Sunday, October 24, 2010

That's RepubliCorp!

Inside Google's $1 Billion-a-Year Tax Cutting Strategy - BusinessWeek

Why is this legal?

Is there an economic rationale for this kind of game playing? I'm asking, 'cuz I don't see it.

Looks like good old fashioned tax evasion to me.

I'm sure Google - and the screaming demagogues on the right who insist that rigging the game in favor of always expanding the opportunity set for corporations in the name of global competitiveness - will claim it is legitimate tax avoidance, and not illegal tax evasion.

But without a solid economic justification, the only rationale for these kinds of transfer payments seem primarily, if not solely, designed to eliminate taxes that would otherwise be owed to the U.S.
Isn't that the very definition of tax evasion?

Inside Google's $1 Billion-a-Year Tax Cutting Strategy - BusinessWeek: - Sent using Google Toolbar"

The IRS used to frown on tax shelters, and work very hard to shut down those that didn't have some significant economic justification. Now they provide pre-approval for them?

Again: why?

Saturday, October 23, 2010

So You Want to Live in a Free Society? Left2Right: Elizabeth Anderson

In an earlier post, I enlisted Elizabeth Anderson in the exposing the hypocrisy of mainstream conservative thought about taxes. If it was not clear to my readers before, it should be by now: I LOVE Elizabeth Anderson!

As brilliant as that was, she outdoes herself in her series of posts entitled "So You Want to Live in a Free Society?", which I am reposting in their entirety below. Her writing is so succinct, and her logic so clear & unequivocable - if not damn near unassailable - that I could not even begin to do justice to her work by summarizing & commenting on it myself. The best I could was correct some typos.

If you want to see THE vision for what our Constitutional Republic is supposed to look like, read on. If you want to impress your college professor with your cutting edge grasp of political philosophy, digest it. And if you want to actually live in a better, freer society than the corporatist plutocracy that modern conservatism would have you submit to, work for it.

Left2Right: Elizabeth Anderson:
"May 27, 2005
So You Want to Live in a Free Society (1): What Hayek Saw

Anderson on Political Economy, Anderson on Taxes, Elizabeth Anderson: May 27, 2005

So far in my posts on taxation and political economy, I've mainly been making negative arguments--that this or that case against taxation to support social insurance doesn't work. It's time now to start building a positive case for social insurance and the taxation needed to support it. Most of you have heard arguments for social insurance based on ideas such as equality and compassion for the less fortunate. For many, such arguments cut little ice because they view the system being defended as incompatible with freedom. Ok, then, let's take freedom as our starting point and foundational value. Suppose you want to live in a free society--one in which everyone is free. What institutions, what types of distributive rules, what kinds of constraints on coercive action, what sort of property regime, should you support? Over this new series of posts, I'm going to lay out my view of what's needed to have a free society.

This first post in the series is dedicated to F. A. Hayek, who had a deep insight into what's needed. In Law, Legislation, and Liberty, vol. 2, Hayek argued that, for a society to secure the liberty of all, its distributive rules cannot aim at achieving some pre-established pattern of distribution based on individual need, desert, or merit. Instead, they should be purely procedural in form. Set up a system of fair, impersonal rules governing our interactions and applicable to all, let people choose freely from among the opportunities generated by acting within the constraints of the rules, and whatever distributions of goods result from following the rules will be just.

Hayek likened the procedural rules constitutive of a free society to the rules of a game:

namely a game partly of skill and partly of chance. . . . It proceeds, like all games, according to rules guiding the actions of individual participants whose aims, skills, and knowledge are different, with the consequence that the outcome will be unpredictable and that there will regularly be winners and losers. And while, as in a game, we are right in insisting that it be fair and that nobody cheat, it would be nonsensical to demand that the results for the different players be just. They will of necessity be determined partly by skill and partly by luck. Some of the circumstances which make the services of a person more or less valuable to his fellows, or which may make it desirable that he change the direction of his efforts, are not of human design or foreseeable by men. (Law, Legislation, and Liberty, vol. 2: The Mirage of Social Justice, p. 71)

In this passage, Hayek denies that the concept of justice can even apply to the outcomes of procedurally fair rules, for two reasons. One is that, because luck is inevitably involved in the outcomes of actions following fair procedures, the outcomes can't be relied upon to track individual merit or desert. The other is that the concept of justice can apply only to things that are deliberately willed, but the outcomes of free individual interactions within procedurally fair rules are unintended consequences of everyone's behavior. I think Hayek was mistaken on the latter point of usage. When we say that the winner of a contest won it 'fair and square,' we imply that justice would be served by awarding the prize to her, so it is just that she receive it. This is just a verbal quibble, however. The key point, on which Hayek was correct, is that the just outcome can't be determined ex ante, before people have played the game.

Why ought a society, to be free, distribute goods according to purely procedural rules? First, consider the leading alternative: what would a society be like if it tried to distribute goods according to some notion of individual merit or desert? Given that the outcomes of free exchanges inevitably include some element of chance, to adjust the outcomes so that they reflect some prior notion of merit or desert would require that the state look over everyone's shoulders to see how they are using their liberties. If, in the state's judgment, an individual used her liberties poorly or irresponsibly, then she is responsible for whatever disadvantages come her way and society will not compensate her for them. But if the state judges that her disadvantages were the result of mere luck, which is undeserved, then society will compensate her. There are of course other ways to draw the line between deserved and undeserved outcomes--indeed, too many ways, which put people into endless disputation over which way is the right way. (A look at recent literature on egalitarianism, full of disputation about how to draw the line between luck and desert, confirms this.) But all of the ways of drawing the line and redistributing goods accordingly require the state to make and enforce intrusive judgments about how people are using their freedom. People can't be free under such a system, where the state is monitoring their choices and passing moral judgment on them, with attendant material consequences. This is the ultimate busybody state.

Of course, not any random set of procedural rules will enhance freedom. Distributing all income according to a lottery, for instance, would be an instance of pure procedural justice. But that would be a crazy system to implement. What is needed is a set of rules that leave people free to offer mutually advantageous exchanges, so as to systematically give people incentives to behave in ways that overall enhance the liberty and opportunities of everyone else. Markets play an indispensable role in this, because prices signal to people where their productive efforts will be most valued by other people. In contrast with a command economy, individuals in a market system are free to take or leave any particular opportunity open to them, free to respond to or ignore any particular bargain or incentive offered to them. Moreover, market prices reflect the aggregate result of everyone's free decision to demand this or that, rather than some bureaucrat's notion of what they ought to be consuming. These are two extremely important ways in which a system of procedural justice based on voluntary market exchange secures everyone's freedom. However, the most important way in which reliance on markets enhances everyone's freedom concerns the dynamic effects of market competition in a private property regime in producing ever-expanding opportunities. I'll postpone to a later post an explanation of this, which I believe gives us the core freedom-based argument for private property.

A market system does not preclude all consideration of individual deserts. Importantly, when people violate the rules of a free society, we enter the realm of retributive justice. Here, we do know ex ante what the just results of a trial should be: namely, that all and only those guilty of violating the rules be punished (or, in a civil trial, compensate those they have harmed). The quality of a person's intentions--whether they did something intentionally, or unwittingly--matter here. But as long as people are abiding by the rules, the state takes no interest in their individual deserts. Consideration of individual deserts may also play a role in local distributions--say, within a firm. Employers often voluntarily implement merit-based pay structures, for example. But in a market system, that one's rewards reflected one's merits relative to the other employees in one's firm is no guarantee that one's rewards reflect one's merits globally--that is, relative to employees of other firms. For the size of the total compensation pie available to any given firm to divide among its employees is typically determined by chance factors--for example, an unanticipated shortage of some input, or sudden surge in demand for a product--independent of anyone's merit.

It might be thought that a system of pure procedural justice must place no constraints on possible outcomes for individuals, lest the constraints interfere with individual liberty. So pure procedural justice must permit catastrophe to befall the unlucky. Robert Nozick famously argued for this position in Anarchy, State, and Utopia (1977), encapsulated in his slogan that 'liberty upsets patterns.' This is the main reason (concern for individual deserts aside) that many egalitarians have objected to letting free markets determine distributions. But there is nothing in the idea of pure procedural justice, nor in the liberty it secures--to freely choose any of the opportunities generated by spontaneous interactions within the constraints of the rules--that precludes placing constraints on the outcomes.

To see this, we can pursue Hayek's analogy of markets with games by looking at the rules of some actual games. Games provide the paradigm of pure procedural justice, because there is no notion ex ante of who should be the winner, the same rules apply to all, and the rules are designed to be fair to all, in the sense of giving everyone a basically equal ex ante chance to win, supposing they play with equal skill. (Sometimes unavoidable asymmetries in a game give a slight advantage to a particular player--for instance, the one who gets the first move. But the rules of games are typically designed to prevent this advantage from being decisive, lest the game be boring for lack of uncertainty about the outcome; and access to that advantage is itself typically allocated by a fair procedure, such as a coin toss or roll of the dice.)

The game of Monopoly illustrates a system of pure procedural justice that matches Nozick's ideal of unconstrained outcomes. In Monopoly, each player's objective is to drive all of the other players into bankruptcy, and to end up owning all of the property in play. Monopoly is a game that does not constrain how low people can go, or how high they can go, within its rules.

Milton Bradley's game of Life illustrates a system of pure procedural justice with constrained outcomes. In the game of Life, each player's objective is to retire with the most money. Although wealth inequality is inherent to the game of Life, it constrains the outcomes in three ways. First, nobody goes bankrupt; everyone retires with something. (I suppose it's technically possible to retire with a negative net worth, but I've never seen it happen. I suspect that that the rules are designed so as to virtually preclude this possibility.) Second, in the course of the game, players collect 'Life tiles,' which give them windfalls. When the draw pile of Life tiles runs out, a player who lands on a 'Life space' gets to take a Life tile from any opponent. Strategically rational players will take their tiles from the richest opponent. Thus, the game of Life contains a redistributive element that in practice constrains how wealthy the richest player will get. Third, once people acquire assets (a house or a car), they can protect them by buying insurance. Insurance is a device that constrains middling outcomes by means of a ratchet--that is, it protects people who have already acquired some assets from losing them.

