule this nation cannot collectively decide just to lower taxes and repeal regulations, while neglecting our national defense, our intelligence, the purity of our air, water and land, our basic research and our safety net. They can, but they oughtn’t. If they do, our society will surely decline much faster than Rome’s, because it has many more dimensions in which to fail. And today other nations, especially China, Germany and Japan, will beat us in those dimensions if we falter and will take over the leadership of our species.

So what can forward-looking CEOs like Apple’s Tim Cook do? First, they can resign from and disband narrowly-focused influence organizations like ALEC, which are fixated on lowering taxes and repealing regulations willy nilly. Second, they can create new, more enlightened organizations dedicated to resurrecting government management of these neglected common enterprises, or to creating new, private or semi-private organizations to advise and assist government or even to take over some government functions. Third, they can “volunteer” their experts, part-time or for limited time, to help government manage the neglected enterprises more efficiently. Fourth, they can volunteer themselves, to work on committees to advise government on how best to spend money on matters involving their corporation’s expertise, for example, how to attract investment in new factories and new jobs that can take advantage of the price umbrellas of Trump’s new tariffs. Or they can form and invest in such new factories themselves. (For a company like Apple, doing this sort thing in the neglected fields of cyber-security and cyber counter-intelligence ought to come naturally.)

Finally—and most important—our ruling CEOs can use all their power and influence over their propaganda organs (such as Fox and Sinclair) and their bought pols to stop dividing us as a routine political tactic. In the long run, this may be CEOs’ most important contribution of all.

In 1991, an “accidental” economist called Ronald Coase won the Nobel Prize in economics, in part for his theory of regulation. He theorized that an entirely private system of regulation, through voluntary contractual arrangements, could work to get private property owners to address so-called “externalities” (problems external to markets, like defense, intelligence, pollution, basic research and safety nets.)

But there’s a catch, Coase reasoned. In order for arrangements based on private property rights to work, so-called “transaction costs”—the cost and difficulty of bargaining over those rights—have to be low.

Today, the oligarchy of CEOs who collectively rule this nation have accomplished precisely the opposite. They have raised transaction costs through the roof by deliberately dividing us into warring camps. They have done so through all their means of ruling: their propaganda organs (Fox, Sinclair and Rush), their PACs, their bought pols, and their controlled media.

And they have succeeded spectacularly. Our nation is now split down the middle between red and blue, “liberal” or “progressive” and “conservative,” white and black, white and brown, Christian and Muslim, pro-choice and pro-life, and immigrants and citizens. What’s more, these groups are not just political rivals. Our rulers have coaxed them into seeing themselves as separate tribes, and they are beginning to hate each other.

This is precisely what Vladimir Putin set out to do with his cyber-propaganda-warfare in 2016. He never imagined that he could help elect Trump president. But he knew that he could use Internet propaganda to split us. Little did Putin know that, in so doing, the propaganda organs that our own CEOs, who run this country, manage and fund would help him.

If our CEOs are to make their rule of this nation enlightened, this must stop. Instead of dividing us just to lower their taxes and decrease their regulatory burden, they must accept deep responsibility for the de facto rule that their oligarchy now has. They must rule wisely, for the whole nation. They must find real solutions to the problems of our neglected common enterprises, including immigration, and they must unite us around those solutions, political party and ideology be damned.

There is absolutely no doubt that our CEOs, collectively, are smarter than our pols and used to solving real problems more efficiently, better and quicker. For them to starve our existing common institutions into neglect, let alone to divide and conquer us as our enemies wish to do, is a gross violation of the responsibility that comes with the practical power they collectively hold. It would be hard to imagine a quicker or better way to push our nation into decline.

Make no mistake about it. The predominance of corporations in daily human life will continue and increase, worldwide. Corporations are consistent with our biological evolution, and they work. The questions before history are whether they can foster our common enterprises to deal with “externalities” to markets, and whether they can do so in democratic societies like ours, Germany’s, France’s and England’s, or whether those common enterprises require a strong central government like China’s, Hungary’s, Russia’s, and Turkey’s.

On that question, the jury is still out. If the CEOs who increasingly rule the West don’t step up to their human and practical responsibilities as our de facto collective leaders, not just this nation’s future but the very survival of democracy could be at stake.

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posted by Jay Dratler, Jr., Ph.D., J.D. @ 7/13/2018 01:54:00 PM   0 comments

12 July 2018

Will America follow Ancient Rome Down History’s Drain?

[For a comparison of quality in pols and reasons to recall our recent past, click here. For reasons why Trump’s trade war is headed toward a disastrous defeat, click here. For a brief note on how corporate rule is encroaching on American cities, click here. For our desperate need for voters to focus on good character, click here. For an analysis of facts and Kim’s myth about North Korea, click here. For a second post on training new voters, click here. For links to popular recent posts, click here.]

Some fear America descending into something like Nazism. But after eighteen month’s of Donald Trump’s presidency, that seems unlikely.

