Wealth, Power and Revolutions: What is happening in North Africa?

Jon Taplin posted a very interesting essay at TPMCAFE about the causes of the revolutions we are watching in the Arabic Middle East right now. It set me to thinking about the interaction of globalization and political power. What I took away from his essay is the following:

Cheap money allows those with wealth to purchase wealth-producing assets and take control of them. So it benefits those with wealth and the banks which manage their money.

Commodities increase in value at a more rapid pace than do sources of intellectual wealth, since the sources of intellectual wealth are uncertain while commodity prices are the inverse of the cost of the cheap money.

So wealth itself becomes the primary source of wealth. The productive economy declines in both value (as measured in money) and in social importance (as measured in political power.)

To state that wealth itself becomes the primary source of wealth and to suggest that political power shifts towards that wealth and away from real economic production is to describe how the economy has been financialized.

The thing I have rarely seen discussed is the "power effect" of money. Possession of money gives an individual the power to influence the decision of those who want the money, and in the financial economy in which we all depend on others for the basic factors of living, this gives those with large accumulations of money great power over lots of people. The Koch brothers are a prime example of this. But there are no reliable and consistent accounting measures of power as there are of money, so economists tend to dismiss power and power effects. The interesting thing, though, is if you go into an organization and conduct a survey of who has power and who does not, the results are quite clear. Everyone knows who has power. But there are no power statements to put in power point alongside financial statements when higher managers make decisions. Those with power can easily dismiss the power aspects of their decisions.

I have attributed the violence in the Middle East largely to the effects of globalization. Globalization is the process of replacing traditional economies with money economies. It is possible to audit and manage the economic changes in a money economy, but because there is no valid and reliable measure of power through society, the power effects of such changes are neither widely recognized nor are they managed. In fact, Libertarianism is the justification presented by the powerful for refusing to manage the social power effects of financializing society.

A revolution is what happens when power moves away from large numbers of people who depend on having the power they need to live their lives with dignity and some predictability.

The US economy is surprisingly dysfunctional.

Several reasons why America is in an economic crisis.

First, is an excellent article by Anna Burger in Huffington post that describes how the US Chamber of Commerce has orchestrated the uncompetitive structure of large corporations and the way top executives control their corporations even when the shareholders object. Here's a sample

To find the "whodunnit" of our current economic crisis, look no further than the corporate boardroom.

Far from serving as checks-and-balances, today's corporate directors are under thumbs of the CEOs who selected them. With unquestioned power and ever increasing arrogance, CEOs can take unnecessary risks, hide details of bad investments, and pay out excessive bonuses to themselves and top executives regardless of their job performance.

That's how subprime mortgages and credit default swaps were hatched. That's how Bank of America's Ken Lewis kept details of Merrill Lynch's poor health and plans of multi-billion dollar bonuses from shareholders. That's how the initial nine banks that got TARP money could pay out $32.6 billion in bonuses last year despite getting a $175 billion dollar bailout from taxpayers.

Then, also in the Huffington Post is an article by Ryan Grim that shows how the Economics profession is dominated by the Federal Reserve.

The Fed belongs to the banks, and all three work in close coordination to make sure that everyone is speaking on the same sheet of music as they propagandize about the economy.

Then there is Paul Krugman's article in the Sunday New York Times describing just how badly the Economics profession got its recommendations in the run up to the 2008 collapse of the American (and then the world) banking system which nearly threw the world into Great Depression II. (I blogged about Krugman's article last Saturday.)

Then there is the fiction that the economy is somehow self-sufficient and self-regulating. It's not. Power structures determine where and how economic transactions occur, but since power cannot be measured in dollars it gets forgotten when we talk about economics. There was a reason why the discipline used to be called Political-economics before Economics itself became a branch of statistics.

Consider how big business organizations are structured. America's economy is largely controlled by large businesses and those businesses act largely at the behest of wealthy conservative oligarchs. Here is how it works.

Big businesses are controlled by the self-defensive conservative wealthy elite whose main purpose is to protect their social position and the wealth that assures they keep that position. The businesses themselves are controlled by the Iron Law of Oligarchy. To a large extent all the resources are controlled by the top managers, and those top managers determine what their employees do professionally.