The game of Life illustrates how a system of pure procedural justice can consistently constrain outcomes at the bottom, at the top, and in the middle. It can even implement these constraints by way of redstributions from the top to those below. I don't pretend to have offered an argument that we should prefer a system that implements such constraints. I just want to point out that there is nothing in the idea of pure procedural justice, even one based on granting free markets a large role in determining distributions, that precludes setting constraints on possible outcomes.

Robert Nozick famously objected to John Rawls' egalitarian Theory of Justice that it was a 'pattern-based' theory of justice that, because it identified just distributions independently of how people play by the rules, is incompatible with a free society. He was wrong. Rawls, the leading egalitarian theorist of the 20th century, in fact endorsed a system of pure procedural justice that insisted on constraining the top and bottom outcomes of a market-based 'property-owning democracy.' As he made clear in the revised edition of his book, the idea of a 'property-owning democracy' is to use devices such as progressive taxation and rules promoting competition so as 'to disperse the ownership of wealth and capital, and thus to prevent a small part of society from controlling the economy and indirectly political life itself' (Theory of Justice, rev. ed., xiv-xv; thanks to Amit Ron for drawing this passage to my attention). (By the way, Rawls on these pages contrasted his preferred system of 'property-owning democracy' with a 'welfare state,' which aims to protect the unlucky from the worst misfortunes. The goal of a property- owning democracy is rather to secure the material conditions for democracy, in part against the threat of plutocracy. I'm not arguing for Rawls' position here; just highlighting the fact that egalitarians have more than one reason for constraining market outcomes. A concern for protecting the material conditions of democracy and equal citizenship is utterly distinct from compassion for the less fortunate.)

Hayek saw what Nozick failed to see: that Rawls' egalitarianism, while it constrained possible outcomes at the top and bottom, is in fact a system of pure procedural justice. It was not a 'pattern-based' theory, and hence not subject to Nozick's objection that a free society will invariably upset patterns. Here's what Hayek said about Rawls' Theory of Justice:

the differences between us seemed more verbal than substantial. Though the first impression of readers may be different, Rawls' statement which I quote later . . . seems to me to show that we agree on what is to me the essential point [that distributive justice in a free society must take a purely procedural form]. Indeed . . . it appears to me that Rawls has been widely misunderstood on this central issue (L, L, L vol. 2, xiii).

Widely misunderstood, not least by Nozick. Hayek continued his observations on Rawls as follows:

there unquestionably also exists a genuine problem of justice in connection with the deliberate design of political institutions, the problem to which Professor John Rawls has recently devoted an important book. . . . I have no basic quarrel with an author who, before he proceeds to that problem, acknowledges that the task of selecting specific systems or distributions of desired things as just must be 'abandoned as mistaken in principle, and it is, in any case, not capable of a definite answer. Rather, the principles of justice define the crucial constraints which institutions and joint activities must satisfy if persons engaging in them are to have no complaints against them. If these constraints are satisfied, the resulting distribution, whatever it is, may be accepted as just (or at least not unjust).' This is more or less what I have been trying to argue in this chapter. (L, L, L, p. 100, quoting Rawls, 'Constitutional Liberty and the Concept of Justice,' Nomos IV: Justice (New York, 1963), p. 102)

It's worth noting that Hayek's preferred system of pure procedural justice, while it differed from Rawls' in rejecting constraints on the top outcomes, did, unlike Nozick's system, insist on constraining the worst outcomes for individuals. He supported state action to abolish poverty in the sense of deprivation relative to objective needs (as opposed to relative to what others have) (L, L, L, vol. 2, p. 139).

I want to stress again that I'm not arguing for Rawls' system. It isn't, in fact, my preferred system. What I've argued for is the following:

1. Hayek was right to insist that the rules of distributive justice for a free society must take a purely procedural form.

2. Free market exchanges among private property owners play an indispensable and central role in any system of pure procedural justice that aims to secure and increase freedom for all.

3. A system of pure procedural justice in a system of private property and free exchange is consistent with rules that constrain outcomes at the top, at the bottom, and in the middle of distributions, and that implements those constrains by means of redistributive mechanisms.

June 03, 2005
So You Want to Live in a Free Society (2): Two Concepts of Liberty

Anderson on Political Economy, Elizabeth Anderson: June 3, 2005

In my previous post, I proposed that we undertake the following inquiry: suppose we accepted, as our primary and foundational value, the freedom of everyone as the basis for assessing institutions of government and property. What institutions and rules would we find compelling? Well, that would depend a lot on how we understand freedom. In this post, I'm going to lay out two conceptions of freedom that I think are indispensable for answering our question.

No, these are not quite Isaiah Berlin's famous 'Two Concepts of Liberty,' (see here) in which Berlin distinguished 'negative liberty,' understood as the absence of external constraints, from 'positive liberty,' understood as . . . well, that's the problem with the dichotomy. 'Positive liberty' has been taken to mean so many things that it's an incoherent jumble. To some, it means the actual ability to achieve one's goals; to others, self-mastery (autonomy, control over irrational impulses in the self); to others, participation in collective decision making (direct democracy); to others, union with fellow members of one's 'nation' into an autonomous state (whether or not this takes a democratic form), and on and on in no logical unfolding of any unified concept.

So I'm going to set aside the hoary negative/positive liberty dichotomy and offer two other notions:

1. Freedom as opportunity.
2. Freedom as non-domination.

By freedom as opportunity, I mean the economist's notion of one's opportunity set: all of the options available to one, which are inside one's budget constraint and whatever other constraints--legal, customary, technological, natural, etc.--apply in one's situation. Options include not just opportunities for consumption of commodities but for all kinds of action--travel, association, speech, worship, sports, sex, whatever. These are the options one is free to choose from, the options that are effectively accessible to oneself, by deploying the skills and resources that are at one's disposal.

By freedom as non-domination, I mean not being subject to another's arbitrary will, not living at another's mercy, as a servile dependent. Philip Pettit, one of the leading contemporary advocates of this notion of freedom, calls this the 'republican' (small r) conception of freedom, going back to Cicero, Machiavelli, Harrington, and the American revolutionaries. He contrasts it with what he calls the 'liberal' conception of freedom, which is Berlin's notion of negative liberty as the absence of external interference. But freedom as non-domination was a central value for Locke, Smith, and Mill, who are all canonical liberals. Locke said, 'freedom of men . . . is . . . not to be subject to the inconstant, uncertain, unknown, arbitrary will of another man' (Second Treatise, Bk. IV, par. 22). Smith argued that the leading virtue of the emerging commercial economy of his day was to liberate people from 'servile dependency on their superiors' (Wealth of Nations, Bk. III, ch. 4). Mill attacked the common law institution of marriage, which dissolved the legal personhood of a married woman into that of her husband's, precisely for putting women under men's arbitrary power, thereby reducing them to a condition of abject servitude little different from slavery (The Subjection of Women). We even find the classic formulation of liberty as non-domination echoed by Hayek: freedom is 'the state in which a man is not subject to coercion by the arbitrary will of another' (The Constitution of Liberty, p. 11).

These two conceptions of freedom overlap at the point where the exercise of one person's arbitrary will over another causes the other's opportunity set to shrink. But they are nevertheless distinct notions, as Pettit has rightly stressed in his book, Republicanism. A person could be undominated, and yet have poor opportunities. Consider, for example, a group of peasants who have acquired title to their land and thereby liberated themselves from their landlord, who previously was free to barge into their homes, rape their brides, command them to work for free on his fields, and make them grovel before him. The peasants would have cast off lordly domination, but still, as measly hardscrabble farmers, have few opportunities in their low-tech rural economy.

A person could also be dominated, and yet have rich opportunities. Consider a courtier who enjoys the King's favor. The King, just because he likes his toady, has granted him a sinecure; he has an open invitation to eat and sleep grandly in the King's palace, a summer estate, and access to the royal hairdresser (a very important perk: all those powdered wigs need tending!). His opportunities are wide, but there's a catch: the King could swipe them all away in a fit of distemper and even send him to the dungeon without a trial, for any or no reason. Now, so long as the King doesn't do this, the courtier enjoys a high degree of opportunity freedom. Yet he is still dominated, still subject to the King's arbitrary will. Knowing this, the courtier adopts a slavish manner: he fawns and flatters the King, bowing and scraping before him, in order to stay in the King's favor. He is very careful with his words. Dependent on the King's arbitrary will, he is servile and hence unfree in an important sense, even if the King is unlikely to take away his privileges. He lives at the King's mercy. A free person, by contrast, would enjoy personal independence, in the sense that his opportunities are not held hostage to another's arbitrary will.

Now I contend that if you want to live in a free society--one in which everyone is free to the extent possible--you ought to be deeply concerned with both opportunity freedom and with freedom as non-domination--what I shall subsequently call 'personal independence.' You'll want to evaluate the institutions of government and property, as well as the culture of civil society, to see how well they secure and advance everyone's freedom in both senses.

So far, this is just set-up. Subsequent posts will develop their implications.

