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ECONOMIC DEMOCRACY – WHAT NEEDS DOING.

August 8, 2011

“A fair distribution of wealth and income and power ought to be an explicit goal of government. The debate ought to be about what’s fair and how to achieve it.” 

Fred Harris, 1976 Campaign Handbook.

Although some may accuse the concept of Economic Democracy as simply another way of attacking the wealthy or soaking the rich or a simple redistribution scheme,  it is in fact very much not that at all.

Like in the Parable of the Lion and the Gazelles that I wrote in a prior Journal entry, a society can very much benefit from the talents an individual may have. It is not necessarily to change the lion’s nature but it is absolutely necessary that our society assure that that nature does not turn on us and harm us all.

We need to recall that shortly after Darwin’s revelations regarding evolution,  the powers that be began to substitute “Survival of the Fittest” for the Darwinian “Natural Selection”.  Prince Kropotkin reminded us, in response, that it is not the survival of the strongest and most rapacious, but those who most fit their ecological niche who survive, and that requires cooperation even more than it does naked tooth and claw. Unfortunately, the Prince was dismissed in his day as a dreamer, much as Keynes is by the conventional economists of today.

Unlike what the Libertarians believe, freedom is not license. A person cannot kill or maim another simply because he has the freedom to do so. Nor is it sensible to rely on the good sense of the potential killer to recognize that. Nor ought we to depend upon the intervention of an invisible or divine hand to prevent the mayhem. No, it is our job as a society to struggle to find ways that prevent a person or institution from mortally harming another person or all of us for that matter. Yes we want you to succeed if you have the ability to do so, but not at the expense of the rest of us.

Our Declaration of Independence and Constitution provides that there are things individuals, governments or institutions of any kind cannot do unless we the people come together in a majority and decide what, when and in what circumstances such actions may occur. To protect the individual and the minority from over exuberance of the majority the Constitution added in the Bill of Rights an enumeration of  some rights so fundamental to freedom that even the majority cannot abridge them.

Why would anyone be morally bound or wish to be morally bound to a civil society that does not share the goal that it’s citizens deserve a fair distribution of wealth, income and power? If the civil society is not dedicated to that end what else could it possibly be dedicated to? What is freedom, to those without wealth, income or power?

Ah, you may say a free society only promises you the freedom to strive for wealth, income of power.

Ok fair enough, but that begs the question whether in the striving for wealth, income or power, one may deny it to others or if one may do so upon achieving it. What happens in those cases? Is the civil society bound to protect his right to deny another persons ability to do so where it threatens his interests or to defend the rights of those he denied?

Isn’t it better that civil society agrees at the outset that it be organized to provide for the maintenance of that opportunity and charged with the duty to prevent that which would diminish it, then to sit idly by until by fortune or rapacity an individual or institution, not subject to the ameliorating effects of democracy, unmolested achieves the ability to do so by whim. Royalty by any other name is still royalty and will act in its own best interests and its interests alone.  When Roosevelt said that the” Price of liberty was eternal vigilance”, he did not mean it to apply only to foreign enemies and to terrorists, but also to the smiling snake oil salesman and con artist selling make believe freedom and patriotism to enhance their own wealth and power.

When we sit together as a society and decide on what freedom is in the economic sense we must address the primary question of whether it means the freedom to attempt to secure whatever social and economic goal we aspire to or is it to be free from subjection to another’s  social and economic aspiration, whether that other is a government, an institution or an individual. It was to protect the latter freedom  that this country’s forefathers  penned the Declaration of Independence.  After all it was not the government of George the Third alone that the American Colonists objected to, but it was that that government was acting at the behest of the kingdom’s new capitalist and corporate institutions, at the expense of the colonies, that raised the colonists ire. Is that much different than what we have happening today?

Now let us get on with a run down of some of the things that need doing to get our Economic Democracy back on the right track.

There are some basic rights fundamental to a society committed to a fair distribution of wealth, income and power. They are:

The right to know the nature and extent of the distribution of wealth income and power in the society.

The right to advisors committed to fair distribution of wealth income and power.

The right to an equitable sharing of contributions to the common good.

The right to be protected from contributing community funds to those who are able to compete in the market.

The right to be as free from the purchase of our democratic rights as we are from their denial by force.

THE RIGHT TO KNOW

“If we did have an express goal for for sharing in privileges and responsibilities, we would demand that the government stop redistributing wealth, income and power in the wrong direction

As it is, there is no regular publication of distribution indicators, and neither the executive or the legislative branch of the federal government makes any attempt to discusser the effect on distribute of its programs or policies. We are hampered by the ‘Scrooge Syndrome’ which still characterizes traditional liberalism: every now and then we are shocked into taking a turkey to the Chrachits at Christmas, when decent wages all year long would have worked better. 

But we haven’t had that kind of debate and ferment in this country in fifty years. “

Fred Harris, 1978 Campaign Handbook

First there should be, as Fred Harris suggests an official  quarterly published governmental report of the distribution indicators accompanied by an analysis of their significance and recommendations on how to government should deal with trends showing maldistribution. This is not so different than the various employment statistics regularly put out by the Labor Department, or the index of leading indicators, or deficit growth or the GDP and the like. If we do it for all of these we ought to do it for something as essential as the distribution of the fruits of our society.

