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Thursday, February 10, 2011

Malignant Narcissism in the Porn Industry: A Case of Flaccid Industry Self-Regulation

In early February, 2011, the Los Angeles city council voted unanimously to draft an ordinance that would require condoms to be used on the set of every pornographic movie made within city limits. “We can’t keep our heads in the sand any longer,” City Councilman Bill Rosendahl said. “These people should be using condoms. Period.” According to The New York Times, the "city law would be the first to impose safety standards specifically on the pornographic film industry, which has largely been allowed to police itself." Until the late 1990s, the industry went unregulated. On the heels of lawsuits filed against production companies by several actresses who had contracted H.I.V., the industry created the Adult Industry Medical Healthcare Foundation in 1998. The nonprofit clinic was financed by contributions from production companies and offered STD tests for the talent. Producers agreed not to hire performers who had not been tested within thirty days. Even though the county health department accused the industry's self-regulation of failing to protect the talent and their sexual partners, the production companies claimed that the system worked well. “This has been working for years,” said Steven Hirsch, founder of Vivid Entertainment. “If we saw people getting sick, we would go to mandatory condoms.” However, STDs remained rampant among pornographic film performers. Rates of chlamydia and gonorrhea are seven times higher than those in the general population.  Taking Steven Hirsch's own statement, it could be argued that waiting until an actor looks sick to require him to wear a condom is a bit like waiting until the horse has left the barn. “Testing just acts as a fig leaf for producers, who suggest that it is a reasonable substitute for condoms, which it is not,” said Michael Weinstein, president of the AIDS Healthcare Foundation.

As with most business ethics cases, this case pits the public good against the financial interests of particular firms and employees. The self-regulatory testing system often left the talent weighing financial needs against their own safety (and one could add the public health). “At first, I would ask about condoms, and they told me I’d never be able to find work,” one actress said. “You do worry about the risk, but any girl desperate for money, like I was, is still going to do it.” It is also not in the financial interest of the production companies to make condom use mandatory. “I tried many years ago to get everybody to go to condoms,” said Jim South, a longtime talent agent for sex-film performers. “Quite a few companies did, but sales fell severely. The switch would be very difficult.”

Ethically, both the talent and the companies have been risking harm to others (and in the case of the talent, themselves as well) in order to gain financially.  It is essentially egoism at the expense of others' well-being. To the extent that AIDs is still fatal, the trade off is between killing someone (and oneself, in the case of the talent not wanting to wear condoms) and losing money. I have written a novel in which I juxapose frauduent sub-prime mortgage banker with gay college students who carelessly risk others' health (and lives) by having unprotected sex, moving from guy to guy in "hook-ups."  The harm in being kicked out of one's home onto the street may seem qualitatively different than the harm in being infected by a possibly fatal disease.  However, I contend that the callous disregard for others among the two kinds of violators renders the two as the same "type." Moreover, I submit that this "type" is increasingly salient in the make up of modern society.  In other words, modern culture, at least in the West, is increasingly taking on their attitude. In terms of M. Scott Peck's theory in People of the Lie, the self-centeredness at the expense of others is malignant narcissism.  Peck theorizes that such narcissism is actually a protective or defensive shield around a feeling of emptiness at one's core.  The evil, Peck argues, is the emptiness rather than the defense mechanisms of selfishness and lack of empathy.  The increasingly "bubble" quality of modern society, wherein people drive in their own cars, listen to their own music, and even watch movies alone on their laptops, may perpetuate the "me vs. everyone else," which in turn reinforces the attitude of malignant narcissism.

Beyond the ethical dimension, that industry self-regulation allowed for others to be harmed in the sex film industry and perhaps has even killed talent or their partners indicates a justification for government regulation. The New York Times reports that enforcement has been a problem, and that the threat of loss of the industry might undercut the regulator's power to enforce a new law. "Even if the law is enacted, city regulators may face similar problems of enforcement that have dogged state occupational safety and health officials. And some filmmakers have grumbled about moving their operations, which bring in as much as $13 billion annually, to other states." An industry can "capture" a regulatory agency not only because the latter depends on the former for information, but also because of the industry's power. This power can be exercised through government officials, even legislators and governors, who have influence over agencies. 

In the end, it is the lack of value that talent and the production companies put on human life (especially that of others, but also that of the talent themselves) that is telling in this case study. Sex itself is oriented to an instant of sheer pleasure that a peson can enjoy in him or herself. It is therefore not surprising that people in an industry involving sex are oriented to their own interests at the expense of others. Whether through industry self-regulation or government regulation, it is difficult to get around, or change, an attitude. This is the intractable problem that this case puts before us. One might ask whether the malignant narcissism is simply human nature or an instance of decadence therein.  Weakness may be difficult enough to treat; whether human nature itself can be changed so as to mitigate the squalid effects of malignant narcissism may be a question for the psychological, biological and medical sciences as the twenty-first century progresses.