June 15, 2005
So You Want to Live in a Free Society (3): The fundamental freedom-based argument for private property

Anderson on Political Economy, Elizabeth Anderson: June 15, 2005

In this series of posts, I've been developing a view about the rules we should institute if we want to live in a free society. On the view being constructed, we take freedom as our foundational value, in terms of which institutions, including property rights, are justified. In taking freedom as our starting point, we treat property rights as instrumentally valuable for promoting freedom. Particular property rules are to be justified according to how well they promote freedom. This approach is distinct from one that starts with certain assumptions about what we own, as natural rights theories do, or that assumes that we are entitled to certain property rights in virtue of moral desert or productive contributions. I've already argued that such approaches are incompatible with capitalism. Arguments for private property rights based on freedom, however, are compatible with capitalism.

Of course, it matters how freedom is defined. In my last post, I explained two conceptions of freedom: as one's opportunity set, and as personal independence (non-domination). In this post I'll just be looking at the notion of freedom as opportunity sets, and see where it takes us. I'll be arguing that this notion of freedom delivers, fairly straightforwardly, a strong case in favor of institutions of private property, in a way that narrower notions of freedom as bare non-interference cannot do.

Some commentators to my last post suspect that I've stacked the deck already with this notion of freedom as opportunity sets. Rob Perelli-Minetti claims, for instance, that 'I don't think most economists who are neither socialists nor some sort of Marxist would find the notion of liberty as opportunity set either helpful or meaningful.' To the contrary, it's a conventional way of representing freedom among non-Marxist, non-socialist economists. Amartya Sen has done the best work formalizing this notion of freedom in the mathematical language of economics. He shows how it yields a neat freedom-based argument for free markets. (See Sen's extensive discussions of representations of freedom in terms of opportunity sets in his Rationality and Freedom. Note especially ch. 17, where he presents a nice proof of certain freedom-optimizing properties of competitive market equilibria. His proof moves neoclassical analysis from its traditional focus on welfare to a focus on freedom--something any libertarian should welcome.)

Arbitrary Aarvark worries that I've strayed too far from Hayek with my account of freedom as opportunity sets. But Hayek clearly stated that the fundamental justification for private property rights and free markets lies with the expansion of freedoms, understood as opportunities, that it provides. The proper aim of legislators in passing laws, he says, is 'increasing the chances for all . . . in the sense . . . [of] increasing the opportunties that will become available to some unkown persons.' (Law, Legislation, and Liberty, vol. 2, p. 126). It's worth quoting him at length:

Since rules of just conduct can affect only the chances of success of the efforts of men, the aim in altering or developing them should be to improve as much as possible the chances of anyone selected at random. . . . All the law can do is to add to the number of favorable possibilities likely to arise for some unknown person and thus to build up an increasing likelihood that favorable opportunities will come anyone's way. (L,L,L, 129-130).

For Hayek, the fundamental justification of property rights and rules of free exchange is to expand the 'range of [favorable] opportunities' (p. 130)--that is, freedoms--that people have. I heartily agree.

Still, suspicion lurks of a stacked deck, and appeals to Hayekian authority may not be enough to allay them. Some people think that the freedom that matters is a formal notion of freedom as non-interference with whatever opportunities one has, however few and undesirable those opportunities may be. They suspect that if we go beyond this notion of freedom as non-interference, toward the alarmingly 'positive' notion of freedom as actual opportunities to which people have effective access, we'll move inexorably toward some awful 'redistributive' policies that libertarians hate.

The latter suspicion, that notions of opportunity freedom lead us toward 'redistributive' policies, is correct, as I'll be arguing in later posts. But the former suspicion, that I have stacked the deck by selecting a conception of freedom tailored in advance to lead to that conclusion, is mistaken. You can't head these developments off at the pass by insisting on evaluating institutions strictly by the formal notion of freedom as non-interference. For that path leaves one unable to defend capitalist private property, too.

Fellow-blogger Don Herzog alluded to the reason why freedom-as-non-interference is an inadequate conception of freedom in a recent post. If the only kind of freedom that matters is that no one intentionally interfere with one's formal freedom of action, and not that one's opportunity set be large and full of worthwhile options, then freedom-lovers would have to oppose traffic laws, stop lights, and so forth, for interfering with freedom of movement. The result of a lack of such laws, however, is not actual freedom of movement, but, in areas of high traffic density, gridlock. (And, in areas of high traffic flow, grave danger.) To be sure, in a state of gridlock, one has the formal freedom to choose any movement in one's opportunity set--which amounts to being able to rock forward and back a couple of inches from bumper to bumper, getting nowhere. Some freedom! By contrast, if we give up certain formal freedoms--to run red lights and stop signs, to drive indiscriminately across lanes--we get in return a vastly expanded opportunity set, including the ability to actually get to places one wants to go, more safely and quickly than if we hadn't given up those freedoms. The point of formal freedom of movement--the right to move around, without coercive interference by the state or other people--is that it is instrumental to expanding actual opportunities to move around where one wants to go. Merely formal freedom of movement, with nowhere to move to, or nowhere worth moving to, is not an end in itself. Different configurations of formal freedom of movement--different traffic laws--are justified by the extent of the opportunities for safe freedom of movement they enable. Give up a little freedom-as-non-interference, get a big bundle of freedom as real opportunities to move around to worthwhile places in return. A pretty spectacular bargain in terms of freedom, if you ask me.

Now here's the rub: the fundamental freedom-based justification for private property has exactly the same form as tbe freedom-based justification for traffic laws. So it depends on accepting a conception of freedom as opportunity, rather than freedom in the formal sense of non-interference. For suppose our conception of freedom were simply that of non-interference. Then the state of perfect freedom would be the earliest stage of Locke's state of nature, in which all the earth is held in common and everyone has a right to take whatever they want from it. No one would have the right to coercively exclude anyone else from the use of any part of it, since that would involve interference with their freedom of action. This entails that in the state of perfect freedom-as-non-interference, no one would be entitled to private property.

(Remember, if freedom is to be our foundational value, then private property has to be justified in terms of freedom, and we can't help ourselves to any prior notion of natural rights to property, against which we define a moralized notion of non-interference with antecedently given rights. That would be begging the question. Granted, in the perfect state of freedom-as-non-interference, people couldn't seize your body, or take what you are physically holding or wearing, without coercively interfering with your freedom of action. But if they just seized those acorns you had gathered and left on the ground for a moment, they would not be interfering with you. No coercion would have taken place, since they would not have achieved their aims by bending your will to their desires. Locke didn't start with any antecedently given conception of natural rights to property, either. Rather, he justified natural rights to property in terms of their instrumental value in enabling people to advance their moral duties under the fundamental moral law--to protect, preserve, and promote human life.)

The trouble with trying to justfy private property in terms of freedom-as-non-interference is that private property essentially involves securing the owner's opportunity freedom at the expense of everyone else's freedom-as-non-interference. This has to be a losing argument, if freedom-as-non-interference is the freedom that matters. For private property essentially involves the use of coercive power to exclude others from using it. It essentially involves coercive interference, or the threat of interference, with everyone else. Common property in the earth and in things does not have this feature. Viewed from the static point of view of freedom-as-non-interference, the institution of private property involves a net loss of freedom.

This is a reductio of the conception of freedom as non-interference as the fundamental measure of freedom, not an attack on private property. (As I've mentioned several times before, I'm an enthusiast for private property! I want everyone to have effective access to it!) What matters more fundamentally than freedom-as-non-interference is opportunity freedom. Once we shift to a conception of freedom as opportunities, the case for private property is evident. A society containing nothing but common property would be utterly impoverished and insecure. People wouldn't make productive investments, for fear that others would just seize the results, leaving them poorer than before. Others would find it easier to simply take things, rather than to try to get access to valued items by being of service to others. Properly designed private property regimes massively expand everyone's opportunity freedom by reversing these perverse incentives. They establish entitlements that dramatically increase the probability that individuals will gain from making productive investments. They structure incentives so that people do better by being of service to others--thereby expanding others' opportunity freedom--than by taking what others have made, and thereby reducing their opportunity freedom in some zero-sum (or even negative-sum) game.

The fundamental freedom-based argument for private property is dynamic and opportunity-based, not static and formal. From a static point of view, private property entails a net loss of formal freedom of action, just as traffic laws do. From a dynamic, opportunity-based point of view--one that considers the consequences for future freedoms of these sacrifices of formal freedom--properly designed private property regimes dramatically expand people's real freedoms (opportunities). Give up a little formal freedom-as-non-interference, and get a big and growing bundle of opportunity freedoms in return. Hayek was right: this is a spectacular bargain. But to grasp it as a bargain from the point of view of freedom, you must embrace a conception of freedom as opportunities, not merely as non-interference.

To sum up, I've argued in this post that:

1. Opportunity freedom is a more fundamental and important type of freedom then freedom-as-non-interference.

2. Private property in things can be justified in terms of opportunity freedoms, but not in terms of pure freedom-as-non-interference.

3. The fundamental form of a freedom-based justification for a coercive law is: if you give up this freedom, you'll get a much more valuable set of freedoms in return.

July 27, 2005
So You Want to Live in a Free Society (4): Personal Independence and the Rule of Law

Anderson on Political Economy, Elizabeth Anderson: July 27, 2005

In this series of posts, I've been developing a view of the requirements of a free society. I've introduced two notions of freedom--as opportunity, and as personal independence or non-domination. Last time I argued that freedom-as-opportunity is needed to justify private property, and is an indispensable idea for assessing social arrangements from the perspective of freedom. In this post I'll argue that freedom-as-personal independence is also a necessary part of a free society. Recall that to be free in this sense is to be in a state in which one 'is not subject to coercion by the arbitrary will of another' (F. A. Hayek, The Constitution of Liberty, p. 11). Despite my fealty to Hayek's own formulation (which in fact follows a very long tradition), some might suspect that I have tried to stack the deck with some left-wing, radical notion of freedom that capitalist freedom-lovers can do without. Once again, the suspicion is right that this notion of freedom-as-personal-independence has some political implications that laissez-faire theorists will not like, as I plan to show in later posts. But once again, freedom-lovers can't do without this notion, because it's necessary for the rule of law, without which capitalism cannot flourish.