Robert Michels explained the iron law of oligarchy. The control and wealth of the corporate organizations are centralized in a few individuals at the very top. The recent extreme pay checks to CEO's is the way the conservative wealthy have manipulated the owners and top managers of large business organizations, especially the centralized media corporations.The media are important, because objections to the way the overall system is organized has to be communicated to the masses if it is going to be changed for the benefit of the rest of us. With control of the big media the oligarchs are able to get out the propaganda that justifies the existing system that works to their benefit and objections to that system are not spread widely.

If there were social justice, the CEO's would only be paid what they are worth - which is not the multimillion dollar pay checks they have increasingly been getting, especially over the last three decades. Those paychecks are designed to align the desires and actions of the top managers of the MSM with the wealthy conservative oligarchs.

This is just a sample of the dysfunctional structure of the American economy, and the super-wealthy like it this way. Since they control the TV networks, the large newspaper chains and the most influential elements of the rest of the media, the rest of us don't hear much about just how dysfunctional the economy and society really is.

Just a few ideas for your consideration.

Many of the problems of the American society are based on centralization of power

We have all heard Scott McClellan's words - "[T]he national press corps was probably too deferential to the White House and to the administration in regard to the most important decision facing the nation…. the choice over whether to go to war in Iraq." (Quoted from the article published by Josh Silver.) The question is, why did so many journalists ALL go along with the Bush administration and fail to question.

Why didn't the serious questions get more TV air time? Why was the only bandwagon out there the one the Bush administration was driving?

The theory is that much of the Press is independent of the administration and can be expected to ask the embarrassing questions of the administration and then publish and explain the responses. Were all the journalists individually complicit in the Bush-directed rush to an unnecessary war?

Now, fives years too late, we get the answers. From Josh Silver's article:

More and more reporters, including major TV correspondents like Jessica Yellin and Chris Matthews have recently admitted that their bosses were pro-war and that it slanted their coverage.

Then from Ruth Rozen, Journalist and historian, we get her experience at what was the most "liberal" newspaper in America:

I worked as an editorial writer at The San Francisco Chronicle, where a liberal editorial board raised serious objections to the war. And yet, in the years following 9/11, I felt editorial restraints that never allowed us to tell the whole truth about the lies and deception that led to America’s most catastrophic foreign policy disaster. [Snip]

So what did I experience? An editor and an editorial board who felt that, in the absence of inside sources, we could not counter the administration’s lies.

Let me give you some examples. I was raised in a Republican family, but schooled by the great iconoclastic journalist I.F. Stone, who taught me that you can find the truth without inside sources, if only you’re willing to see beyond patriotic fervor and examine voices in the public domain that are marginalized, So, I would read national security experts who countered Donald Rumfeld’s ridiculous predictions; I would read the British, Canadian, Italian and French press; I would read the writings of experts in resource wars and weapons of mass destruction.

No, I didn’t know I was right. But I was sure that the administration was lying. And, I knew that at the very least that our editorials should be asking why Bush, Cheney, Rumsfeld et al should be believed when I had found strong evidence that they were cherry picking intelligence, and setting up their own office in the Pentagon, and acting in complete secrecy. [Snip]

When I heard Bush’s inaugural address, I heard two major lies embedded within his speech. But somehow that still wasn’t enough to accuse him of plagiarism and deception.

The truth is, even a liberal newspaper, blessed with a liberal editorial board, did not engage in truth telling. We raised some good questions, wrote about supporting the troops, but failed to describe the deception that led to the catastrophe that was unfolding right before our eyes. [Snip]

This week, I sat with a former colleague from the editorial board in a café, rather than in the room where we used to make our editorial decisions. He admitted that I had been right, but even more, that even in a liberal paper, the editor and most of the board, had felt restrained, afraid of seeming unpatriotic, afraid of saying the emperor wore no clothes, afraid of not giving the President the benefit of the doubt, afraid of truth telling without access to inside sources.

Even without inside sources it was clear early on that the Bush administration was lying and that the Press was either spreading those lies (FOX "News" and the other right-wing liars) or they were shading the news and omitting the opposition.

How did they get away with it?

There are three major TV networks and the cable news organizations, all owned and managed by a very few conservative individuals. The controls in TV regarding what is reported are in the hands of probably fewer than 25 or so individuals. Most local radio stations have been bought up by a very few networks like Clear Channel, and the same controls are applied to what is broadcast. And Newspapers?

