So what would be hurt if America simply eliminated wealthy people?

Ted Frier suggests a really different relationship between America's rich and the rest of us.

In an essay last July that asked the provocative question: "have the American people outlived their usefulness to the rich?" one-time William F. Buckley protégé Michael Lind may have put his finger on why today's Republicans can so unashamedly insist on billions for the wealthy while guiltlessly threatening to cut off any help at all for Americans who are out of work.

Time was, says Lind, when the rich and everyone else co-existed according to an ancient and honored social contract: "In return for receiving a disproportionate amount of the gains from economic growth in a capitalist economy, the rich paid a disproportionate percentage of the taxes needed for public goods and a safety net for the majority."

The economic elite needed ordinary people to consume the products put out by the factories the rich invested in. The upper class also needed commoners to be foot soldiers to fight its wars against "totalitarian empires that would have created a world order hostile to a market economy."

But globalization has eliminated the first reason for the rich to support this bargain, says Lind, while the emergence of quasi-public mercenary armies like Blackwater has undermined the second.

"And this marks a historic change in the relationship between capital and labor in the US," Lind insists.

Even the robber barons of the Gilded Age generally recognized the necessity of a rapprochement with labor, says Lind, because the rich lived near the working classes, depended on the domestic American market for their fortunes and were always generally alert to labor strikes and the prospect of revolution should their exploitation of the masses get out of hand.

But this is no longer the case. "Many of the highest-paid individuals on Wall Street have grown rich through activities that have little or no connection with the American economy," writes Lind. "They can flourish even if the US declines, as long as they can tap into growth in other regions of the world."

This is the central argument against supply-side wizardry and extending tax cuts for the rich.

Elites can make money from factories in China by selling to consumers in India, says Lind "while relying entirely on immigrant servants at one of several homes around the country." Between the profits they can earn from overseas factories in countries policed by brutal autocracies, and factories in the US manned by non-voting immigrant labor, "the only thing missing is a non-voting immigrant mercenary army whose legions can be deployed in foreign wars without creating grieving parents, widows and children who vote in American elections." That, maybe in part, is what the Dream Act is about.

There was a time when rich and poor alike subscribed to the promise that a rising tide raises all boats. But American investors and corporate managers no longer need the rest of America to prosper, says Lind, since "they can enjoy their stream of profits from factories in China while shutting down factories in the US." And if Chinese workers have the impertinence to demand higher wages, says Lind, American corporations can find low-wage labor elsewhere.

It may be true that the rich are invested in foreign corporations that do most of their business in the US Market. But this too is changing.

"American consumers are tapped out," says Lind, "and as long as they are paying down their debts from the bubble years, private household demand for goods and services will grow slowly at best in the United States. In the long run, the fastest-growing consumer markets, like the fastest-growing labor markets, may be found in China, India and other developing countries."

The point is, says Lind: If the rich do not depend for their wealth - or even their security -- on American workers, consumers and soldiers "then it is hardly surprising that so many of them should be so hostile to paying taxes to support the infrastructure and the social programs that help the majority of the American people. The rich don't need the rest anymore."

This is an interesting and in fact realistic evaluation of the relationship between the American wealthy and the rest of us. But Ted is asking if the wealthy need the rest of us. That question can easily be reversed! What do we need the wealthy for??

Face it. If the top 2% of the American population own over 40% of the wealth in America, then the American wealthy are well on the way to becoming the new American aristocracy. Aristocracy - That's the American government! That means that America is on the way to no longer being a democracy.

Any surprise in that? The current American federal government is controlled by the 100 wealthy people in the Senate, and the American Congress is controlled by the K-Street lobbyists for the wealthy. Who provides the money used by the candidates for President? largely America's wealthy, that's who.

Why is a major element of the conservative American party demanding elimination of the only American tax on wealth - the inheritance tax? Come on. The children of the wealthy did absolutely nothing to earn their inheritance! All they do is fight to protect that wealth. That is the definition of being conservative. America is no longer a meritocracy in which people personally earn what they are paid. When 2% of the population mostly inherit their wealth and own over 40% of America's wealth, that is an aristocracy that is controlled by those who never earned what they control.