Imagine a state in which people have wide opportunities, but enjoy them only at the pleasure of a dictator. The dictator is easy-going and mostly lets his subjects do as they please. But every so often he gets cranky and orders the arrest of a subject who has displeased him, or he gets greedy and orders the confiscation of a subject's possessions. He doesn't have to prove that his subjects broke any laws that could warrant such punishment. He can throw people in jail or take their possessions without a trial. He can do this to any of his subjects at his whim.

What does this say about the subjects who have not been arrested or had their possessions seized? Are they free, or not? In the opportunity sense of freedom, they are still free. But their opportunities are implicitly conditioned on the permission of the dictator. They enjoy them as a mere grant of privilege from him, not as a right against him. This has consequences beyond the relative insecurity of their freedom. It also means that they had better toady up to the dictator, lest he take away their opportunities. People who must grovel in order to retain their opportunities are not fully free. They lack freedom in the sense of personal independence.

There is a way to secure people's personal independence from state agents. It's called the rule of law. In a state governed by the rule of law, the agents of the state can act only pursuant to prior, duly enacted, publicized laws of general application specifying what may be done to whom and for what reasons. People's liberties can only be taken away by due process of law. The point of the rule of law is to limit the discretionary power of state agents within tight bounds. When acting for the state, they cannot do as they please, but only as publicized, general, duly enacted laws authorize them to act.

Without the rule of law, private property rights, and hence capitalism, cannot flourish. We see this point being made in China today, where oil prospectors have filed suit against the state for seizing their wells and paying them a small fraction of what they are worth. Here's the background: In 1994, China, eager to develop its own energy resources, wisely decided to permit private oil prospecting. Its bet on private enterprise paid off hugely when thousands of people of very modest means signed development contracts with the Oil Ministry, scrimped together their savings along with that of their family, friends, and neighbors, and drilled over 2,000 productive wells in Shaanxi Province. State officials, once they saw how profitable these investments were, seized the wells for the government, paying investors a fraction of their investment--and more importantly, a fraction of the market value of the wells. Given the quasi-feudal mode of state governance in China, where local officials treat their governmental domains as integrated with their private property, and tax the locals to generate revenue for their firms, it is reasonable to assume that the officials plan to skim the profits of the oil wells for themselves. 'Let the people take the risks; we'll take the profits' is the best translation of the explanation by the mayor of one Shaanxi town, who called the experiment of allowing private prospecting 'a beautiful mistake.' Beautiful for him, a mistake for the poor prospectors who did all the work, relying on the state's lying promise to recognize their claim to property. The people are fighting back with an unprecedented class action suit against the government, demanding either full restitution of their wells or better compensation for their investment.

What's emerging is a major test of the rule of law and hence the future of capitalism in China. So far, the rule of arbitrary state will appears to be winning over the rule of law. The lead lawyer for the prospectors has been arrested, some of the plaintiffs have been arrested, others are in hiding, and the state has banned the plaintiffs' lawyers from talking to the press. The choice is stark: shall it be klepto-capitalism for the ruling class, feudalism for everyone else, or shall all be free to become capitalists, with rights to private property? The irony is heavy: can today's Communist Party/company town ruler-owners point to anything that distinguishes them, morally, from the oppressive landlords the original Communists fought to overthrow? More and more frequently, rioting peasants and villagers don't see much of a difference. Their vision is 20/20.

No doubt, the readers of this blog will join me in expressing outrage at China's actions. But we may differ in our grounds. For some, the outrage consists in its violation of a sacred and inviolable natural right to private property. For me, the outrage consists in exploitative lies, corruption, and gross violations of the rule of law. The two concerns converge in a common condemnation of the state's oppression of its people in this case. But they diverge in other cases, notably concerning the scope of the state's power of eminent domain. More on that in my next post.

August 02, 2005
So You Want to Live in a Free Society (5): Common Property, Common Carriers, and the Case of the Conscientious Objecting Pharmacist

Anderson on Political Economy, Elizabeth Anderson: August 2, 2005

Imagine that you lived in a place where you had to ask someone else's permission to leave your property. Even if the other person always gave permission, you wouldn't be free. You'd be under conditional house arrest, with the other person your discretionary jailor. The case wouldn't be much better if you had a choice of 5 people to ask, any one of whose permission would let you leave your property. Then those 5 would be your joint jailors. You'd have somewhat wider opportunities, assuming their decisions were not coordinated. But you'd still be dominated by them. To be fully free, it's not enough just to have wide opportunities. People must be free from the prospect of domination--the power of others to arbitrarily put them in a state of subjection, where they must beg to get an opportunity critical to living a free life. It's worse, from the perspective of freedom, to be deprived of a critical opportunity by the arbitrary exercise of another's will, than to lack it due to natural causes or lack of technological development. It's worse to be unable to cross an unnavigable river because others arbitrarily forbid one from using the bridge, than because the technology for building a bridge at that point is lacking. In the first case, one lives in a state of subjection to others; in the second, one is merely technologically poor.

The 'house arrest' case does not require that the 'jailors' be state agents. They could be private property owners, in a property regime that enforces an absolute right against trespass, and in which an entire territory is completely privately appropriated, such that some parcels of private property are wholly surrounded by other parcels. Then the owners of the surrounded parcels would all be effectively trapped by the owners of the surrounding ones. They'd be unfree. They'd be unfree even if helicopter travel were feasible, and private property owners didn't have airspace rights, so one could fly over their property. A property regime that makes escape from one's property either massively expensive, inconvenient, rarely scheduled, and likely beyond one's budget, or conditional on someone's arbitrary will, is nearly as bad from the perspective of freedom as one that conditions it on someone's arbitrary will alone.

I'm going to argue that consideration of freedom in cases like these yields:
1. An argument in favor of keeping certain parcels of land in the commons;
2. An argument in favor of the common carrier rule (the common law rule that operators of transportation, communication, and hotel services offer their services to all, without discrimination);
3. An argument in favor of applying the common carrier rule to pharmacists and other providers of medical care.

Robert Nozick considered cases like these (Anarchy, State, and Utopia, p. 55). He rightly argued that in such circumstances, property rights against trespass should yield to the compelling liberty interest of trapped persons in being free to leave their property. Nozick's answer entails that the bundle of rights that should go along with a parcel of private property may properly vary with the impact the exercise of those rights has on the liberty of other people. It recognizes a point I made in an earlier post: in securing an exclusive right to the owner, private property takes away certain liberties of others. This raises the question of whose liberties should prevail in determining the proper scope of a property right.

Nozick answered this question by invoking what he called 'the Lockean Proviso': a diminution of one's freedoms due to the private property appropriations of others is ok as long as it doesn't make one worse off than one would have been in a state of nature without any private property (Anarchy, State, and Utopia, p. 175). The case of being trapped makes one worse off than if one could move around, which one was free to do in the pre-appropriation state. So Nozick can claim that surrounded individuals have a right to an easement across the property of the surrounding owners under the Lockean Proviso.

Brad DeLong has offered a devastating internal criticism of Nozick's Lockean Proviso. The Proviso permits taking away people's natural rights (to use the whole earth freely--which they enjoy before there is any appropriation) just so long as this makes people no worse off in terms of utility. Utilitarians are of course happy with this. But the whole point of Nozick's system is to oppose such tradeoffs of rights against utility. DeLong argues that Nozick is inconsistent: he's got to allow such tradeoffs to get private property off the ground, but after that, he wants to prohibit them.

To be consistent, Nozick should have judged property regimes in the currency of freedom, rather than utility. Moreover, Nozick should have considered that the important comparison is not between having his specification of a private property regime and having no private property, but between alternative specifications of property regimes. If freedom is what matters, then we should choose the specification that best promotes the freedom of everyone. It is not sufficient to justify Nozick's specification of private property rights that it satisfies the Lockean proviso, if lots of alternative specifications would equally well satisfy it, but generate a superior package of freedoms for people generally. We should choose the specification that generates the best package of freedoms overall.

Given that every specification of a private property right secures some freedoms at the cost of others, we need a rough metric of the value of freedoms to determine which specification would be best. In general, the answer will depend upon two factors:

1) Whether each person has a more compelling interest in exercising a given person-specific liberty in himself (for example, P deciding whether P shall leave P's property) than in exercising that liberty in the person of another (P deciding whether S shall leave S's property); and

2) Whether permitting the liberty to be used, transferred, or constrained in the ways specified has dynamic effects that generally enhance people's overall package of liberties.

(Let me introduce a notation to help us compare the freedoms made available by rival specifications of property rights. We can ignore the liberties that the rival specifications have in common, and consider only where they differ. Since every property right trades off some liberties for others, we can denote property right X in terms of the ways it differs from Y as follows: X = [people have liberty a, and lack liberty b]; Y = [people lack liberty a, and have liberty b].)

Considerations of the first type typically speak to individuals' freedom in the sense of personal independence or non-domination. Some liberties in the person are so critical to freedom that each person has a more compelling liberty interest in possessing them in their own person than in possessing them in the person of anyone else. For each person P, P has a stronger liberty interest in having the freedom to determine what P shall think, whom P will befriend, when P will leave P's property, etc., than in having the freedom to determine what anyone else S shall think, whom S will befriend, whether S will leave S's property, etc. In short, the liberty package [I'm secured against being a slave to anyone, I can't own any slaves] is a more valuable package of freedoms than the package [I could be a slave to someone, I could own slaves]. Such considerations generate grounds not just for 'self-ownership,' but for inalienable rights in one's own person. (And no, dynamic considerations of free contract do not always override such arguments. Having the right to sell oneself into slavery does not make one freer than not having the right to sell oneself into slavery, because having that right weakens one's bargaining position and thereby shrinks one's opportunities. Opportunities others would have offered to one in a regime in which one enjoys an inalienable right against enslavement they may now offer only on condition of accepting enslavement.)