The newspapers have lost their revenue streams as the downtown department stored moved to the malls, and the Reagan administration encouraged competing newspapers in the same city to merge or have one buy the other out and shut it down. Control of the news again resides in the hands of two or three people in each city, even if they aren't controlled by the few chains.

News in America is controlled by fewer than 200 individuals. They determine what will get a lot of coverage and what will be ignored.

The result? There is no free market in news in America. The many disasters of the Bush administration starting with Florida 2000 is a direct result of the central control of the news organizations. We have problems that fester because the news controllers do not want to upset the apple cart by telling the public about those problems, and most especially, they don't want to run counter to the wishes of the administration, particularly the Republican administrations.

I would bet that the 200 or so news-controlling individuals are afraid of the vindictiveness of the Republican administrations, which is why they avoid criticizing them while piling on to the Democratic administrations. That's just one of the many biases in the news media.

Another bias is that those 200 individuals are all very wealthy and belong to the class of individuals with great wealth. Chris Matthews gets $5,000,000 a year for what he does. Tim Russert gets even more. And they aren't the top decision-makers. Those top decision-makers can remove Matthews and Russert just as the head of CBS news removed Dan Rather when he became too inquisitive.

Those wealthy news-controllers don't want to upset their own apple carts, so they give labor and the poor short shrift. Better than those groups get propaganda on how to be better Americans (and support the wealthy) rather than that they learn that the social deck as stacked against them (by those wealthy individuals and their wealthy friends.)

Very large organizations do not exist to produce and sell products and services. They exist to make money, and the top CEO's control all their subordinate companies by controlling the money those companies get to keep or receive to invest. Those top CEO's are bankers, generally with little close knowledge of how the products they sell are created or used. All that matters is that revenues increase and costs be reduced.

This also applied to news organizations. Their purpose is not to collect and present their news. Their purpose is to make a profit by selling advertising, and the news department is bait to cause viewers/readers to look at the ads. Increasing revenue means selling more ads or selling ads at higher prices. Reducing costs means cutting newsroom staff - since distribution of the news is pretty much a fixed cost.

As a result, those of us who expected the news organizations to provide the information needed for an informed public who would vote for those who best manage America are sadly disappointed. IN the absence of an active and aggressive news media, we get bad government filled with corruption and ignoring the real problems that government has to deal with in an industrial society.

Welcome to the Reagan Revolution as it works its way into creating a Latin American society with about 10% wealthy 90% poor and no significant middle class. It is the result of too much centralization of power.

Conservative America - where wealth and power is rewarded instead of work

Work hard and you will be rewarded in America. We still get taught that in school - but under the Reagan Revolution you will only get part of the reward for your work. The rest is siphoned off and redistributed to the wealthy and the powerful. That's what is meant by the statistics showing greater disparity between the wealthy and the superwealthy and the rest of us. It's not better educated workers getting paid more in the global economy for economic reasons. It's the power-based redistribution of income upwards from the workers who produce the wealth to the wealthy and powerful who define the rules of who gets the rewards.

Part of this results from the changes in tax codes that make the middle class pay a larger percentage of their income after family support than is true for the wealthy and especially the superwealthy. But even more comes from the redistribution of power away from workers and from the government to the investors and top management class. The Reagan Revolution is building a Latin-American style plutocracy in America by shifting power from the workers and their government to the wealthy and the superrich.

This is bad economics in the first place since it rewards position and class rather than effort, but it also has social consequences as the connection between effort and the reward for that effort is severed.

For all the conservative rant that America should be a nation based on "free enterprise" what has happened in America since the 1960's is that people get wealthy primarily by getting a government contract or a government-protected monopoly. The ideal of the American economy used to be that the people who did the productive work that created wealth were rewarded more for their productivity than were the managers who organized the work, and the investors who merely contributed money to the enterprise were the least rewarded because their effort was the least productive. That's the ideal of a middle class nation. It is the skills and efforts of the middle class that actually produce more and better goods and services, and the efforts of those who merely reorganize those productive efforts should not be rewarded more than the efforts of those who actually do the final productive work of wealth creation.

How do you get the most wealth creation and greatest productivity from a society with a modern economy embedded in it? You provide the greatest reward to those who do the real work rather than to the managers, investors and politicians.