Why are we currently sending Americans to fight in Afghanistan? We were attacked in 9/11 as a direct blowback from the political operations of American oil companies in the Middle East. The Mullah's in Iran took power because they were rejecting the Shah which BP and the American CIA had placed into power to replace the legitimately elected Iranian Prime Minister Mohammad Mosaddegh He threatened to nationalize Iran's oil companies.

From my experience both inside and outside the Republican Party, I've gradually come to believe that one of the major differences separating Republicans from Democrats is that Democrats view service in Congress as the pinnacle of their careers while Republicans look at their time on Capitol Hill as an internship - a chance to do their time, pay their dues and build up a resume of favors and chits they can cash in later for a far more lucrative second career as lobbyist or corporate hack.

Yes, Democrats pass through the same revolving door between government and K Street that Republicans push on. But Republican behavior while still in government seems far more devoted towards creating jobs for themselves when that Big Day finally arrives and they get to make the jump to an appreciative corporate sector.

I am thinking, of course, of parasites like Wendy Lee Gramm (wife of former Senator Phil), the one-time federal regulator with the Commodity Futures Trading Commission who enabled Enron to become the 8th largest corporation in American, and a ticking economic time bomb, when she gave its corrupt owners a waiver to trade energy derivatives without oversight -- and then jumped into bed with the company as a member of Enron's board and, adding insult to injury, its audit committee.

I am also thinking of former Louisiana Republican Congressman Billy Tauzin. As chairman of the House Energy and Commerce Committee, Tauzin was instrumental in writing a Medicare drug benefit into the 2003 bill that specifically barred the government from negotiating drug prices for Medicare recipients. With that chit for Big Pharma firmly in hand, Tauzin was able to cash in his time in government for a position as president of the Pharmaceutical Research and Manufacturers of America.

The point is, examples of corruption like these are now so commonplace they often pass without notice or comment and are very nearly to the point of being accepted as the new political normal.

Consider this carefully. Nothing is enacted today in American politics unless the very wealthy get their share of it and permit it. The American wealthy killed the public option during the effort to create universal health care.

Business lobbyists aren't supposed to act as surrogate whips for the Republican leadership or personally draft statutes themselves. "But it turns out there's no actual law against it."

Scientists and bureaucrats are expected to testify truthfully to Congress when asked. "But it turns out that no regulation prevents political appointees from keeping them muzzled and providing bowdlerized testimony in their place."

All of these things, says Drum, "serve a single purpose: passing business-friendly pork as efficiently and as quietly as possible. Tax bills, energy bills, Medicare prescription bills: all become mere vehicles for corporate largesse."

And when push comes to shove Republicans simply lie.

"Lying has become a systematic necessity," writes Chait. The reason is obvious. "If the Republicans had truly believed that the public shared their goals, businessmen would simply have come forward to proudly announce their support for the tax cuts, explaining that rewarding wealth and success would create a rising tide for one and all."

But they didn't. Instead, says Drum, Republicans sold their tax cuts as a way of giving back the surplus to hardworking Americans. Then Republicans sold it as a way to fight recession. Then they sold it as a way of making the tax code fairer to the poor. "Any rationale would do," says Drum, "except the real one." And America invaded Iraq to destroy Weapons of Mass Destruction.

You can tell that America's New Oligarchy and their Republican house servants are waging class war against the rest of America today because they squeal "class warfare!!!" whenever their shenanigans are found out and exposed.

Eventually, says Drum, someone needs to notice "that Republican policy is no longer rooted in any kind of recognizable conservative principle" and is instead "little more than a program of preventing the middle class from sharing in the gains of economic growth and divvying up the resulting loot among the richest of the rich."

[...]

Americans, says Lind, need to begin exercising their unused political authority to demand that their elected representatives give them a new social contract that requires American corporations and America's economic elites to create jobs in this country, for American workers.

And if that doesn't interest corporate shareholders and their managers, says Lind, then perhaps they can do without those legal privileges which are granted to them courtesy of the sovereign American people - such as the legal right to form corporations and do business at all.

The American people, says Lind in short, need to start insisting "that the United States will be a democratic republican nation-state, not a post-national rentier oligarchy.

Really. What do we need the super wealthy for anyway? All that want from the rest of us now is our bodies in their wars to protect their international wealth.

It's time to return to a 90% inheritance tax. America should return to being a middle class nation with little room for power controlled by inherited (read unearned) wealth!