Let’s take the GDP and look at it for a moment. When the GDP for a particular period in time is issued, there are significant discussions about a whole host of issues regarding the validity of the measure and its constituent parts, and so on. Individuals and decision makers may argue over its speed and content, nevertheless there is general agreement that GDP should grow. Why is there that consensus for growth, I wonder? Couldn’t  the need for growth of the GDP be merely a hidden indication of an inefficiency in production and distribution?

I think that this information gathering and publication should be done by  some entity like the Council of Economic Advisors and perhaps change their name also to the Council on Economic Democracy Advice.

THE RIGHT ADVISORS.

We would not expect  someone to have the talent to pitch for the New York Yankees simply because he is wealthy, so why would we give to the wealthy, solely because they have been successful in making money, the right to tell us how we live, how our money invested in government is to be spent and a host of other things of common interest. After all their expertise is limited to making money, usually in a very narrow field of endeavor. Why would we not expect their advice to be biased to favor them making more moony? Yet for the past 40 years that is what we have done. That is one of the things that must change if we want to travel the road to Economic Democracy.

One would think, as their professional economist toadies promised us, that by putting our money into the pockets of  modern masters of the universe, productivity, wealth and happiness would burst forth forever. What happened?  It took only three years to distort the entire world’s economy? How could people we thought were so smart be so wrong? Why didn’t these brilliant minds see it coming? Of course there is not a lot one can see coming while he he kissing Mammon’s a**. Yet we still ask these same people who were paid to advocate on behalf of their paymaster’s interest, what it is we should do to solve the economic problems that they caused.

It is absurd, in the case of Wall Street, whose denizens sole expertise is in how to game a system given to them by others, to advise us on how to keep that system from harming all of us. It would be like asking the Taliban how to wage the war in Afghanistan or hiring Osama Bin Laden as Secretary of Defense. Nevertheless out last five presidential administration have done just that when it comes to Wall Street.

We would not use a general who had just suffered a disastrous defeat due to his own ineptitude to lead us into the next battle, why do we do so here?

The Roman Republic after suffering a catastrophic defeat at the hands of Hannibal that left the italian peninsula open to the victorious general’s depredations for twenty or so years, ordered their own generals to never again take the field with their army unless they were absolutely assured of victory. The result was almost 700 years of martial success.

The entire classical economic system is wrong and is a fraud. It is based upon taking some arcane transactions that occurred in a few coffee houses in London in the sixteenth century and extrapolating it as a metaphor for all transactions of any kind everywhere.

What is even more amazing to me is that it did not even have adequate predictive value for those rudimentary sixteenth century London coffee house transactions and still does not do so today.

It never ceases to surprise me that we optimistic Americans, who so pride ourselves on our ability to solve any problems that we as individuals may meet, are so willing to accept this deterministic drivel.

Yet for the past 40 years we have followed the nostrums of this academic arrogant class of of agents of the rich and powerful as though we were still living in caves and falling down in terror before the ravings of the local shaman.

Keynes, Galbreath and others like them are right, so called economic problems require practical solutions that fit the situation at hand and not some vague academically popular theory that never worked anyway. Economics follows the goal we set for it. Economics does not set the goal.

THE RIGHT TO AN EQUITABLE SHARING OF THE BURDENS OF SOCIETY

Because there are so many sensible fixes for the tax system discussed in the progressive blog-o-sphere and elsewhere that are readily available to anyone, it would be unnecessary for me to discuss them here.  It is sufficient to mention that whatever the tax if it is not truly progressive and if it encourages capital accumulation at the expense of labor or consumption of practical necessities, it is not consistent with Economic Democracy. Dealing with the he deficit hysteria is of greater immediate concern.

The deficit hysteria a fraud. The Republicans knew it when they ran up the deficit to pay to their tax cuts to the wealthy. Contrary to the conventional wisdom that the masters of the Republican Party would have you believe, the wealthy are not, I repeat they are not, the productive element of society but are the primary beneficiaries of that productivity. In fact the  U.S. Bureau of Economic Analysis, statistics show the the percentage of value added to our society from manufacturing since 1950 has steadily dropped until now it is less than the both the financial sector and the professional services (lawyers and accountants) sectors.

Even though anguish at the size of the deficit is a phony tactic used to scare the public into transferring more of their wealth into the hands of the fortunate few, the principles implied by Economic Democracy require the deficit, if it is going to be reduced, be reduced first from funds transferred from those that can most afford it and who have benefited the most from society’s largess. After all, what kind of a society have we become when we will give untold amount of wealth to our wealthiest and often least  socially productive citizens and stand strangely quiet when our public deficit balloons, and then turn and blame the teachers of our children for increasing the deficit by their asking for a few dollars raise in pay and then demanding that they give back raises they had already received to help reduce the defect that under no rational analysis could they conceivably had a hand in causing? Where has been the cry for them who received the public benefits that caused whatever deficit crisis we now face to give back the money? A fair and just society would not just cancel the gift of public funds at some time in the future, but demand that what they received be paid back with interest.