In the last thirty years especially American has changed. The rewards for productive effort have been distributed away from those who actually create the final goods and services towards those with the power and money to decide who gets rewarded and who does not. David Cay Johnston's new book Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill) provides numerous examples of how our society now rewards wealth, power and position rather than productive effort.

Contrary to the fictions the Reagan conservatives keep spouting, this redistribution of wealth from the workers and families up to the very wealthy is a political function, not an economic one. Every time a big-box store like Wal-Mart or Costco arranges with local governments to not have to pay local taxes for a decade or more to locate a story in a community, they gain an economic advantage over the local stores which still have to pay those taxes. I used to trade at two local hardware stores where I got good service and advice along with the hardware, tools and parts I needed, but home Depot and Lowe's opened up, cut the prices because of the tax benefits the County gave them, and sucked up the business that had gone to my local hardware stores.

I'm not getting lower prices because now I have to drive ten miles instead of two, and park half a mile from the big box store in a dangerous anonymous parking lot instead of right in front of my local store. I also can't find anyone who can help me figure out how to deal with my plumbing or lawn problem. And oddly enough, the amount of product that Home Depot and Lowe's make is roughly the same as the amount of tax incentive they got the County commissioners court to give them to open in the first place. That money is sucked out of my community into the pockets of those wealthy and powerful enough to get the special government privileges that makes the big-box business model profitable in the first place. So Our community is poorer, we have fewer total jobs and the ones we have pay less than when we had local hardware stores, and the only winners have been the wealthy and politically connected investors. Welcome to the Reagan Revolution - the revolution in which plutocrats, investors and top managers of big business conglomerates are disproportionately rewarded because of the positions they occupy instead of the actual wealth they personally produce.

Rick Perlstein quotes Tom Geoghegan who describes the social and economic results of this failed economic structure in See You in Court: How the Right Made America a Lawsuit Nation :

It took ten years—almost all of the 1990s—for the median family income to get to the same level that it was, in real terms, in 1989. But in 1999, when we got to the same income level we had in 1989, the "median" family had to work six more weeks a year.

To keep from falling, the 1999 middle class had to work six more weeks a year for free. Not a few more hours—six more weeks! By the way, maybe it's worth pausing to say this: No wonder our FDP keeps shooting up, if the middle class is being forced to work for free.

But all this unpaid extra labor tends to undermine the Rule of Law.

Why? The economist John Maynard Keynes put it best: "Nothing corrupts society more than to disconnect effort and reward." That's what did in the old Soviet Union: no matter how hard one worked, one could not get ahead of someone who did not work at all. All that is what is happening in the United States, too. Of course, in a certain way our country would seem the very opposite of the Soviet Union. Here, if people don’t' work, they're going to end up homeless. Then again, if they do work, they may end up homeless, too.

That's the point. Like the USSR, we are slowly breaking the connection between effort and reward. And in terms of the Rule of Law, that's a dangerous thing to do. It's dangerous to push the middle class into questioning the fairness of the rules.

The danger is that people in the middle class will begin to see the world as arbitrary and unfair—unpredictable, a matter of luck, a chance of catastrophe around the corner. It does not matter if they work the extra hours. Over 40 percent of American families have less than $5,000 in savings. One bill, a hurricane out of the blue, can blow everything away.

So, quietly and to themselves, people at the median or below have to wonder, as the country becomes fabulously wealthy: Why play by the rules?

I may even understate the case. The disconnect between effort and reward is much greater than it seems. Some families lost income, though they worked harder. But they became wealthier. How? They made money off their homes. But this is not "effort." It's not even savings. It's just something that happened arbitrarily, to me, but not to many others. The moral is: Hard work doesn't pay.

Let's go back to my earlier example. I doubt many people did actually get back to the same 1989 level of income in 1999. Think of pensions. Fewer working people had pensions, though they worked longer. Or they had bigger administrative fees. Think of health insurance. Fewer people had it. Or they had bigger deductibles. They lost out, even with six more weeks of work. Perhaps our moral character can survive one decade of that kind of thing, but it keeps going.

Why is this so dangerous for the Rule of Law? It's simple. If we do not expect the world to be reasonable and fair, then sooner or later we do not demand or expect those qualities from the law, either. We get used to arbitrariness and unfairness. Sometimes we take a certain glee in it—at least when arbitrary things happen to others. Worse, as fewer of us vote, or even watch the news, we experience the legal system not just as arbitrary but as alien. It's something that is imposed on us. We did not consent to it. We didn't vote.