Source: http://www.nytimes.com/2011/02/10/health/policy/10porn.html?_r=1&ref=todayspaper

Wednesday, February 9, 2011

The U.S. Government to the Rescue of Troubled States: Larger Faultlines

The New York Times reported on February 9, 2011 that President Obama was "proposing to ride to the rescue of states" that had borrowed billions of dollars from the federal government by continuing to pay unemployment benefits during the economic downturn. His plan would "give the states a two-year breather before automatic tax increases would hit employers, and before states would have to start paying interest on the loans." Many of the states began the recession with "too little money in their unemployment trust funds," and they "quickly ran through what little they had as unemployment rose and remained stubbornly high month after month. With their own trust funds depleted, 30 states borrowed $42 billion from the federal government to continue paying unemployment benefits." These state were facing an estimated $1.3 billion in interest payments to Washington due in the fall of 2011. To make up for the loss of this interest income to the federal government, the President’s proposal would raise the minimum taxable wage base of $7000 to $15,000 in 2014. "The rate of the federal portion of the unemployment taxes would then be lowered, so the proposal would not raise federal taxes on states that do not owe the federal government money. But it would speed the rate at which states that do owe money repay the federal government, and allow states to collect more unemployment taxes to rebuild their trust funds if they do not lower their tax rates." By February, 2011, eighteen states had already raised their minimum taxable wage base to $15,000 or more, according to the National Association of State Workforce Agencies. Iris Lav, an advisor at the Center on Budget and Policy Priorities, said that the unemployment system as “a constellation of problems that need to be solved. . . . The near-term problem is the economy . . . and both the interest payments and the principal repayments are cutting into employers, and it makes great sense to postpone them. The larger question is how you get states to solvency.”


The proposal itself makes sense from the standpoint of getting thirty states out of a tight fix. The debate on whether taxes should go up in 2011 or 2014 ought to be dwarfed by the larger structural faultlines, which are only hinted at by the President's proposal to ease up on States in trouble in the unemployment compensation system. In other words, the necessity of having extended unemployment's term to cover the length of the recession following the financial crisis of 2008 itself implies higher taxes (or debt). Whether the states' borrowing for unemployment is covered beginning in 2011 or 2014 can be debated (e.g., avoiding recessionary tax increases during a recession vs. the higher deficits), but we ought not allow it to divert attention entirely from the larger structural faultlines that are intimated by the President's proposal.

First, the "rescue" is limited to that program; neither the Federal Reserve nor the U.S. Government would come to the rescue of the states concerning their deficits and debt. Moreover, that the U.S. take on taxes limited the ability of state governments to tax in sufficient amounts to cover their expenditures is not touched. Furthermore, that the U.S. Government would be rescuing states intimates the dependence of the latter and the overwhelming power of the former. Perhaps the "cooperation," or intermixing, of the two systems of government in the unemployment system is problematic because it gives the U.S. Government a way to dominate states. According to Jacobs and Karst, “It is the preservation of the balance between the central authority and the constituent states that is the essence of federalism.” Yet, “In the American federal structure the central authority is stronger." Rescuing thirty states evinces this imbalance, and thus the failure of the United States to preserve the essence of federalism. Maintaining at least one autonomous domain for the states is not sufficient for a viable federal system; balance is essential or the two systems of government will not be able to act as a check on each other. Debating whether to raise taxes in 2011 or 2014 would mean once again ignoring our failure to preserve our federal system; it would mean blindly sitting by once again while the political consolidation of a diverse continent proceeds full throttle ahead to a "one size fits all" and the resultant building pressure, which is apt to explode one day. 

Second, the unemployment system itself, being limited to helping the unemployed for discreet periods often shorter than a given recession, is not addressed fundamentally. In other words, the X weeks feature of being on unemployment compensation treats "convenient" things like food, rent and utilities as though they were optional commodities that could be skipped after the Xth week on unemployment. The nature of unemployment is rooted in survival, which if one believes in human rights, including life, is properly unconditional. The basic structural problem with the unemployment system in the U.S. is in turn a symptom of the inability of the private sector to bring the U.S. population to full employment. That is to say, relying exclusively on business to bring us to full employment is problematic, again from the standpoint of survival as a human right. To be sure, the recognition of survival as a human right implies higher taxes than are necessary in simply treating survival as a matter for the state of nature--as in Paul's dictum that those who don't work don't eat. This broader debate is typically ignored as we debate incremental changes in policy, even if those changes have implications in terms of the broader faultline.



Jacobs, Francis G. and Kenneth L. Karst, “The 'Federal' Legal Order: The U.S.A. And Europe Compared A Juridical Perspective,” in Integration Through Law: Europe and the American Federal Experience, Mauro Cappelletti, Monica Seccombe, and Joseph Weiler, eds., Vol. 1, Methods, Tools and Institutions. Bk. 1, “A Political, Legal and Economic Overview” (Berlin: Walter de Gruyter, 1986), pp. 169-244, p. 171.

Tuesday, February 8, 2011

Is Health Care a Right? Or Merely Economic Egalitarianism?