What drove the Nazis to power in Germany was the Great Depression and the worst inflation ever suffered by a developed nation. In contrast, our economy today is booming, with minimal inflation, full employment and solid growth. And while Germany’s pre-Nazi Weimar Republic was new, our American democracy has lasted 242 years. We have had enough time to develop secure and independent counterweights to executive power, including the judiciary, the federal bureaucracy and a robust two-party system. (Congress, at present, seems AWOL.) Even Judge Kavanaugh, Trump’s current pick for the Supreme Court, made a point of declaring our “independent judiciary,” not the Constitution itself, as the “crown jewel” in America’s rule of law.

So no, we Americans aren’t about to morph into Nazis anytime soon. The real danger—and the one far more probable—is that we follow the course of ancient Rome’s decline and fall.

The mechanism could be the very same one that set democratic Rome on its path to empire and swift decline. In modern terms, it was increasingly selfish and inept rule by corporations, i.e., by the nation’s business elite.

By the time Rome’s decay began in earnest, most of Rome’s Senators were also rich and powerful merchants. That’s how they got into the Senate: their common elite influence made them a clique, and their money allowed them to buy the people’s votes with “bread and circuses.”

As Rome’s international empire extended itself, so did their business empires. Their businesses became more complex and overextended, and they incurred greater debt. As time went on, they focused more and more on their own increasingly complex and precarious businesses, and less and less on the nation. Anthony Everitt described the process in his must-read book Cicero: The Life and Times of Rome's Greatest Politician—a book that I reviewed in another context in my very first essay on this blog.

After getting mired in debt, the Senators’ overextended businesses began draining the Roman state’s economic substance with loans, direct grants, and other subsidies. Little money or energy was left over to support the vast Roman Army, which kept peace throughout the Empire, let alone the people. There was no impetus to reward retiring soldiers, as they came home, with the traditional plot of land and elevated social status.

So for soldiering the Empire turned increasingly to foreigners. Sometimes it hired them as paid mercenaries. Often it attracted them with the promise of Roman citizenship (after twenty years of service!), or of simple freedom, for soldiers “recruited” essentially as slaves. Of course these sorts of soldiers were not terribly reliable. Eventually, in key parts of the Empire, they turned on their masters and chewed on Rome’s empire like a pack of dogs gnawing an abandoned roast pig.

In today’s America, the process of rule by corporations is as least as advanced as it was in ancient Rome before Caesar’s and Pompey’s civil war began the turn from democracy to empire. For proof, consider a recent exhaustive study of 1779 public issues. The vast majority of them were resolved as the corporations and our business elite desired, not the people. For additional proof, consider the recent Trump Tax Cut, which drained the economic substance of our nation, imposing a huge deficit, for the primary purpose of giving corporations and the rich enormous tax breaks.

The irony is that our corporations didn’t really need the government largesse. They were hardly in debt like ancient Rome’s at the time of its turning. Instead, they were awash in cash. Apple alone, as I pointed out in an earlier essay, had more cash reserves than France. Yet with their massive political contributions and control of Congress, our corporations were simply obeying the prime directive of the mini-empires that they are: to grow, increase, and wax richer, willy nilly.

As I have outlined in previous essays (see this one and this one), the megatrend toward corporate rule is an ineluctable part of human social evolution. It arises out of our evolutionary attachment to alpha-male rule in clans of thirty or fewer. It’s the primary means by which we humans reconcile impossibly complex high-tech societies of hundreds of millions of individuals with the imperative of specializing to master such diverse enterprises as air travel, nuclear power, computers and modern medicine. In order to specialize properly, we must have many corporations, giving many alpha males the chance to rule different corporate empires in “clans” much smaller than any modern nation-state.

Each corporation serves our evolutionary habits as a clan-like mini-empire. Together, they make our complex, high-tech society work. Competition among them insures competence and honesty and occasionally the innovation that drives our technological and social progress. Yet when corporations get too big, they can thwart progress both socially and technologically, as Big Fossil and its Koch Brothers (as advocates) have been doing while the Earth heats, energy transformation languishes, and their limited fuels run out.

There is no question that business corporations are here to stay. Not only do they produce the overwhelming majority of the goods and services that insure our survival and provide our creature comforts. They also produce the weapons that, while appearing to keep us safe and protect our security, also paradoxically threaten our global stability and our species’ survival.

So as our third millennium progresses, we can expect corporate rule to “go global” and to permeate every aspect of our lives. We can expect nation-states and their coercive governments to wither, at least relatively. Some day they may fall to a level of merely vestigial importance and little real power, analogous to that of the once-all-powerful Vatican today.

So what’s the solution? How can we avoid the fate of ancient Rome: degeneration and decay? How can we insure the survival of some form of democracy and human rights? How can we let free speech and personal liberty—things vital to any modern technocracy—survive in a corporate-ruled America, when little in our Constitution and nothing in our Bill of Rights applies to private actors like corporations, which today make their own law in contracts and enforce it in private arbitration?