Considerations of the second, dynamic, type usually speak to individuals' opportunity freedom, and do most of the work in determining how to specify the bundles of rights properly attached to any parcel of property external to the self. Yet, as the 'house arrest' cases show, considerations of non-domination or personal independence enter here as well. The liberty package [I can leave my property without having to ask anyone else's permission; others can cross my property if they need to do so to leave their own property] is superior to the package [I can't leave my property without asking someone else's permission; I can forbid anyone from crossing my property].

So far, I have shown that system B, in which all property is privately appropriated, combined with easements for everyone to cross their neighbors' property, secures more freedom than system A, in which all property is privately appropriated, and everyone has strict rights against trespass. Yet there are compelling liberty interests that B would not satisfy. Each of us has a compelling interest in being free to have visitors to our homes, without having to ask anyone else's permission. System C: [all property privately appropriated; anyone has the right to cross anyone's property en route to someone else's home] secures a superior package of freedoms than either A or B. Still, C could be faulted for its failure to limit easement rights. A few people crossing one's lawn is no big deal; but big crushes of people will invade one's privacy and leave one without the freedom to enjoy one's property in peace. C also fails to satisfy our compelling liberty interests in having spaces where we can freely meet larger groups of people than we can fit on our properties, and where we can meet lots of people who might gather spontaneously.

What we really need to have a free society is a system in which each property owner (and renter) has unconditional access to a network of common roads and parks, that links every parcel of private property to every other parcel, so that everyone has access to every place and to common spaces. Such a system could be instantiated in the following ways:

D: Property left in the commons (not privately appropriated, nor under formal collective ownership and management), and by convention dedicated to transport and communication;

E: Private property open to the public on non-discriminatory terms--that is, where any member of the public has a right of access to it, and the private property owner is not allowed to arbitrarily exclude anyone from using it, although they may charge a toll for its use. In other words, privately owned toll roads subject to a common carrier rule.

F: Public property collectively managed for purposes of public transport and communication, and funded by general taxes (not tolls).

There is no sound liberty-based argument for G: private ownership of all roads without a common carrier rule. That is the equivalent of letting some individuals arbitrarily trap others, unable to travel to a destination where they have a right to be. The possibility of competing private roads to the same destination doesn't change this calculation. That's like the case of being surrounded by 5 property owners rather than 1: having five jailors doesn't make it ok for any one of them to arbitrarily deny you the right to cross their property, if you need to do so to escape your own property. If private operation of public access roads is to contribute to a free society, it must be subject to the common carrier rule.

In general, F offers a superior package of freedoms to either D or E. F is more free than D because it allows improvements to common paths that can increase the traffic they can bear, as well as traffic lights and traffic rules than can vastly increase opportunities for mobility. F is more free than E because it doesn't tax communication with others at the margin, as toll roads do. (Thus, the poor and pedestrians generally have a superior package of travel opportunities under F than E, because they can walk on the roads for free; and we all gain opportunities from free communication with others, which would be discouraged if each personal interaction carried a toll.) There may be exceptions to the general superiority of F over E. Sometimes public toll roads can be justified (e.g., fast toll-based lanes designed to relieve highway traffic jams); sometimes privately operated toll roads are (e.g., if the state is too poor or fiscally improvident to manage construction of public roads, and too corrupt to be trusted with tolls). But these cases are peripheral.

F and E share a common feature: In a free society, it is impossible for private individuals to avoid supporting the freedom of others to do things of which they disapprove. Under F, we all pay taxes to support the public roads, which enable people to travel to the church of their choice, however much we may disapprove of their choice. There is no conscience exemption to withhold that portion of one's taxes that supports a road to a church that one believes promotes a false religion. Nor would freedom be gained on net by modifying E (under the common carrier rule) to H: giving private operators of public road accommodations a limited conscience exemption to the common carrier rule, to prevent individuals from using their road to travel to the church of what they regard as a false religion. The package [I'm free to travel to the church of my choice; I can't prevent anyone from traveling to the church of their choice] is superior to the package [road operators are free to block me from using the roads needed to travel to the church of my choice; I am free to block others from using my road to travel to the church of their choice]. To those private road operators who would find it unconscionable to facilitate others' travel to the church of what they regard as a false religion, the proper response of a free society is not to let them block the travel, but to advise them that they had better get out of the road business.

There are many public accommodations that secure a superior package of freedoms under a common carrier rule than under a rule that permits arbitrary discrimination on the grounds of individual conscience, or other arbitrary grounds. The Civil Rights Act of 1964, barring discrimination in access to public accommodations such as buses, restaurants, and hotels on grounds of race, is based on the claim that the package [I am free from discrimination to use any public accommodation; I am not free to use my ownership of a public accommodation to advance a racial caste system] secures a superior set of freedoms than the package [others are free to try to make me an untouchable in civil society; I am free to use my ownership of a public accommodation to advance a caste system]. Note here that considerations of non-domination are important over and above opportunity. Even if someone else is willing to offer me a room at a hotel without regard to my race (so I don't lack the opportunity to stay overnight in some city), this does not remove the subjection inherent in anyone trying to make me a subordinate caste, by depriving me of a hotel room on account of my race.

This argument generalizes. The operators of a private telephone system should not be able to claim a right of religious conscience to eavesdrop on telephone conversations, so they can cut off blasphemous phone calls. The operator of an ambulance service that takes public calls, who is a Christian Scientist, may not claim a right of religious conscience to refuse to transport any emergency case to the hospital, unless it is for the treatments permitted to a Christian Scientist (bone setting, pulling an infected tooth). A Talibanesque taxi driver may not conscientiously refuse to serve women unaccompanied by male relatives, on the ground that he might thereby be facilitating their sinful consorting with the opposite sex. And similarly, a pharmacist may not claim a right of religious conscience to refuse to fill a prescription for birth control to women, or to single women, on the ground that he might thereby be facilitating the sin of fornication.

In the original debates over the Civil Rights Act of 1964, opponents claimed that operators of public accommodations had a sacred right to freedom of association, as if all that was at stake was the right to exercise one's idiosyncratic tastes over whom one wants to serve. (Even if that were all that was at stake, it should still have to yield to the common carrier rule, which underpinned the CRA.) But the 'taste' for not serving blacks was inseparable from the desire to reduce them to an untouchable caste. Similarly, the 'tender religious conscience' against filling birth control prescriptions is inseparable from a religious world-view that regards women as properly confined to a mothering caste (with their sexuality limited to reproductive purposes). The Christian pharmacist who refuses to fill birth control prescriptions differs only in degree and not in kind from the Talibanesque taxi driver who refuses to serve women who are unaccompanied by their male relatives.

The potential availability of competing pharmacists who assert no conscience exemptions is no argument in favor of allowing them in some cases. For there may be no such providers. (Recall the frequency of this situation for blacks in the U.S. before 1964, where they met comprehensive discrimination in many markets in the North, even in the absence of Jim Crow laws.) Even if there are some in a distant county, or on the Internet, this is like the person who can escape her property only by helicopter. Even if there are some in the same county, this is like the person who has five independent jailors rather than just one. If women in many towns and counties are not to be turned into a subordinate, unfree caste, limited to the opportunity package [motherhood, celibacy] by the dominion of others, then pharmacists must not have a right to deny them access to birth control. The freedom to use one's pharmacy as an instrument for promoting one's religious beliefs is nothing compared to the freedom of escape from subordinate caste status-- and even to the freedom of being branded with the badges of subordinate caste status (in the case where women have other easily accessible pharmacies willing to serve them, but still may be snubbed by this or that pharmacist).

There are some public accommodations of such vital interest to each person that each has a compelling liberty interest in unfettered access to it, without being subject to the arbitrary decisions of those who operate them. The right to operate a public accommodation is not the right to inflict one's religious beliefs on others. The pharmacist's license is a license to practice pharmacy for others, not a license to practice one's religion on others. The state, in the name of freedom, properly enforces a common carrier rule in such cases.

January 14, 2006

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Friday, October 22, 2010

Thursday, October 21, 2010

The British Conservatives Have No Theory - Grasping Reality with Both Hands

I love DeLong's poker analogy!

This is what may well happen if the current crop of cut taxes-reduce regulation-limit government-reduce spending crowd gets into power.

A 9% hit to GDP? Holy shit! And you thought the 6% GDP decline that we (U.S.) took during the worst of the Great Recession was bad.
Another million net jobless? Are we really so angry that we will vote to cut off our nose to spite our face?

The British Conservatives Have No Theory - Grasping Reality with Both Hands: "- Sent using Google Toolbar"

Isn't this what happened during the Great Depression?

First, the markets went to hell in a hand basket, the real economy plummeted, leading to massive unemployment. All of which started under the Republican's watch, whose earlier laissez-faire free market policies arguably both led to the economic meltdown and exacerbated them. FDR gets elected as a savior and throws federal government spending into overdrive - based on Keynesian policy - to stand in the breach and attempt to kick start the economy back to life. Recovery begins, but is slow and exacerbated by drought, a inadequate monetary policy exercised by the independent Federal Reserve Bank system, and Smoot-Hawley tariff-induced collapse of international trade. Republicans & conservatives react with howling fury, forcing FDR in 1937 to cut taxes & reduce spending to balance the federal budget. The economy again falls like a rock.

Deja vu all over again?

Implications, Debating Points & Strategies: What Tea Partiers Really Want | By Jonathan Haidt -

In the Saturday/Sunday (10/16-17/2010) edition of the Wall Street Journal [Review section], Johnathan Haidt - professor of psychology at the University of Virginia - lays out a remarkable analysis of the psychological underpinnings of the Tea Party movement. What is truly driving the passion behind this angry, populist insurgency, he claims, "is less about liberty than a particularly American idea of karma."