Worse, the more we drop out, the more arbitrary and unpredictable the Rule of Law becomes. The unions, political parties, and other institutions such as the liberal churches helped us shape a certain legal system. When they began to weaken, the law itself begins to change. It became less rational and predictable. It is not just that people now perceive the law as less rational and predictable. It really is.

Maybe the country will survive it. Maybe the less rational and predictable the law becomes, the more people will go along. They will accept it up to a point, as in backward societies, because they will experience the Rule of Law in the same way they experience the world.

America became a wealthy and powerful nation because the availability of free land severed the connection between rewarding land ownership and rewarding hard work. Individuals who wanted to get rewarded for their own work merely had to open new land and put their effort into the enterprise.

When the wealthy landowners tried to get government to tax the new middle class for reasons that did not contribute to their economic success, they used their numbers to change the way government was controlled. The shock expressed by many who had been leaders during the American Revolution when Andrew Jackson took control of the government is clear in history, but the Jacksonian Democrats were people who were used to being rewarded for their effort and weren't going to let a few large landowners (A.K.A. "The Right People") take the rewards away from them.

The fact that the American South with its plantation culture and slavery did not participate in the early stages of the Industrial Revolution (and has yet to get fully with the program) is a clear demonstration of the economic superiority of rewarding the efforts of labor more than land, capital or that strange, mostly ideological economic concept, Entrepreneurship. [Land, Capital and Entrepreneurship are not unimportant economic factors, but the rewards to those who do the final job of creating goods and services are the most powerfully productive rewards in the system. That's what the statement that "a business' most important assets are its workers" really means.]

The reason why laissez faire economics does not work is that it assumes that the social and power structures of society will somehow automatically gravitate to those which produce the best good, services, and social benefits. Unfortunately, there is no automatic pressure or mechanism that makes that true. In fact, in some markets such as a private insurance-dominated national health care system, the assumption that somehow the market will give the best results at the lowest possible cost is clearly false.
America needs to seriously reconsider the reward structure in has in place and that will include, but not be limited to, the tax structure. What social benefit is returned from the super-rich that justifies their failure to pay a greater percentage on their incomes in taxes than those with the least income? The super-rich get proportionately more form society, they should support it proportionately more. Is there any social benefit at all in allowing great wealth to be inflicted on the descendants of wealthy families? Is that not simply an incentive for them to NOT be productive and instead play power politics for the sole purpose of protect their social position?

America has had a three decade experiment with the Reagan Revolution. The Reagan Revolution and the conservative movement that has inflicted in on America has clearly failed our society and our nation. It needs to be rethought and re-worked.

A major element of that rethinking is how work is rewarded. Today it is more likely for most people to become wealthy by hitting the lottery than by the results of their hard work. That is simply wrong, and destructive on any society that is supposedly built on the rule of law and also wants to be an economically productive nation that can compete in the world economy.

Conservative thought is based on the assumption that the nation exists to support business and reward the rich and powerful. Somewhere in the Reagan Revolution the idea that the heart of our nation is its families, and that business and the economy exist to improve life for the workers and their families, not for the CEOs, the investors and the politicians who enable them. Conservative thought and actions have failed America.

It's time for American to return to its roots as a middle class nation not dominated by an aristocracy. Instead, work needs to be properly rewarded and families supported by the economy.

America the unrecognizable

This editorial was published today:

There are too many moments these days when we cannot recognize our country. Sunday was one of them, as we read the account in The Times of how men in some of the most trusted posts in the nation plotted to cover up the torture of prisoners by Central Intelligence Agency interrogators by destroying videotapes of their sickening behavior. It was impossible to see the founding principles of the greatest democracy in the contempt these men and their bosses showed for the Constitution, the rule of law and human decency.

It was not the first time in recent years we’ve felt this horror, this sorrowful sense of estrangement, not nearly. This sort of lawless behavior has become standard practice since Sept. 11, 2001.

The country and much of the world was rightly and profoundly frightened by the single-minded hatred and ingenuity displayed by this new enemy. But there is no excuse for how President Bush and his advisers panicked — how they forgot that it is their responsibility to protect American lives and American ideals, that there really is no safety for Americans or their country when those ideals are sacrificed.

