Posts Tagged 'Economics'

Porcupines And The Social Contract

Porcupines and the Social Contract

Sometime back there was an image on the internet of a snake that had swallowed a porcupine. I didn’t click on the image to see the video of the event as the photo was sufficiently vivid. That image came back to me after seeing photos online of Trump and members of Congress beaming into the camera having reached a happy compromise over the debt limit in order to facilitate hurricane aid to the affected states. The Republican Speaker of the House did his best to make it seem like a good time was being had by all. The Republican party, I think, swallowed a porcupine when they climbed onto the Trump bandwagon and they know it. The daily damage and destruction inflicted on the American social contract by the Trump administration has revealed a number of people who are now realizing they too have swallowed a porcupine.

Not long after hurricanes struck Puerto Rico, the President explained that Puerto Rico is an island way out in the ocean, thus making aid difficult. Despite begging from elected officials, prevarication characterized the presidential response to the emergency and attendant tragedy. Puerto Rico was still engaged in an ongoing humanitarian emergency weeks later as well as a verbal duel with the president, who visited the island and demonstrated his concern for the people by throwing packages of paper towels to them. Officials at the Federal Emergency Management Agency said the government and its partners were providing only 200,000 meals a day to meet the needs of more than 2 million people. As if the Puerto Rico tragedy were not enough, just a week or so later a gunman, firing from a hotel room 39 floors above street level in Las Vegas, shot and killed 59 people and injured more than 500 who were attending an outdoor concert. The President’s response?  It’s “premature” to discuss guns.

In some respects the porcupine seems to be going down easily. The President is eagerly joined by Congressional Republicans on certain issues. Speaker Paul Ryan in discussing the Republican sponsored tax cuts, explained that the middle class would somehow benefit from those cuts that were mainly for the wealthy. Middle class people would pay more to fund the cuts. Oh, yes, of course. So far the proposal has been stalled and new, sweeter proposals offered. This is the same Paul Ryan who led the Republican assault on Social Security and public education which should also give people a clue to just how destructive his party and this President are intending to be to American society and our limping democracy. The assault on public education, by the way, is the same strategy employed by demagogues and dictators throughout history; control education to control the minds of children and young adults so they become easier to manipulate as a general public. Control information with falsehood or distortion to control the public in general. And, let’s privatize public education to make a profit while we are at it.

  

What we have here is an untethered reality, a president who believes whatever he says is real and true. It is true, of course, that people can believe and not believe the same thing simultaneously. It’s a form of solipsism, the idea that anything outside your own mind doesn’t exist so you can inhabit your own reality simultaneously with inhabiting the outside social world shared with others. This self-defined world is fueled by what is sometimes referred to as “existential fatigue” which has been defined as a personal search for meaning and purpose in a world increasingly bankrupt of both. It isn’t a complicated matter for the people who voted for Trump who know his  background of financial cheating, child molestation, self-admitted sexual assault complete with comments on how to approach that. Yes, good church-going, self-defined “Christians” remain supportive of the President and his agenda. What to make of this? A remarkable fluidity of perception, loose commitment to a social contract, and a fungible belief system. Now, while the porcupine is getting a lot of attention it’s the snakes facilitating the porcupine that we have to watch out for. And the snakes had better understand that once swallowed, the Porcupine has only one path out.

Circling The Drain

In mathematics there is a concept called Pareto efficiency, it describes the impossibility for one side of an equation to keep taking without depriving or diminishing  the other side. A common sense idea in which the losing side inevitably goes to zero. Because of the finite quality of available resources namely money, Capitalism is a Pareto efficient economic system – the rich get richer and the poor get poorer. In other words it is a zero-sum game – I win and you lose. This raises an interesting question: how can a so-called “Democratic” society  tolerate or thrive within a anti-democratic economic model? As a consequence of too few having too much too many have too little of this stuff to spend. It doesn’t require a PhD in Economics to figure out that if too few have to little to spend the general economy will suffer. So, a truthful Economics 101 should tell us that the imbalance caused by greed is a foundational cause of economic failure and, eventually, social collapse.

It is important to understand that aside from accumulating as much as possible, there is no moral or ethical code associated with the Capitalist belief system. To understand this consider: A pharmaceuticals company acquires the rights to a vital medicine which has been selling at $56.64 per dose they raise the price overnight to $317.82 for the same amount and at the same time raise the compensation of their CEO from $2,453,456.00 to $18,931,068.00. The drug went up 461%  and the CEO’s salary went up 671%. As they say, nice work if you can get it and pity the people who need the drug to survive.

Pick up any economics texts and you’ll be treated to an amazing variety of theories explaining why we had a crash in 2008 or why the world’s (and our) economy has failed to regenerate from said crash in spite of various governmental interventions. One theory after another is generated by learned professors at various universities and think-tanks. Of course none of this wisdom accords with what we experience in our everyday lives but it sounds profound. The reason why the economy isn’t recovering is actually quite simple – we live in a Pareto efficient economic system, that is to say, too few people have too much of available monetary resources and too many have too little.