While I will leave it to Haidt's article to sketch out the why's & wherefore's and otherwise provide the details of this thesis, I wanted to focus on some of the implications of what this may mean. And, in turn, offer up some thoughts as to how best to leverage this psychological foundation to debate specific policy & to posit political strategies for the post-mid term election future.

Important Insight #1:
Focusing on narrow, pejorative explanations of Tea Partiers' motives is a mistake.

While some elements of the movement may indeed be racist (they're all white!), greedy/selfish (they just don't want to pay taxes!), or gullible (they've been hypnotized by charlatans like Glenn Beck), similar things may be said of any number of other movements, including ones on the left. Such explanations are either provably untrue (they're not ALL white, most willingly pay taxes, and they are - perhaps surprisingly, to some - somewhat better educated than you would expect gullible racists to be), or simply unhelpful. How can you expect to dialogue with people when you're calling them greedy, ignorant racists?

I confess: I have been guilty of doing just that.

[Then again, my audience is not comprised of Tea Party activists. And this blog is not so much meant to generate civil discourse amongst opposing viewpoints as it is an outlet for a moderate mind (mine, in particular) that feels threatened by the purging miasma of extremist poison emerging all around it.]

The key is that doing so not only prevents dialogue & understanding, but it misses the point. It allows liberals to disregard the moral claims of Tea Partiers. And if those moral claims are not addressed, we only invite perpetual war.

Important Insight #2:
Tea Partiers conception of karma - i.e., that for every action or deed, there is an equal and commensurate reaction that [eventually] balances the moral books (virtue will be rewarded, vice will be punished) - assumes that no divine [much less human] intervention is required.

As Haidt reports, for Tea Party activists karma is just a universal law, like gravity, that somehow or other, just works. Given the Tea Partiers' predominant religiosity, perhaps they believe it simply God's will ('tho I think the rationalist Libertarian component of the movement might have something else to say about that)? Whatever the mechanism, in their view karma is automatic... albeit delayable.

Accordingly, if it can be demonstrated that this assumed automaticity is not in fact true, Tea Partiers might be more inclined to accept the need for human intervention - in the form of government - to provide moral accountability. Buddhism teaches that karma, ultimately, is an illusion; if Tea Partiers' can be led to a similar understanding, a more reasonable debate about policy might well follow.  [Memo to Rene Weber, my old Professor of Religion at Rutgers: Help me out here!]

For the God-fearing elements who see His hand everywhere, the argument might be framed along these lines:

  • God gave humanity free will.
  • In doing so, He gave mankind resposnibility for balancing his collective affairs, at least during this earthly life.
  • Having sworn off his previous techniques for enforcing karmic justice - global deluge [Noah & the Flood], property damage & schizophasia [Tower of Babel], turning disobedient wives & entire metropolises into pillars of salt [Lot's wife, Sodom & Gomorrha] - God made mankind his designated karmic enforcer.
  • Accordingly, in the American Constitutional system, government - as the embodiment of the collective will of the people - has a responsibility to see justice done.

Important Insight #3:
In the Tea Party world view, only a relatively limited set of human characteristics determine success/failure outcomes, and these can be modeled along a spectrum of three independent axes:
  • Kindness-Cruelty;
  • Honesty-Deceit;
  • Hard Work-Laziness.
Kindness, honesty and hard work will (eventually) bring good fortune; cruelty, deceit and laziness will (eventually) bring suffering.

There is no room, anywhere, for mere Luck.

Simple, random chance has no part in their success equation. In their view, all human outcomes must be entirely controllable by human actions & choices. [Which seems wildly at odds with their religious views... if men are entirely in control of their destinies, whither God?]

Place of birth or genetic constitution, accidents and epidemics: none of these apparently have any influence on individuals' success or failure in life. So sayeth the Tea Party Patriot.

This attitude towards Luck - or, rather, this refusal to even recognize Luck - would seem to explain the large divergence between American and European forms of governance. European cultures tend to give more credence to Luck as a factor in the relative success of individual lives, and have chosen relatively more socialistic forms of governance to compensate for its effects.

But, what would happen if Tea Partiers were confronted, continually & on a large scale, with irrefutable empirical evidence that SHIT HAPPENS? Regardless of whether the shit-or or shit-ee is kind, honest or hard working or otherwise.

You would think that at least some of them would be familiar with the concept of insurance. More than likely, the vast majority of them actually own substantial insurance policies on everything from their private property, their health and even their liability towards others. If they truly believe in moral karma that solely functions along dimensions that are completely a matter of personal responsibility for actions & choices, how do they explain insurance - whether provided via private, commercial markets or through the government?

Hammer home the incongruity of their fundamental belief system - American moral karma - with the reality of this worldly life - shit happens - and slowly, but surely, honest Tea Partiers seeking to reconcile the two will come to a place that will allow for reasonable compromise. 

I hope.

Important Insight #4:
Tea Partiers' commitment to karma does not admit the possibility of collateral damage.

Those guilty of corruption and irresponsibility in creating today's ongoing financial and economic crisis have escaped the consequences of their wrongdoing. First they were rescued by President Bush - e.g., the Bear Stearns & AIG rescues, TARP - and then by President Obama - the Financial Recovery Act a/k/a the stimulus bill. Bailouts sent unimaginable sums of the taxpayers' money to the very people who brought calamity upon the rest of us, and all the while these same scoundrels were pocketing record bonuses [presumably for dealing with the fallout from their prior bad decisions]. The great lament of the Tea Party wails loudly: Where is punishment for the wicked?

In the mind of the Tea Party, karmic punishment MUST be allowed to fall upon the necks of the wicked.

Now, I have to admit, there is an instinctual appeal to this logic. But, the problem with this kind of misanthropic tunnel vision is that it completely ignores the fact that doing so would also punish millions of  innocent victims.

If all of the bad actors were allowed to collapse into utter bankruptcy, the financial system as a whole would also collapse and drag the rest of us along with it into the maw of the maelstrom.

How can we know this? Just look around. Only Lehman Bros. was allowed to fail, and AIG was merely threatened with a similar fate. The result was a global financial panic:
- frozen credit markets;
- a staggering loss of trillions of dollars of wealth as the stock markets plummeted, wiping out years of retirement savings;
- further erosion of the housing market, as millions of home owners saw the equity in their homes evaporate;
- a sharp deceleration of the economy (a 6% drop in annualized GDP in one quarter alone);
- mounting job losses (10% unemployment, monthly new unemployment claims of nearly 800,000).

Moreover, we have a very precise historical parallel that we can draw upon: the Great Depression.

Almost exactly the same set of facts & circumstances occurred leading up the Great Depression of the 1930s - a stunning stock market crash, a tidal wave of bank failures, massive unemployment, etc.

What distinguishes then from now was that the Hoover administration did absolutely nothing about it. Much like our modern day Tea Party, Hoover was the very exemplar of conservatism. Hoover believed unquestioningly that government had absolutely no business in rescuing the economy, for to do so would be to create "moral hazard" (post-Gilded Age code speak for "violating Karma").

In the aftermath of the Great Depression, most Americans recognized that capitalism required safety nets.  FDR was elected to a record four consecutive presidential terms precisely because he embraced this reality. For the most part, the ideological debate was over, and most of America accepted the notion that there needed to be limits placed on allowing karma to run its course. Even Libertarians understood that giving free rein to karmic justice must stop at the point that it was about to punch everyone else in the nose.

Eighty years of subsequent growth and prosperity later, and apparently we have forgotten that lesson.

The lesson needs to be re-learned. If Tea Partiers get their wish, and come into power during these mid-term elections and implement their radical agenda, we are likely to get just that opportunity. The emergence of a double-dip recession stemming from the flawed policy prescription favored by Tea Partiers should give liberals, moderates - and, yes, even Libertarians - the chance to make the point all over again that punishing the wicked makes little sense when doing so also punishes the innocent.

Important Insight #5:
The current make-up of the Tea Party is a shaky coalition of strange political bedfellows: Social Conservatives and Libertarians. This unlikely alliance is unlikely to endure.

Based on extensive studies & surveys that Haidt has conducted over time, on more karmic notions of fairness, conservatives and libertarians begin to split apart.

For example:
In response to propositions about the positive, rewarding aspects of karma - e.g., "Employees who work the hardest should be paid the most" - everyone agrees, but conservatives agree more enthusiastically than liberals and libertarians, whose responses were identical.

Similar divergences occur about the negative side of karma. When asked whether they conur with the proposition that "Whenever possible, a criminal should be made to suffer in the same way that his victim suffered", liberals reject this harsh notion, and libertarians mildly reject it. But conservatives are slightly positive about it.

In a study of 152,000 people who filled out surveys at, led by colleague Ravi Iyer of the University of Southern California, Haidt & Co. found that libertarians are morally a bit more similar to liberals than to conservatives.

Quoting Haidt's article directly now:
"Libertarians are closer to conservatives on two of the five main psychological "foundations" of morality that we study—concerns about care and fairness (as described above). [note: refer to the article for further explanation]

But on the other three psychological foundations - group loyalty, respect for authority and spiritual sanctity - libertarians are indistinguishable from liberals and far apart from conservatives.

We call these the three "binding" foundations because they are the psychological systems used by groups—including religious groups, the military and even college fraternities—to bind people together into tight communities of trust, cooperation and shared identity. When you think about morality as a way of binding individuals together, it's no wonder that libertarians (who prize individual liberty above all else) part company with conservatives."

My advice?  Focus on wedge arguments that should split off libertarians from their current conservative comrades.  There is already an innate tension between the wings of the movement, which perhaps explains a large part of the inchoatenes of their message to date. Apply a little nudge, and their cohesiveness should fly apart.