Obviously a necessary and  essential step is to allow the Bush tax cut for the wealthy to lapse and they get back to paying a fairer share of the costs of the society that so greatly benefited them. The Republican Party also managed a twofer with the tax cut, not only did the already wealthy benefit, but Wall Street also made billions in commissions for transacting the loans the government required to pay for the tax cut.

The two wars that we are waging must be ended sooner rather than later. There is no reason in the world why the most powerful country in the world would or should allow itself get bogged down in a war of attrition. Either the enemy is a real threat to our existence and freedom, like the Soviet Union may have been, in which case we may need to use whatever means we have available to deal with it or we should not place american lives and treasure at risk .  The wars themselves take out tax dollars and spend them all too often on war profiteers and in foreign countries on goods and services that do not benefit the American worker or small business.

Although the defense budget may be grossly inflated and need of pruning an even more fundamental question needs to be addressed. Why is it  we allow the defense industries to make a profit on our common defense needs and then permit them use these profits to lobby our government to purchase more equipment? Why do we ask our sons and daughters to put themselves in harms way to fight and die for the rest of us while the owners of the companies supplying their equipment reap huge profits? War profiteering is wrong. The profits should be going instead of into the pockets of the profiteers, into the hands of the men and women doing the fighting and dying and their families. The argument is, of course, that if we don’t pay them their unconscionable profits, they will not supply us the goods we need and our defense will suffer. And that threat apparently, according to the Republican Party, represents the highest form of patriotism

If the defense of our country requires giving bribes to those unwilling to bear the risks that the defense of democracy entails, we will not long be the strongest country in the world nor long be free. During WWII under some of the greatest threats and economic stresses this country had ever faced, stringent war profiteering controls were imposed. We need independent auditors and investigators to prevent the continuing waste of the countries defense budget by the defense industry, probably more so than a review of the defense budget itself.

SUBSIDIES TO THOSE WHO SHOULD COMPETE

We all know that tax shelters, large corporate subsidies and tax loopholes are inimical to Economic Democracy because they represent  transfers of wealth from the rest of us , you and me,  into the hands of those with the most ability to compete in a free enterprise market society. They need to be phased out and eliminated.

For example, take the “Oil Depletion Allowance”. Does anyone in the world believe that any oil company would not drill for oil without it? And if they did need it, why is it that once they do find oil they do not pay us back (it is our money after all) with interest? They certainly would make us pay it back if we borrowed money from them (and make us put up security as well). And why after they used our money to find and drill for the oil, do they sell the oil back to us at the highest price offered? (Remember whoever offers the highest price gets the oil. They are not competing for our dollars we are competing for their oil).

The same should occur with agricultural subsidies to large agricultural entities. Why is it that these large entities like the oil companies and agribusiness cannot compete without subsidies from you and me and why don’t they pay us back?

These redistributions of wealth need to be eliminated before we cut governmental expenditures of any kind. If there is to be pain to be suffered to get the budget under control, the pain should start there. And, if it is argued that these entities are too big and too powerful, then that is precisely what Economic Democracy is intended to combat.

THE BEST GOVERNMENT THAT MONEY CAN BUY.

Money is not speech nor is it a metaphor for speech. Money can buy speech and it can prohibit speech. If the right of free speech is so fundamental that government cannot abridge it, then it is so fundamental that government must assure that no one abridges the free speech of another by financial, political or physical power. A government that does not protect the general public from the abridgment of their fundamental rights by anyone or any entity foreign or domestic is a government that conspires to deprive those citizens of those fundamental rights and risks losing its legitimacy.

As with most fundamental freedoms, preventing those who wish to abridge the fundamental rights of others is a more important role of government than encouraging the exercise of those rights. Exercising our rights are our individual jobs, protecting us from those who would abridge are rights is the duty we collectively give to government. If government is not the guarantor of Freedom then it is a tyranny.

The Supreme Court’s  Citizen’s United v FEC decision. This is potentially  the most serious blow to both political and economic democracy in the history of the United States. It is as dolorous a blow to political and economic democracy as the Dred Scott decision was to the cause of abolition. Like the Dred Scott decision that recognized the fact of slavery over morality and the fundamental right of all to freedom, the Supreme Court  in Citizens United recognized the fact of the gains over the past forty years  of corporate political power and wealth, over the fundamental political rights of the individual under the Constitution and the democratic economic rights of the people as a whole.

I believe that in the long run no issue will adversely affect the continuing freedoms that American’s now enjoy than this decision. It codifies and enhances dominance of juridical institutions over the individual

We should consider a prohibition on any person or  institution receiving a governmental contract over a certain amount from lobbying or providing campaign funds for any purpose for a period before, during and after the contract without full disclosure and transparent approval by a public entity that conflict of interest rules have not been nor will not be violated. In fact, a rule like this should apply to any governmental subsidy over a certain amount  received by anyone.

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