The totality of economics can be expressed this way: 2+2=4 and 4-2=2 but more importantly, 4-4=0. That’s it, that’s the whole story in a nut shell. For all of us unwashed, economics is a simple matter of you either have it or you don’t. As of July of this year 13% of men between the ages of 25 and 54 have dropped out of the labor force consequently they don’t have any “it” to spend. The unemployment rate continues to hover around 4.9% of which 26.6% are considered long-term unemployed. Also, what the numbers don’t tell you is what kinds of jobs are available and what wages they are paying. Do they pay minimum wage? Can people support their families on this level of income? Can employed people afford health care? Is there such a thing as “disposable” income? Did you know that a large percentage of enlisted military families rely on food stamps or that the US has one of the highest rates of child poverty in the entire world? That’s real world economics, folks.

Capitalism is a dualistic belief system which, while promising fair distribution of material and social wealth, delivers quite the opposite. Now that 1% of the population owns 40% of the United States’ wealth it seems plain to see things are out of balance. Although many writers such as Thomas Piketty and Charles Lehmann, have produced incontrovertible evidence  of the imbalance, the general public seems to be in denial. To argue against inequality earns you various imprecations such as, you are a Socialist or even worse a Communist. Most using these terms don’t have a clue as to what Socialism is or means, it becomes name calling because Communists, are, as we all know, evil and totalitarian and who knows what socialists are?

Given the Pareto efficient aspect of Capitalism, the imbalance, cannot be treated with doses of feel-good Kumbaya or patriotic exhortations; eventually something has to give. A bigger question remains. When there is nothing left for the majority how long can belief in the social contract survive? Are we circling the drain? Inevitably we are going to find out.

American Agonistes?

Is it ironic that in the second decade of the 21st century we are still debating equality in a country where all are supposed to be political equals? In the 18th century, the equality debate concerned the rights of colonists. In the 19th century the debate erupted into civil war over slavery, followed in the 20th over suffrage, and in the 21st the battlefield is economic equality, a societal battle over the rights of money over the rights of citizens as embodied in the destructive sophistry of the 2010 Citizens United decision.

Earlier equality debates have not been resolved either as there is always someone with a new twist seeking to undermine what should be settled law. Racism, sexual orientation, religion, bigotry, and mysogny are unrelenting, persistent, and tragically reinvented daily. It’s a curse, this agon, this quest for equality. Not so long ago Southern European immigrants were persecuted presently it’s Muslims and migrants fleeing economic and political oppression. It has always been blacks; next week it will be someone else. Truth is, if every person of color were to disappear tomorrow morning a new target group would be found by nightfall. While discrimination on the basis of wealth isn’t new on the list of divisive social issues it has now become critical when so many are unemployed, underemployed, or simply dropped out including college graduates laden with debt who cannot find employment.

Hedge fund managers making $24 million annually are taxed at 15% while truck drivers who earn $43 thousand a year are taxed at 28% the tax burden thus falls to working class people. In Kansas budget shortfalls will be made up with increased sales taxes and fees paid mainly by the working middle class and poor. A non-partisan policy group says the poorest 20 percent of the state will now pay 1.5 percent more in taxes than they did in 2012. or an average of $197 a year. The Governor, Sam Brownback, in a classic Orwellian trope, told the press this isn’t an increase but a tax cut.  I think we’re in Wonderland, Aunti Em.

  When wealth is gained at the expense of the majority of the members of a society, social viability becomes the paramount question. Historically such has  been the prelude to one sort of revolution or another and some think we may be on the precipice of a foundational evolutionary social reformation. Sentiments go well beyond the numerous books recently published about economic inequality and Capitalism. Petitions are being circulated calling for a constitutional amendment to nullify the obviously biased Citizens United decision. The presidential candidacy of Bernie Sanders, the rhetoric of Elizabeth Warren and others are also speaking to larger more fundamental deeply felt issues.

The realities of a diminished, if not extinguished, democracy are denial and negation of truth. Neither propaganda nor appeals to patriotism can make this go away because there is no alternative to inequality but equality. There is no livable alternate reality when 33 American cities already have or are planning to make feeding hungry people illegal. The casual abandonment of moral consideration is truly remarkable.

In an analysis  of federal policy initiatives dating from 1981 to 2002 researchers at Princeton concluded, “ economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while mass-based interest groups and average citizens have little or no independent influence.” The denial and destruction of a government of, by, and for the people, is the antithesis of a democratic society paving an inevitable path to disengagement, and ultimately – dissolution. We can fairly ask as we must, how is it possible for a society to maintain a non-democratic economic system, qua religion, conflated with a barely functioning social contract? It is inarguable that a civilized society must correct those inequalities which can be corrected to provide the economic and social capital necessary to minimize inequalities of economic opportunity and political access.

Democracy as a political and social system requires equity, sharing, and engagement. Democracy is an expression of distribution and inclusion – capitalism is accumulation and exclusion. Capitalism is fundamentally a winner take all zero sum game, it has no ethic or morality other than to take it all is opposed to the sharing ethic required for a viable democratic civil society. Capitalism being finite and material has a natural end point – democracy being politically and socially aspirational does not, its horizon is indeterminate. In the absence of equal economic justice there is no possibility of a viable democratic social contract. As Adam Smith cautioned in his 1776 classic, The Wealth Of Nations: “No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.

The United States has been engaged in one war or another for 222 out of the past 239 years. Since 1776 we have also been at war with ourselves. Is this then the ongoing American agon? We must decide.


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