Haidt already points out some obvious pain points. Demonstrate clearly how some conservative ideals - American Exceptionalism, for one, championing the idea of America as a Christian nation, for another (not to mention Creationism as science equal to Evolution, or their anti-Constitutional defense of 'traditional' marriage) - are incompatible with libertarian ideals of fairness & liberty, and surely the coalition will begin to unravel faster than a ball of yarn rolling down a hill.

The economic justice argument I make in Insight #4 above should work particularly well on Libertarians:  The desire to punish the wicked on Wall Street (or irresponsible home buyers) should not be allowed to impact all the rest of us by damaging the economy. Conservatives' right to extend their fist towards these evil-doers ends at a point before it reaches everyone else's noses.

As Haidt summarizes:
"The tea-party movement is a blend of libertarians and conservatives, but it is far from an equal blend, and it's not clear how long it can stay blended. The movement is partially funded and trained by libertarian and pro-business groups—such as FreedomWorks, the organization run by Messrs. Armey and Kibbe—whose main concern is increasing economic liberty. They may indeed "just want to be free," particularly from regulation and taxes, but the social conservatives who make up the great bulk of the movement have much broader aims."

Amen, brother.

What Tea Partiers Really Want By Jonathan Haidt -

Sunday, October 17, 2010

Economist's View: "United in Our Delusion" about Taxes

Mark Thoma is a professor of Economics from the University of Oregon who shares camp with Krugman & DeLong, among others.

In a recent post to his Economists View blog (Economist's View: "United in Our Delusion" about Taxes:), he distills the essence of my current angst into such crystal clarity I can do little more than regurgitate it here... except maybe emphasize the thought bubbles [I wish] I had written myself...

"A quick post between classes:

United In Our Delusion, by David Cay Johnston, ...Americans are in a fury about taxes, or so the headlines tell us, with Tea Partiers convinced our president is a socialist wealth redistributor who plots to take from the productive to give to the indolent, tax-eating, illegally resident, and nonwhite.

Angry voters are eager to throw out incumbents wholesale in favor of new leaders who promise to slash their taxes, we are told on the broadcast news shows every day. At the same time, numerous polls that did not make the headlines show that large majorities favor the president's proposal to retain the Bush-era tax cuts on the first $200,000 or $250,000 of taxable income.

When it comes to how wealth is distributed in America, we probably hold radically different views depending on our political affiliation, age, income, and gender, right? ...


We don't think differently. In fact, Americans think very much alike on wealth distribution. Amazingly alike. High-income or low, Republican or Democrat, young or old, male or female, Bush voters or Kerry voters, Americans are united in what they believe is the ideal distribution of wealth. And they are just as united about what they imagine to be the distribution of wealth in America.

The problem is that neither the ideals we broadly share, nor our estimated distributions of wealth today, bear much relationship to reality.

And therein lies the explanation for how our nation became caught up in such a contentious, nasty, sometimes threatening, and potentially violent debate about tax policy. When it comes to wealth and taxes, the vast majority of Americans are modern Know-Nothings. [Bozat says: Pinning the Know-Nothing pejorative on the vast majority is perhaps unkind and impolitic. But the term is one of my absolutely favorite historical political monikers, and so I give Thoma extra slack for putting it back into circulation.] The disconnect between belief and reality is being exploited by those who laugh all the way to the bank with their tax savings and the burdens they have subtly shifted off themselves and onto the rest of us.

The ideal wealth distribution chosen by the 5,522 people who took the online survey has the top fifth of Americans owning between 30 percent and 40 percent of the wealth. That means Americans believe the ideal distribution of wealth is that of Sweden. [Bozat says: Memo to Bonjuman Shinez - See? I am not alone in thinking Sweden has something to offer us, besides just bikini teams!] Moreover, 90 percent of Republicans share that belief. (Actually, 90.2 percent, as the survey coauthor, Prof. Daniel Ariely of Duke University, noted when we met to discuss his work.) ...

What did those surveyed think was the actual distribution of wealth in America? They estimated that the top fifth of Americans owns about 60 percent of the wealth. The reality? Eighty-five percent.

So what about the bottom 120 million of us? Those surveyed said that ideally, the bottom 40 percent would own 20 to 25 percent of all wealth. When asked to estimate the share of wealth actually owned, the collective guesses were between 8 and 10 percent. Reality: 0.3 percent. ...

Mark Mellman, a top Republican pollster, told a radio audience last week that he thought the poll results showed how American culture is innately interested in fairness. Like Ariely, Mellman was most intrigued by the fact that those surveyed got the ownership share of the middle quintile about right in their estimates of actual distribution. Where people got it wrong was at the top and bottom. ...

So why are so many Americans passive in the face of years of stagnating wages, reduced benefits, and mounting anxiety about whether work will run out before retirement benefits kick in? Why are the better-than-average-income Tea Partiers kicking up a fuss and not the actual poor, the 120 million Americans who own a small fraction of 1 percent of our wealth?

Ariely sees this as a form of learned helplessness. What's that? 'Imagine you have two dogs in two rooms,' he said. 'One dog hears a bell followed by an electric shock. This dog has a switch he can press with his paw that stops the shock, and he learns to press it when he hears the bell.'

The other dog does not hear any bell to signal that the shock is coming and has no switch to turn it off.

'So now you move the two dogs and put them in two new rooms where they can move from one side of the room to the other over a low partition,' Ariely explained. 'One of the sides of the new room gives from time to time electrical shocks, but if the dog jumps over the partition to the other side of the room, he can escape the shock. When the shock comes, the first dog quickly learns to jump from one side of the room to the other, but the second dog just lies there and whimpers. This is learned helplessness, because when you cannot make a connection between cause and effect, you become depressed and just take it.'

Ariely's theory fits with what my unemployed brother discovered. Eric went out on his own last week among his blue-collar friends in rural Oregon to talk about the severe lack of jobs there, the low wages without fringe benefits for those who do find work, and their concerns about the future.

'The people I live with and work with and talk to work at McDonald's or as security guards or on a road crew -- they are high school graduates thinking only about paying their bills and have no idea about politics in this country,' Eric told me.

'If you try to engage these people about the state of the economy, just in passing, they have no idea, and they don't care,' Eric wrote. 'They know bad things have happened to them, they know they can barely pay their bills. They are scared, but they don't know why things have gotten so bad, and they don't know how to find out anything. That's what scares me -- they don't want to find out, because they say knowing won't change anything. They say what they know doesn't matter because they can't do anything about it.'

Eric detects a seething anger beneath the surface that the right charismatic figure could ignite. ... [Enter stage left: Boazt the Laughing Prophet! LOL]

The interests doling out money for Tea Party events have hired consultants who are superbly talented at exploiting this politically toxic amalgam of helplessness and lack of knowledge about taxes. Add in the racist elements drawn to the Tea Party, and the armed militias whose numbers Time magazine says have tripled since President Obama's election, and there is reason to worry. Doubt that? Google this: Timothy McVeigh hero. ...

Ariely sees the ideas of Milton Friedman, the late Nobel laureate in economics, as a major source of the thinking underlying this brooding malaise. I agree and see Ronald Reagan as the popularizer of Friedman's smug ideas.

'Friedman ideology has deeply influenced our beliefs,' Ariely said. 'Even Obama's statements show this in how he talks about taxes. Americans have this general belief now that government is bad, taxes are bad.'

These ideas are easier to market than dandruff shampoo. Taxes, bad. Government, bad. Tax cuts, good. Less government, better.

It is much harder to explain that without taxes there is no wealth, that without taxes there is no civilization, that without taxes criminals take life and property with no redress except violence. ...

Taking their cue from Friedman, even if they do not know who he is or why they believe as they do, many people spout as unchallengeable truth that high taxes are the source of our economic woes, that the Bush tax cuts made us all better off. ...

As a nation we now know, thanks to Ariely and Norton, that we are united in our ideals about wealth distribution. We share an important value about how the fruits of our society should be spread. Now we need to debate the effects our tax rules have on wealth distribution piling up at the top and draining from the bottom. We need a debate based on facts that appeals to our better natures.

We will probably get past the efforts to use taxes to inflame rebellion just fine. It is unlikely that we will be torn apart by someone mixing fertilizer and diesel, two useful products never intended to be combined into one, unless the demagogues and the oligarchs promoting tax hatred give away matches as Tea Party favors.

I discussed the results from this poll here in the context of why, if people do not think the income distribution is fair, they still oppose redistributive policies.

- Sent using Google Toolbar"

Why We Can't Afford Unfettered Capitalism

My stepson, who is pursuing a graduate degree in corporate finance in hopes of someday landing a job at a high-paying venture capital firm, recently told me that he thought it was ultimately futile to try to regulate business or for the government to implement counter-cyclical economic policies in an effort to ameliorate the social effects of capitalist boom & bust cycles.

In his view, booms & busts are inherent to capitalism, and any effort by governments to try to constrain their effects are doomed to failure because - like a metastasizing cancer that mutates relentlessly & invades previously disease-free organs in response to environmental pressures (and / or the demise of the original hosting organ) - markets always find a way around the constraints. Ultimately, government efforts are inefficient over the long run relative to simply allowing market failures run their course, and thus are sub-optimal. Never mind what happens to individuals in the short run. Laissez-faire fatalism.

As to the first part of his assertion - that boom and bust cycles are inherent, inevitable features of our modern capitalist economy - I can only partly agree. They are certainly an inherent risk; they are not, however, inevitable unless they are allowed to be.

Hyman P. Minsky's Financial Instability Hypothesis is one of the oft-ignored economic theories that explain the cause(s) of the Great Recession of 2007-09. Too bad most mainstream economists - particularly ones responsible for shaping actual government policy (Larry Summers, I'm talking to you, among others) - either don't know Minsky or poo-pooed his work without much thought.