FDR's Economic Bill of Rights

Franklin D. Roosevelt

“The Economic Bill of Rights”

Excerpt from 11 January 1944 message to Congress on the State of the Union

---

It is our duty now to begin to lay the plans and determine the strategy for the winning of a lasting peace and the establishment of an American standard of living higher than ever before known. We cannot be content, no matter how high that general standard of living may be, if some fraction of our people—whether it be one-third or one-fifth or one-tenth—is ill-fed, ill-clothed, ill-housed, and insecure.

This Republic had its beginning, and grew to its present strength, under the protection of certain inalienable political rights—among them the right of free speech, free press, free worship, trial by jury, freedom from unreasonable searches and seizures. They were our rights to life and liberty.

As our nation has grown in size and stature, however—as our industrial economy expanded—these political rights proved inadequate to assure us equality in the pursuit of happiness.

We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence. “Necessitous men are not free men.” People who are hungry and out of a job are the stuff of which dictatorships are made.

In our day these economic truths have become accepted as self-evident. We have accepted, so to speak, a second Bill of Rights under which a new basis of security and prosperity can be established for all—regardless of station, race, or creed.

Among these are:

The right to a useful and remunerative job in the industries or shops or farms or mines of the nation;

The right to earn enough to provide adequate food and clothing and recreation;

The right of every farmer to raise and sell his products at a return which will give him and his family a decent living;

The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad;

The right of every family to a decent home;

The right to adequate medical care and the opportunity to achieve and enjoy good health;

The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment;

The right to a good education.

All of these rights spell security. And after this war is won we must be prepared to move forward, in the implementation of these rights, to new goals of human happiness and well-being.

America’s own rightful place in the world depends in large part upon how fully these and similar rights have been carried into practice for our citizens.

---

source: The Public Papers & Addresses of Franklin D. Roosevelt (Samuel Rosenman, ed.), Vol XIII (NY: Harper, 1950), 40-42

12 How. 152: “Necessitous men,” says the Lord Chancellor, in Vernon v Bethell, 2 Eden 113 (1762), “are not, truly speaking, free men; but, to answer a present emergency, will submit to any terms that the crafty may impose on them.”

Posted at TPM Cafe by M. J. Rosenberg.

America's growing plutocracy

America is becoming a nation in which wealth dominates the government and in which the financial rewards from the economy are monopolized by wealth instead of ability and accomplishment. The term for that is "plutocracy." The ideal of America has always been a society that was a "meritocracy" in which ability and accomplishment dominate government and the rewards from the economy flow to those who are most productive. We are losing that ideal.

What is the difference? In a meritocracy society rewards those who demonstrate personal abilities that increase economic and social productivity and who are useful to others. In a meritocracy the government is run by individuals who have demonstrated personal achievements. In a plutocracy, society rewards the holders of great wealth rather than those who have personally accomplished things of note.

The key government policies in a plutocracy are those that protect great wealth and the ability to keep it in the family. In a meritocracy the key government policies are those that grow greater wealth for society, and instead of allowing it to remain concentrated in a few pockets already dominated by inherited wealth, they spread it to those who contribute most to building society and to increase economic productivity.

But don't people with great wealth get rewarded for their achievements? No, generally they are rewarded for their personal networks and ability to raise funds needed to build organizations (productive or not) which they will then dominate because of their networks among the wealthy. I offer as an example George W. Bush, who has never in his life achieved anything, but because of his family and its wealth he was handed a series of jobs at the top of oil companies, then handed a professional baseball team, and finally was handed the Governorship of Texas followed by the Presidency of the United States. At no time has he ever achieved, let alone exceeded, expectations. There is one exception. He was placed in government by those who have great wealth, generally inherited, and his job has been to appoint government officials who act to protects and augment families with great wealth.

Just my opinion? Go look at the chart that Kevin Drum has posted and read his explanation. The top line on his chart - the one that shows the income flowing to the top 1% of America families - shows clearly that America is rewarding wealth, not ability or productivity.

Protecting and rewarding wealth is the central purpose of the conservative movement, even when it makes American society less productive.

Problems, decisions, boundries, and best practices

There are effective ways to sharply improve the outcomes from an organizational process or processes. The free market ideologues would lead you to believe that the only way is to let private business operate completely free from any and all government interference, and that somehow the magic of the market will provide great products and services at the lowest possible prices. There are elements of truth to that, but the idea is more flawed than accurate. Let’s look at how a process can be made to provide sharply improved outcomes over those it provided earlier.