There’s only one clear answer I can think of. Corporate CEOs must step up to the plate. They must assume responsibility not just for increasing their profits and the size of their corporate empires. Since collectively they are now the rulers of the world’s most powerful nation and most looked-to “democracy,” they must assume responsibility for social, as well as economic, progress. In particular, they must assume responsibility for keeping individual rights from vanishing under an avalanche of the kind of adhesive, mandatory arbitration clauses that our Supreme Court now promises to enforce routinely.

Today’s CEOs must also assume some responsibility for the workers who depend on them for a living. That’s just what Henry Ford did in kicking off our uniquely American “consumer society.” He made headlines, and a new America, by decreeing unilaterally a then-unprecedented $5-a-day “living wage” for his production-line workers.

It’s not too hard to conceive of our CEOs doing what must be done in light of the general default of government. Compare, for example, the average CEO to the average American pol, say, a member of the House or a state legislature. The CEO, on average, is smarter, better educated, more attuned to facts and reality, less driven by abstract dogma and ideology, more practical, more flexible, more experimental, and more data-driven. The only thing missing in the average CEO today is a deep sense of responsibility for being part of the oligarchy that nows rules America and perhaps some day the world.

Take Amazon, for example. You can lament its inevitable toppling of the local bookstore, other retail outlets, department stores, and some day perhaps even the local supermarket. But as it rolls its retail empire ever outward, Amazon fosters, in the corporate arena, two essential characteristics of American democracy: free speech and fair treatment. Amazon has abandoned the ancient seller’s credo “caveat emptor” (“let the buyer beware”). Instead it allows and even encourages unknown third parties, in numbers, to criticize its wares and warn would-be buyers of their defects and disadvantages. As for fairness, how much fairer can you get than allowing buyers to return merchandise after using it, for any reason, for up to a stated period (usually thirty days)?

I don’t mean to apotheosize Amazon or its CEO Jeff Bezos, whom I greatly admire. Recently, there have been complaints that Amazon, like Facebook with Russian propaganda, has been too slow in removing socially dangerous postings from its site.

In this complex world, nothing or nobody is perfect, let alone all the time. But some of the ways in which Amazon runs its expanding retail business empire suggest that business empires in general—even world-spanning ones—can be run with sensitivity to workers’ needs, human rights and other human needs that our Founders never dreamed private business would “govern” through contract and daily practice.

Human society, progress and happiness are not exercises in accounting. There is no single numerical “bottom line” that can assess them. So as business corporations come more and more to rule the world and the day-to-day course of human existence, their CEOs must concern themselves with the entire collective impact of businesses on humanity. They must become more like Tim Cook, CEO of Apple, who famously said,
“When we work on making our devices accessible by the blind, I don’t consider the bloody ROI [return on investment]. [We do] a lot of things for reasons besides profit motive. We want to leave the world better than we found it.”
Uneasy lies the head that wears the crown. In our new century, the mantle of real governing power is passing bit by bit from presidents, prime ministers, parliaments and bureaucracies to corporate CEOs collectively. This megatrend is growing as surely as power once passed from Church to State and from monarchies to legislatures. How human societies adapt to it will influence, if not determine, human happiness and progress for the rest of this millennium.

As in many things, America is in the vanguard of this transformation. Its CEOs can continue to do what they’re doing—using massive campaign contributions and propaganda organs like Fox and Sinclair to govern in their own narrow self-interest, just to broaden their empires and raise their “bottom lines.” Or they can assume the burden of real leadership and create a more just, fair, equal and democratic society, one product, service, contract, customer dispute and lobbying initiative at a time.

Whether they do the latter will determine, in large measure, whether the “life, liberty and the pursuit of happiness” that our Declaration of Independence promises continue under corporate rule far into humanity’s third millennium. If they fail to accept the challenge, our “shining city on the hill” could well go the way of ancient Rome.

Endnote: In an earlier essay, I accused America’s unique business schools of being partly responsible for transforming amoral corporations into immoral actors. Their primary errors have been focusing obsessively on profit and “monetizing” every corporate act. So instructing their students, they have encouraged graduates to become the bean counters of modern life, ignoring broader leadership and the moral sphere altogether, or downplaying them as practically unimportant.

If corporations are to play properly their growing role as de facto leaders of human societies, this inculcated tunnel vision must end. Of all people, the teachers of business men and women should emphasize their practical roles as oligarchical and societal leaders and their responsibility for leading beyond mere profit, lest their graduates help accelerate the same trends that led to ancient Rome’s demise. In this regard, business-school professors are far behind their legal counterparts, who long ago—and for business as well as broader reasons—abandoned the “profit-only” concept of corporate purpose for a far more flexible “business judgment rule.”

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posted by Jay Dratler, Jr., Ph.D., J.D. @ 7/12/2018 03:06:00 AM   0 comments