Minsky's hypothesis suggests there may well be government policies that could mitigate the inevitability of booms and busts and irrational exuberance-fed asset bubbles. In particular, policies that clearly insulate socially utile financial hedging activities from the realm of socially useless financial speculation activities are recommended. And policies that aggressively seek to prevent financial speculation activities from devolving into Ponzi schemes are absolutely necessary. Bernie Madoff & Sir Allen Stanford were only as inevitable as the limited government, minimal regulation mindset allowed them to be. More detailed Minsky-ian policy ideas can be found here.

Over the past three decades, the very concept of regulation has undergone an ideological assault. Yet regulation should not be equated with red tape.
A sound regulatory structure provides a basic code of conduct that actually enhances the business of finance, by surrounding it with a sense of confidence and stability.
It also makes sure businesses operate within the broader social interest. In reality, a basic framework for proper behavior endows businesses like finance with a sense of legitimacy
—just what is sorely lacking under current conditions.

The Causes of Rising Income Inequality

Why have the rich have gotten so much richer?

In a 2005 study, Robert J. Gordon and Ian Dew-Becker found that the top 10 percent of earners saw their share of overall income rise from 27 percent in 1966 to 45 percent in 2001. But that study also documented that fully half of that increase came from the relative gains made at the very top of that spectrum - those at the 95th percentile and above.

That study also distinguished between "superstars," whose incomes were market-driven, and CEOs, whose incomes were "chosen by their peers." In their new survey, the authors carve out a third group - high-income professionals, especially lawyers and investment bankers, whose pay is market-driven but who don't enjoy the benefits of "audience magnification," whereby the superstars can fill entire arenas or sell recordings to millions of people.

Their point: income inequality is growing even among the top 10 percent of earners as the superstars and CEOs increase their pay faster than lawyers and investment bankers. But at least the pay of the superstars, lawyers, and investment bankers is market-driven. The pay of CEOs is not.

[Note: However, the study does not recognize the extent to which the markets for superstars, lawyers and investment bankers may impose externalities, and thus even these classes of upper income earners cannot be considered entirely justified. If external costs were factored into, say, investment bankers' and CEOs' compensation (e.g., impacts on public debt, unemployment levels, and reduced output / consumption arising from incompetently structured, speculative, engineered financial products of minimal social utility that contribute to asset bubbles & financial instability) then such compensation would almost certainly be significantly lower. If, in turn, the lowered compensation was redistributed to lower income groups via the tax and transfers systems, or utilized to fund a form of social insurance that benefits middle-class job creation, income inequality would be reduced.]

"CEOs, through compensation committees and inbreeding of boards of directors, have a unique ability to control their own compensation," the authors write. "Furthermore, if a director approves a higher compensation package, that may subsequently lead her to receive more compensation at her own firm."

They cite one study of 1,500 firms that found that the compensation earned by the top five corporate officers in 1993-5 equaled 5 percent of their firms' total profits during that period; by 2000-2, that ratio had more than doubled to 12.8 percent. The trend was caused in equal parts by arbitrary pay decisions by corporate boards and by the showering of stock options on CEOs, they conclude.

Furthermore, the survey cites a study showing "ample evidence that firms work to disguise the magnitude of CEO pay," such as lifetime healthcare, below-market-rate loans, and above-market-rate loans when CEOs defer their compensation, to lessen shareholder outrage.

Such research "is important because it tells shareholders what to expect and where their outrage constraint should be set," the authors write. [Thus my relatively higher hopes for even greater shareholders' rights reforms.]

Controversies about the Rise of American Inequality: A Survey (NBER Working Paper No. 13982) "- Sent using Google Toolbar"

Saturday, October 16, 2010

The United States of America, Inc.: Whither Now Representative Democracy?

In its most important and controversial [and, likely, most unsustainable] decision to date, on January 21, 2010 the Supreme Court of the United States (SCOTUS) confirmed its unabashed love affair with de facto Corporatocracy as the presumably rightful system of America's governance.

In Citizens United v. Federal Election Commission, the conservative Roberts-led court, with Scalia, Thomas & Alito firmly in tow & cheer leading from the sidelines, overturned 100 years of seemingly settled American jurisprudence to opine that corporations are entitled to the same unfettered political free speech rights of individual [human] citizens under the First Amendment to the Constitution. Cynically tossing aside even lip-service to their pledges of judicial restraint, respect for precedent and their supposed disdain for activist jurisprudence, this clan of purported Strict Constructionist & Originalist legalists, now, SCOTUS asserts, corporations have virtually unrestrained rights to spend from their economies-of-scale-swollen coffers to influence elections & political outcomes.

Businesses can, to the extent that direct advocacy advertising & propaganda spending (among other things) are determinative, buy elections.

And all this with a supposedly moderate Justice Kennedy providing cover for [indeed, championing] their ill-considered scheme to disenfranchise individual citizens from the value of their votes and their authority over elected representatives.  So much for liberty and justice for all.

How they reconcile this result with their professed purist Strict Constructionist, Originalist impulses is beyond my meager reckoning.

For instance, in his amicus briefs to the court, Jeffrey D. Clements - former Chief of the Public Protection and Advocacy Bureau in the Massachusetts Attorney General’s Office & currently a litigation and appeals principal of Clements Law Office, LLC - "seeks to show that if the Court deems Congress and the states to be powerless to restrict corporate political expenditures, [then] the piecemeal and unwarranted fabrication of a corporate rights doctrine that has gathered pace over the past three decades [Austin v. Michigan Chamber of Commerce, McConnell v. FEC] will have reached an extreme conclusion."

Clements argues that "[s]uch a conclusion by the Court would not only be wildly out of touch with the realities of corporate power in contemporary American life, but [also] would disregard the Court’s proper separation over 200 years of the constitutional rights of people from those claimed by corporations."

But perhaps instead, given that Clements' arguments were not persuasive to the razor-thin 5-4 majority, an even better depiction of their incoherence can be found [here] in Richard L. Hasen's subsequent critique in the June 4, 2010 edition of the Michigan Law Review (Michigan Law Review, Vol. 109, 2011)?

In any event, I remain befuddled.

If independent campaign spending do not corrupt the political process (Kennedy et al's words, not mine) and the identity of the spender need not be disclosed, then SCOTUS, if it is to follow the majority's doctrine, will eventually have to allow unlimited campaign spending, even by by foreign nationals!!!

The dystopian future global corporate plutocracy is at our doorstep, yet SCOTUS' conservative majority that this is what our founding fathers plainly intended?

I hardly think so. Jefferson would be rolling over in his grave.

Think about that, Gadsen flag-waving Tea Baggers; your political bed mates & supposed Constitutional guardians are turning over your "common sense Americans" to the tender mercies of:
Walmart, Exxon Mobil, Chevron, Conoco, Bank of America, Ford, GE, JP Morgan Chase, Goldman Sachs (USA)
Royal Dutch Shell, ING Group (Netherlands)
Toyota, Japan Post Holdings (Japan)
Sinopec, China National Petroleum, State Grid (China)
AXA Insurance, BNP Paribas (France)
Allianz, Mercedes Benz (Germany)
Reliance Industries, Tata Motors (India)
Gazprom, Lukoil (Russia)
Petrobas (Brazil)
Samsung (Korea)
Hon Hai Precision (Taiwan)

Maybe if they all paid US income taxes, that'd be just fine and dandy, huh?

What do we do in the meantime? Two articles forthcoming in the Harvard Law Review propose methods for countering the political corruption that some fear will result from corporate contributions.

Samuel Issacharoff suggests that reforms designed to increase campaign contributions by non-corporate donors would help to diminish corporate influence. I am not so sanguine about this suggestion. A court that holds corporations are full persons should have no trouble finding a 14th Amendment Equal Protection problem with such reforms and strike them down, too.

He also favors prohibiting such spending by entities uniquely capable of distorting government policy, such as government contractors. Again, I am not convinced this would be anywhere near a politically satisfactory solution. Government contractors are only a [relatively small] portion of the larger problem, which is the attempted transformation of our Republic - ostensibly a representative democracy - into a corporate plutocracy.

In a separate article, co-authors Lucian Bebchuk and Robert Jackson contend that decisions regarding political spending differ from ordinary business decisions, and thus they propose new rules to align corporate political speech with shareholder interests. I am a bit more convinced that this could be a more effective route towards a comprehensive solution. Empowering individual shareholders & pension boards to become greater counter-balances to corporate management's self-interests seems a no-brainer good idea; the trick will be how to structure a system so as to prevent concentrated corporate interests from overwhelming those of individuals. Remember: Wall Street owns a lot of capital, not just Main Street (in fact, maybe more... I'll have to look it up).

In the last article of SCOTUSblog's Academic Roundup, Deborah Hellman (via the Minnesota Law Review) offers a way out of the confusion by challenging the assumption that contributing money to campaigns constitutes speech protected by the First Amendment. She points out that money facilitates the exercise of many constitutional rights and yet spending in furtherance of other rights is not always constitutionally protected.

The Court now takes the assumption as a given, and is unlikely to abandon it in the near future (unless Kennedy can be swung over, or if Scalia or Thomas grow old & retire earlier than I fear). But, maybe, just maybe Hellman's position can provide a face-saving way out for the majority after the consequences of their short-sighted decision comes back to haunt them in future cases?

Academic round-up : SCOTUSblog: "- Sent using Google Toolbar"

Finally, we can also fight.

The question is ultimately a political one, and those of us who believe the Citizens United decision was fundamentally wrong can organize together to reverse the narrative.

One such effort is coordinated, which has a proposed Constitutional Amendement and an accompanying resolution petition drive that points a way. Personally, I think the proposed Amendment needs some work (e.g., possible carve-outs to avoid religious or State expression?).

But, it seems a good place to start. Otherwise, we all become at will employees of USA, Inc.