In order to improve a process, a decision-making person has to have feedback on the quality of the results of what was done earlier, and that must determine which efforts succeeded and which failed. Then they must learn the “best practices” which can increase the number of successes and reduce the number of failures. This requires a thorough understanding of the process that provides the outcomes and very careful measurements of the most important aspects of that process. The very striking example Dr. Atul Gawande presents in his book "Better: A Surgeon's Notes on Performance" (Metropolitan Books, 2007) is the way the military has measured emergency medical care for injured soldiers and improved that care so that deaths have been reduced from 25% of causalities down to 10%, not by breakthrough new medical methods as just by applying best practices to the points in the process with the highest death rate.

The key is to isolate a process, or even a segment of a process, and then measure everything that is happening in that process and also to measure and rank the outcome of the process according to its degree of success or failure. Then focus on what elements of the process contributed to the failed outcomes and determine how those elements can be changed. The process must be thoroughly understood. I am not sure whether Dr. Gawande realizes that this is an application to battlefield medicine of the ideas called “Best Practices” in business quality control, but it is.

One very important point to keep in mind is that after a change in the process outputs will often degrade for a while until the newer process becomes established. This temporary period of degradation must be accepted if the overall process to become better in the long term.

Another very important point is to consider how the process is isolated. There has to be an organization that is inside those boundaries and which encompasses the problem that is to be improved. Those boundaries are of critical importance. People outside those boundaries must not be allowed to interfere with the decisions taken by the qualified decision-maker who is working to improve the process.

Andro Linklater reported on an interesting historical experiment in allowing individuals set up relatively autonomous organizations, measure their success and improve them in his book "The Fabric of America: How Our Borders and Boundaries Shaped the Country and Forged Our National Identity" (Walker, 2007.) He contends that it was not just the frontier that made America such a successful nation. It was also the fact that Americans applied the latest survey techniques to the older common law ideas of private property as Americans moved west into new frontier areas. By use of the latest surveying technology and by having the government record who owed each parcel of land American ranches and farms became independent little organizations, each managed by its owner.

These individuals then had their own personal property with which to make economic decisions. Output could be measured in terms of amount of a crop or number of cattle, and using markets to put prices on those outputs, prices could be used to compare relative outputs between farms and ranches. This allowed each farmer or rancher a sphere of independence in which no one else could step in and make decisions for him. The most successful farmers and ranchers were those who learned and adopted the best practices.

This isn’t really a new idea. It was, in fact, the reason for the state agricultural extension services and the agricultural schools in America. What it was, however, was unique in world history up to that time. The very economic success of this process is largely the basis of the free market ideologists in politics today.

There are a number of problems with this model, however. First, and most important, markets only provide a limited measure of economic success or failure. Productivity matters – a lot – but so does quality of life for people in and around a business. The sawmill up river from the town I grew up in threw its chemicals into the river for over half a century. That lowered their costs, increased their profit and destroyed the fishing (among other noxious results) for nearly 100 miles downriver. Market-based economic decisions could not, by themselves, measure all of the costs of the lumber produced because there is no connection between the market transactions for land, labor and capital inputs and the resulting corporate revenue accept the (self-serving) assertions and estimates of business management in their financial statements. Government has to provide additional measurements for such otherwise unmeasured things as environmental dumping. This always creates major political issues around what should be measured and published as measures of the real costs of input and output.

This becomes an even greater problem for organizations that are not economic in nature. Schools are an example. In spite of all efforts we have yet to develop comprehensive effective and informative measures of the important characteristics of the most important inputs to a school, especially the characteristics of students and teachers. On top of that, there are no markets that create a semblance of comparable measures of student outcomes. Grades at best record the opinions of teachers about short-term progress, or the outcome of very limited written tests. Nor do we understand the educational process well enough to describe it, let alone comprehensively measure the most important elements in it. The result is that every attempt to apply objective measurable standards to inputs and outputs of schools is met with political cries of outrage by those who don’t like the results of those measures.

Justice Roberts recently solved that problem very neatly in the question of determining the effects of Racism in schools. His decision was that measuring race is, itself, Racist, so it was forbidden to measure race or racial outcomes of schools. The American problem of Racism is one that he and four of his colleagues do not want solved, so they have the power to prevent measurement of the problem. They used that power.