Out of panic and ideology, President Bush squandered America’s position of moral and political leadership, swept aside international institutions and treaties, sullied America’s global image, and trampled on the constitutional pillars that have supported our democracy through the most terrifying and challenging times. These policies have fed the world’s anger and alienation and have not made any of us safer.

In the years since 9/11, we have seen American soldiers abuse, sexually humiliate, torment and murder prisoners in Afghanistan and Iraq. A few have been punished, but their leaders have never been called to account. We have seen mercenaries gun down Iraqi civilians with no fear of prosecution. We have seen the president, sworn to defend the Constitution, turn his powers on his own citizens, authorizing the intelligence agencies to spy on Americans, wiretapping phones and intercepting international e-mail messages without a warrant.

We have read accounts of how the government’s top lawyers huddled in secret after the attacks in New York and Washington and plotted ways to circumvent the Geneva Conventions — and both American and international law — to hold anyone the president chose indefinitely without charges or judicial review.

Those same lawyers then twisted other laws beyond recognition to allow Mr. Bush to turn intelligence agents into torturers, to force doctors to abdicate their professional oaths and responsibilities to prepare prisoners for abuse, and then to monitor the torment to make sure it didn’t go just a bit too far and actually kill them.

The White House used the fear of terrorism and the sense of national unity to ram laws through Congress that gave law-enforcement agencies far more power than they truly needed to respond to the threat — and at the same time fulfilled the imperial fantasies of Vice President Dick Cheney and others determined to use the tragedy of 9/11 to arrogate as much power as they could.

Hundreds of men, swept up on the battlefields of Afghanistan and Iraq, were thrown into a prison in Guantánamo Bay, Cuba, so that the White House could claim they were beyond the reach of American laws. Prisoners are held there with no hope of real justice, only the chance to face a kangaroo court where evidence and the names of their accusers are kept secret, and where they are not permitted to talk about the abuse they have suffered at the hands of American jailers.

In other foreign lands, the C.I.A. set up secret jails where “high-value detainees” were subjected to ever more barbaric acts, including simulated drowning. These crimes were videotaped, so that “experts” could watch them, and then the videotapes were destroyed, after consultation with the White House, in the hope that Americans would never know.

The C.I.A. contracted out its inhumanity to nations with no respect for life or law, sending prisoners — some of them innocents kidnapped on street corners and in airports — to be tortured into making false confessions, or until it was clear they had nothing to say and so were let go without any apology or hope of redress.

These are not the only shocking abuses of President Bush’s two terms in office, made in the name of fighting terrorism. There is much more — so much that the next president will have a full agenda simply discovering all the wrongs that have been done and then righting them.

We can only hope that this time, unlike 2004, American voters will have the wisdom to grant the awesome powers of the presidency to someone who has the integrity, principle and decency to use them honorably. Then when we look in the mirror as a nation, we will see, once again, the reflection of the United States of America.

For all my complaints with the dying newspaper, the New York Times, this time they got it right.

This is a reflection of George W. Bush, write large in the administration over which he presides. But Bush is a reflection of the panic and anger that is movement conservatism. It's not like the Democrats are going to be the nation's saviors, either. Nancy Pelosi has taken impeachment off the table, and she represents the Democrats in Congress who have seniority. Don't rock the boat. Protect the establishment at all costs.

The pundits, led by David Broder the (senile?) Dean of the Press Corps, are touting the bipartisan administration by New York City's billionaire Mayor Bloomberg. Salon's Glenn Greenwald explains what a travesty of establishmentarianism that is.

He [Bloomberg] also is as enamored of government control, police powers and surveillance as anyone in the Bush administration. He is an unrestrained advocate and enforcer of the War on Drugs (despite his own acknowledged use of marijuana, of course) and advocates the creation of "a DNA or fingerprint database to track and verify all legal U.S. workers," about which the NY Civil Liberties Union said, with extreme understatement: "It doesn't sound like the free society we think we're living in. It will inevitably be used not just by employers but by law enforcement, government agencies, schools and all over the private sector."