Another problem is that as the American economy has become more interlocked both internally and internationally, the level of problems to be resolved has grown larger. The decision domain of the solution to a problem must be as large as the problem itself for any solution to work. Larger organizations exist to control larger (mostly economic) processes.

Also, as economic processes get larger, they begin to have to differentiate between those controlled by markets at each stage of production or by common ownership, which allocates resources administratively, rather than by free markets. A steel company that owns the iron and coal mines, the foundries, and the steel fabricators will rarely resort to using markets between the mines and foundries and again between the foundries and fabricators because the information collection costs of markets is very expensive. The overall cost of the final product can be greatly lowered by using administrative means to determine how much coal and iron is mined and shipped to foundries and how much steel is shipped to fabricators. However, the increase in efficiency is attained at the expense of flexibility, so that such a large organization cannot be innovative the same way smaller ones can be. The strategic requirement for such a large integrated company to compete on the basis of cost per unit means that major changes in the product cannot be made without losing market share during the period of the time in which the changeover is being made. (See Oliver E. Williamson and in particular his book “Markets and hierarchies : analysis and antitrust implications : a study in the economics of internal organization”)

The limited decision domain around the problem must be large enough to encompass the problem. If the problem is that trains do not leave a given station on time and the decision domain is established at the level of the station master, he can keep the trains from sitting at the station too long but he has no control over whether they arrive at the station late. A decision maker cannot completely deal with problems from outside his area of control. That is a major reason why economic organizations get larger. But the managers who work closer to the economic processes make only those decisions delegated to them from higher management.

The American agricultural economic experiment breaks down as businesses get larger and decisions are centralized further away from the individuals who physically work with the core productive processes. Government has always existed to solve society-wide problems, but as economic processes get larger, the organizations that control them get larger. But like government, top managers in larger organizations make their decisions primarily on the basis of political power of the decision makers, since they cannot have direct experience with all the processes they manage. Direct experience is possible only in small organizations.

The American agricultural economic experiment applied historically to decisions made in the limited domain of relatively small family farms, which is why the idea of establishing boundaries and measuring processes and outcomes carefully within those domains is important. Problems that are too large to be dealt with effectively within a given set of borders require that larger borders be drawn. But what happens when the decision is too large for any individual to handle by himself. The decision-makers in such very large and complex organizations require staffs of specialists to assist in decisions in their respective areas.

Decisions in such an environment cannot be made by a single all wise individual because individuals are limited in how much each can rationally decide. That is why the decisions made at the central core of every large organization will always be political. That is, the decision-maker with the greatest level of power will choose which of the alternatives will be implemented. But since the decision is based on political power, any negative outcome of that decision will cause the decision maker to lose power. Any measurement of negative results will either not be measured or the measurements will be spun to provide good results. It is impossible to improve processes when the outcome measurements are not honest, but no political decision maker dares honestly report negative results. Improved outcomes result only from determining what processes cause negative results, and that is impossible for a political decision maker to permit.

It is because of this process that rational decisions in an organization must always be made at the direction of a politically powerful individual.

Problems that are too large to be solved within any given organization normally have to be excluded by the decision maker instead of solved. As an example, when Racism is a major problem in society that problem will cross over any decision borders that are defined for groups smaller than a state or nation, and will often cause problems within the smaller decision domains. Racism, being a social problem, cannot be solved in each of the set of limited domains. The minority Race can, however, be excluded and this will often lead to better outcomes for those limited decision domains because of reduced conflict within each domain. As the American experiment with segregation proved, such problems grow larger in society if they are not solved. The social conflicts and the waste of productive resources limit both the economy and society, so a larger entity with more than just economic power will have to establish Race-neutral best practices and enforce them on the more limited domains. Only government can make such social changes, and the otherwise economically independent (but smaller) business groups have to be changed whether they like it or not.

Like any change in the process intended to improve the outcomes, such an edict will have the effect for a while of reducing preferred outcomes until it is fully established. Only after it is fully accepted will the better outcomes become apparent.

The advocates of totally free market solutions will not allow each employee of an organization to make their own independent decisions, but they have to let trained individuals work as professionals. A nation or society must also have the same flexibility with respect to the economic organizations within it. Social problems have to be solved just as well as economic ones do.

Bush misunderstands the Presidency - Congressional leaders properly mistrustful of Bush.

Michael Abramowitz of the Washington Post has an excellent article today about the relations between the White House and Capital Hill. He provides the detail, but from that detail I'd draw the conclusion that neither trusts the other much at all.

I find that unsurprising. The White House does not understand how large organizations make and implement major decisions. For anyone who wants a very good explanation of organizational decision-making I STRONGLY suggest reading the classic Essence of Decision. It is about organizational decision-making, using the Cuban Missile Crisis as an example. Read it and you will never look at "idiotic" organizational decisions the same way.

Let me offer a thumbnail description of the process of strategic decision making for large organizations. The problem of a strategy involves not one, but a whole series of decisions. I'll ignore the problem of actually making an extremely complex decision by human beings who are physically incapable of dealing with more than about seven variables at any one time. For that I will refer you to Herbert A. Simon's concept of Bounded Rationality and Satisficing. The book mentioned above, "Essence of Decision," is largely a very readable example of how real decisions are made under the limitations of bounded rationality.

Strategic Decision Making.

The first decision for a strategic decision makers has to be to decide what goal is to be accomplished. The second decision then naturally flows from the first. How should the goal to be accomplished and what resources (people, money, capital goods, infrastructure, etc.) will be used to accomplish that goal. This seems nice and linear at first. Decide on the goal, then decide how to get there. But the big snag quickly raises its head. Some goals require unavailable resources. They may not exist (colony on the moon or mars,) the resources just may not be available (health care for the masses in extremely poor countries) or they may be being used for other, higher priority purposes (fighting a war rather than providing universal health care.) A lot of the impediments to achieving the goal do not appear until the effort to implement it starts. So what happens then?

The goal decision has to be reopened. Either the goal is abandoned, or it is changed. Then the implementation decisions of how to accomplish the revised goal and what resources are to be used have to be revisited. This iteration may occur several times until hopefully, the goal and implementation decisions are workable and agreed on.

The Goal and Implementation Decisions for Business.

Let's go back and look at the goal decision first. A business has a (relatively) easy job making the goal decisions. The job of a business is to manage a social and economic process so that the cost of the resources used are less than the revenue produced by selling the output of that process. It is relatively easy compared to decisions made by government because a business needs to be responsive only to those potential customers who want those results and to the needs of the process of obtaining and procesing raw materials and selling the output. Anyone who cannot afford the output of the business is simply ignored.

All business goals are based on this idea. A business works ONLY for its customers and potential customers, and IGNORES everyone else. The concept of a free market suggests that those ignored customers may become a market for other businesses, but many people will never become customers. Only people WITH MONEY are customers. [And yes, I am ignoring the problem of externalized costs at this time. Dumping waste into the river rather than dealing with the increased cost of properly disposing of waste is a social problem that businesses work hard to ignore.]

The Goal and Implementation Decisions for Government.

A government does not have the luxury of ignoring whole groups of people when it establishes its goals. A successful government controls (or is expected to control) a specific, defined area of land and is responsible for what people do there and for what is done to them.

With the development of the twentieth century concept of citizenship, the various governments also have become responsible for the care and behavior of individual citizens outside the national boundaries, although this is a limited function. The government of a specific territory always has primary jurisdiction unless the foreigner comes from a nation whose government has negotiated or enforces an immunity for its citizens from the powers of the local government. This is rare, because it is an admission by the less powerful government that it is not strong enough to fend for itself. The legal position of contractors in Iraq has been such a form of immunity for foreigners provided by more powerful nations such as USA and Great Britain.

So a government that governs fairly cannot do so by simply governing for certain powerful groups of people and ignoring the rest - not that they don't try. That is the major reason why industrial nations sooner or later become democracies. Government has one set of problems to solve, businesses another, and traditionally, religions have even another. The real genius of the U.S. Constitutional system of democracy includes the fact that each of those three sets of powers have their own specific realms in which the other powers tread only to protect the overall system, and then very cautiously. The fourth realm of independence was provided by the Bill of Rights to the individual people. This is at least as important as the first three, but individuals without the power of democracy generally have only the methods of riots and revolt with which to make their needs known.

The Social System of Developed Industrial Countries in more Depth.