Clearly, this is just exactly what our country desperately needs, what it is missing most -- a neoconservative, combat-avoiding, Bush-supporting, Middle-East-warmonger who sees U.S. and Israeli interests as indistinguishable and inextricably linked, with a fetish for ever-increasing government control and surveillance, and a background as a Wall St. billionaire. We just haven't had enough of those in our political culture. Our political system, more than anything, is missing the influence of people like that. That's why it's broken: not enough of those.

Bloomberg is basically just Rudy Giuliani with a billion or two dollars to spend to alter the election. When it comes to foreign policy, war-making and government power, he offers absolutely nothing that isn't found in destructive abundance among the most extremist precincts in the Republican Party, while his moderate to liberal stance on social issues would prevent him from actually winning the support of his natural GOP base.

In fact -- despite his steadfast neoconservatism -- it's hard to see how the candidacy of a divorced, unmarried, stridently pro-gun-control, pro-choice, socially liberal New York City billionaire would accomplish anything other than offering the Republicans their best hope of winning in 2008. All of this seems to be intended as punishment meted out by the Establishment to the Democrats -- using Bloomberg's billions as the weapon -- for not repudiating their loudmouth, restless liberal base strongly enough. That, more than anything, seems to be the oh-so-noble and trans-partisan purpose of David Broder, David Boren and Sam Nunn: to find a way to stifle the populist anger at our political establishment after 8 years of unrestrained Bush-Cheney devastation, increasingly represented (on the Democratic side) by the Scary, Angry, Intemperate John Edwards campaign.

A Bloomberg candidacy would have no purpose other than satisfy his bottomless personal lust for attention and bestow the wise old men threatening the country with his candidacy with some fleeting sense of rejuvenated relevance and wisdom. His political views are conventional in every way and he's little more than an establishment-enabling figurehead. The whole attraction to his candidacy has nothing to do with any issues or substance and everything to do with an empty addiction to vapid notions of Establishment harmony and a desire to exert control, whereby our Seriousness guardians devote themselves to a candidate for reasons largely unrelated to his policies or political views, thus proving themselves, as usual, to be the exact antithesis of actual seriousness.

So the Bush administration consists of out and out reactionary loonies, so find someone just like Bush to replace him. and if David Broder puts his fingers in his ears and whistles real loudly he won't hear any Partisan complaints at the sloppy job he is doing as he tries thinking and writing about what is wrong with America.

Whatever happens, the Bush administration is incompetent and down-right scary, but the Democratic leadership does not want to rock the boat any more than David Broder and the pundits do. So they are all shrieking about the horrible Populists who are popping up in both parties (sounds suspiciously like people who are facing similar problems and finding similar solutions when it happens in both parties.) In the Republican Party it is first Huckabee, and to some extent also Ron Paul. In the Democratic Party it is the Dirty Hippy Bloggers who are doing all the complaining. David Sirota discusses the situation:

A pretty reliable gauge of Establishment fear is how far away from factual reality its chief spokesmen stray at election time. With economic populism now driving both the Democratic and Republican presidential contests, professional political pontificators in Washington are attacking candidates for being crazed and angry - when in fact their own rhetoric shows it is the pundits who are the angriest of all. An uprising is on - one against the hostile takeover of our government by Big Money interests. And inside the walls of the Washington palace, the elite are freaking out.

America is coming up against major changes, and the establishment is freaking out. George W. Bush himself represents an effort by movement conservatives and evangelical fundamentalists to deal with the changes that have been pounding more and more Americans for a generation, but Bush has been a solution driven by fear and ignorance and trying to apply military power and authoritarianism to solve the problems. The problems are real, but the Bush-led solutions have made the problems much worse.

Well, centralization of power, militarism, authoritarianism and religious fundamentalism have all failed, so we are seeing a rise in populism. The establishment is all cozy in financially protected ghettos with security guards, and they are getting panicked by "the rise of the masses." The pundit's solution is just ignore the problems and they will go away. That's the solution of the well-to-do geriatric set like David Broder.

It's time to try something new, and whatever it is, should embody the dream of Liberty that created America in 1776 and that established the U.S. Constitution. Those are two very powerful forces, and they can deal with the economic and social changes that are causing so much disruption in America today. Maybe we can remind Broder and the Establishment what they are?

They'll be better for it.

[See also The last stages of American world dominance have arrived for an explanation of what is causing all the problems that the conservatives and populists are reacting to, and that the establishment pundits and Wall Street want to ignore.]

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.