The purpose of the entire national social system is to provide the very best life possible for every individual. Each of the powerful realms, Religion, Government and Business, has its function to best provide such lives for every individual. Only government has functions that infringe on the independence of the others, and this power to infringe comes with a much greater set of legal restrictions and with the requirement that secrecy be sharply limited unless it is absolutely necessary.

The government sets and enforces the laws and is itself tightly regulated by them. The independent judiciary is needed to evaluate individual cases for compliance with laws under the Rule of Law. For this system to work, no one can be above the power of the law, including all members of the government. But let's look at what each of what I am calling the realms of power contributes to the nation, and what limitations each should face. Then, remember that all of this is in support of the best, most free, and most productive lives of the individuals who make up this nation. Ultimately, the people is why the rest are allowed to exist.

• The purpose of the religious realm is to help individuals to understand and belong to their position in the Universe, or in a different set of words, to understand their relationship to the Divine. Religion offers insight into the mysteries of life and the unknown. It offers an educational function. Religion cannot be allowed to misuse people generally, and to this extent government must intrude on the functions of religious organizations. , but cannot be trusted with the legal powers of law, police and judiciary. These are all functions of government. The main thing that religion needs from government is to be left alone.
  
• The purpose of the business realm is to take in raw materials, process them to add value (including both processing and distributing them), then then sell them to customers who have the money to buy them. A business manages the process that it puts the raw materials through, but needs no power beyond that required to acquire raw materials, capital goods, and to hire labor. Every business requires enforceable contracts and a well-managed currency. Like religion, business cannot be trusted with the legal powers of law, police or judiciary, so the enforcement of contracts is farmed out to government. Similarly, a reliable currency is required for all businesses to operate effectively. This is another function that must be performed by government, and since the banks create most of the money supply through the lending function, the government must also regulate banks to a much greater extent than most other businesses. In a related function, business cannot function effectively without a good understanding of what the other businesses are doing, This is especially true for banks and financial institutions. Allowing other businesses to conduct this without some regulation gives too much power to competitors, so this is another function of government.
  
• The purpose of the government realm is to protect the people (all of them, regardless of the money they have. Government cannot exclude certain groups from its benefits and controls for greater efficiency the way businesses and religions can), religions and businesses from outsiders who ignore the rules. Government also collects system-wide information and applies it to the problems of state rule enforcement. The law enforcement function belongs to well-regulated government organizations. We give government the sole right to use force on individuals to make them comply with laws, and then limit to individuals and government organizations to a specific set of situations in which they can use such power. The independent judiciary has the final approval of such actions.
• People in general make up all of the three realms I have described. The purpose of government is to protect individuals from each other and from predations by religion, business, government and outsiders. Where possible and cost-effective, government also works to make individuals more useful to society. Most importantly, this means helping families to rear their children and to socialize them into American society so that they can function productively. Again, government must have a monopoly of force and there has to be an independent judiciary which passes judgement (within the Rule of Law) on apparent infractions of the law while limiting the effective power of religion, government and businesses.
  

Let me point out again that the above "realms of independence" work only if there is an effective Rule of Law and an independent judiciary in place to enforce it. None of the rest of the system works without the Rule of Law and its effective enforcement. The independent judiciary is absolutely critical to ensure that each case in which two parties have a conflict in which the law is to be applied have a fair and independent organization which will determine the facts, apply the law, and make a judgement. This allows both consistent and fair application of the law. It also exposes individual cases in which existing law is a bad law, and either applies the Common Law or provides the legislature with the information needed to revise the law.

So Why do the White House and Capital Hill Face Each Other with Distrust?

Bush is a business manager. Business decisions properly make a fetish decisions geared towards greater efficiency Efficiency can be best achieved by standardizing products and ignoring, even rejecting, large elements of customer demand. This allows long production runs that minimize costs. The easiest way to be allowed to produce a few very low costs models of any product is to operate a monopoly. Cost can be minimized while revenue will be higher than if there are competitors.

The second best solution for business is to have a few very large businesses who agree to split up the market. This often happens in a mature market. Businesses in such a mature market rarely provide new products or a large variety of models unless challenged by competitors. Frequently it is easier to deal with competitors in a mature or declining market by mergers or buying them out. Such mergers invariably lead to higher cost products, while every step away from monopoly makes achieving low cost through greater efficiency more difficult for the business. Government needs to prevent these mergers, because the closer a business comes to being a monopoly the fewer new products and services it provides, and the higher the price it charges. electric power utilities are an excellent example, as are phone companies. Privately owned and operated toll roads will soon prove to be similar disasters.

Businesses also supposedly react quickly to changes in markets. Such changes require an individual decision-maker with a free hand to be effective and even then often don't work. Still, that business model is better than committee decisions. But this leads to a particular socialization of business managers as they grow in their profession.

As business mangers get promoted in American business they tend to specialize. That limits to kind of decisions they are good at, but they supposedly get better and better at making those decisions - as long as the circumstances in which the decisions are made do not change rapidly. Such managers often know their speciality quite well, but they tend to be weak strategic managers. They make decisions based on limited information and their experience in the past about customers and goals and then focus on the most efficient implementation of those decisions - no matter who is hurt in that implementation. Efficiency becomes the primary attitude that leads to the implementation of decisions. Such managers are not trained to gather information on new and unusual situation, and they are discouraged from being curious outside their speciality. It's not efficient. So they don't deal well with new or sharply changed situations. Usually they try to find someone to hand such decisions off to. George W. Bush is this kind of manager.

The Constitutional Structure of American Government.

At the social and strategic levels, goals are more important than efficient implementation. Government cannot limit itself to a restricted set of customers, so efficiency in any one area tends to leave out a great many people who need government services. Setting goals requires a lot of information of various types from a variety of people. The U.S. Constitution sets up the Congress to represent the people and gather the information regarding what People, Families, Businesses and Religions need from government. The term "Represent" means to know the issues of importance to a variety of people and organizations and to bring this variety to bear on developing the goals of overall government.

The Legislature gathers that information and runs it through competitive pressures and power mechanisms to develop the national goals. Part of gathering that information is holding public hearings on various aspects of government and society. This informs the goal making process while also educating the population about what is happening in society. Once the goals are established, they are then given over to the Executive Department for implementation. The Executive Department does not have the sources of information nor does it have in place the needed procedures to make broad goal decisions for the government. Instead it has the single President and a hierarchical organization that is designed to make implementation of the goals easier once those goals have been provided by Congress.

So the only decisions which the President makes are those of implementing the goals given by Congress, and coordinating the use of the resources the Congress supplies. Congress establishes the goals and the priorities of those goals.

The President also has the limited function of making short term decisions to deal with rapidly changing situations, subject to the approval of Congress. The President also knows of should know what resources and abilities the government has to work with, so he provides information regarding the government's capabilities to Congress for them to use in formulating or reformulating goals. He also reports on the status of goal achievement to the Congress and the people at least once each year.

The Distrust between Capital Hill and the White House.

The distrust between the White House and Capital Hill is based on Bush's misunderstanding of the limitations of his goal formulation power. He has very little, but he wants to take on a great deal more. Yet he has neither the ability nor the Constitutional power to take on such extended duties.

His efforts to implement the so-called "Unitary Executive" are nothing more than an attempt to take the executive back to the forms of power practiced by Kings when the theory was the "Divine Right of Kings." Such power was done away with by every industrializing country as soon as it was realized that the government were too inefficient to run competitive business organizations. The U.S. Constitution was written at a time when it was realized that government was best run by a representative Parliament or Legislature, and America has been greatly blessed by this structure. George W. Bush, having never had a job as an independent manager unless someone brought him into the business for his name and connections, does not understand his own limitations or those of the Constitution.

The Democratic Constitutional leaders recognize this, and do not trust Bush, nor do the Democrats react as he expects to his assumption of powers that go beyond those allowed and expected under the Constitution and by American tradition. The previous Republican leaders of Congress were Right-Wing Authoritarian in personality, so they allowed Bush to take excessive leeway and they failed to do the job Congress is needed to do.

The change from the compliance of the Republican leaders to the distrust exhibited by the current Democratic leaders has rather shocked Bush, and he doesn't understand where he stands with respect to Congress now. Since he recognizes the distrust from the Democrats he similarly distrusts them.

So that is the source of the conflict right now that was described in Michael Abramowitz' article.

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Comments, criticisms and links would all be greatly appreciated. I am trying to get this information into an article short enough to read, and still make it flow easily so that my point is made. I also learn more from dealing with disagreement than I do from agreement, so don't hesitate to offer criticism.