The Senior US Senator from Illinois, Dick Durbin, said the following just before one of the votes on the health-care insurance reform legislation in December, 2009:

“Thirty million Americans who currently don’t have health insurance  have the peace of mind of knowing that they have health insurance,” Mr. Durbin said. He added, “This is a real debate over whether or not health care is going to be a right or a privilege in America.”

My first reaction after reading this quote was one of perspective—specifically, on how far from this central question of “right vs. privilege” the debate on the health-care legislation had gotten in the obsession over a “public option.”  Health-care can be a right, whether implemented through private, non-profit or public sector organizations (the government funding the poor regardless).   The fundamental question in mandatory health-insurance coverage is whether something that is needed to survive (medical treatment for the sick) is a political right in a society.  If so, then the government has a responsibility to make sure that every citizen has insurance regardless of income.   I suspect that there are many citizens in the US who would say that health-care should not be a right because that right involves economic redistribution.   I believe one poll showed that 87% of Americans who were satisfied with their health insurance said they do not agree to pay for others who would not otherwise be able to afford insurance could have it.  The costly emergency room visits of the uninsured may mean that the insured pay more to have uninsured in society; even so, my point is that we can not assume that rights bearing on sustenance and involving economic redistribution are recognized as rights (rather than as “tax and spend”).   Essentially—and perhaps surprisingly—some people would say that others do not have the political right to life (though some of the same people would say that unborn fetuses have it!).   Unfortunately, given how the debate on health-care insurance has gone, it is difficult to know whether there is a sizable portion of the American society that does not want to recognize that every citizen has a right to basic necessities.   Is political discourse such that it inherently leads to a spirallying out on a tertiary aspect of an issue, rather than on the eye?  If so, how are we to discuss just what are the limits on rights in our society?  Are the rights recognized in law to be byproducts of discussions on implementation (i.e., by business, non-profits or government organizations)?   Furthermore, is a focus on implementation a case of putting the cart before the horse…and letting the horse wander off? 

Thinking of the health-care insurance debate this way—as focused on implementation as if that which is to be implemented follows from it—I submit that there are limits to public discourse.  Hence, Congressional representatives who are led by polls and newspapers may well be a case of the tail wagging the dog.  At the very least, such legislators would not be debating the central questions.   It is dangerous, if not utterly unwise, to legislate this way.   Yet as our system of government becomes more and more democratic (i.e., tailored to the public discourse and polls), we risk running ourselves into a ditch—not looking at where we are going.   Rarely, if ever, did I hear or read references to health-care as a right in the debate.  I heard a lot on process and implimentation, but little on whether a new right that involves redistribution ought to be recognized.  Moreover, we missed an opportunity to debate whether rights that require redistribution are actually rights as distinct from economic egalitarianism.    Not even our elected representatives, who are supposed to act as abuffer to direct democracy (i.e., pulse of the people at the moment), were able to focus on these questions.   Clearly, chasing tails is not the way of leadership.  

Lessons from Jordon: Democracy's Achilles Heel

In December, 2009, Abdullah II, King of the state of Jordon,dismissed the prime minister and replaced him with a palace aide and loyalist, dissolved Parliament and postponed legislative elections for a year.   For all the defects of a representative democratic system, it is far superior to autocratic rule, especially by one.   It is natural for people to resist preemption. “The nature of humans is they want democracy,” said Ali Dalain, an independent member of the Parliament that was dissolved. “One person cannot solve all problems and cannot make everyone happy, so people must share in determining their fate.”   These quotes are revealing from the standpoint of human nature and political theory.    In reading “one person cannot solve all problems,” I thought of the imperial US presidency—not only at the expense of the governments of the republics within the US, but also of the Congress.   The health-care insurance reform legislation, for example, is said to be Obama’s, even though he is in the executive rather than the legislative branch (having only a veto, which can be overridden, in the latter).   It would seem to me that the Speaker of the US House and the Majority Leader of the US Senate ought to have their own agendas—that the Congress should not simply be led by the president’s agenda.   Foreign policy is perhaps the one area where the Congress ought to defer—but only in terms of agreeing to consider what the president has negotiated abroad.  Had the UN climate talks in Copenhagen produced a treaty in December, 2009, the US President would have asked the US Senate to consider it.  Were the Senate to routinely ignore the President’s negotiations, it would be very difficult for the US to negotiate internationally.   In terms of foreign policy, however, one person does not hold a monopoly of wisdom or truth.  So in general, we could take a lesson from Jordon, even as we pride ourselves on our having a representative democracy rather than a monarchy.  I think perhaps we discount too readily the vestages of one-person rule in the US.  A unified long term vision is nice, but stepping back to see and enunciate it is different than deciding what it shall be and imposing it. 

In terms of the American presidency, there may even be a bit of hero or idol worship that has held on from ancient king-worship, as if eons of practice etched it in the human genome.  It is evinced not just when a president is sworn in, but also when he gives the State of the Union address—should I capitalize this?   Honor in the office, it is said, but the president is just a man.   The media obsesses on his every move, including what he is doing on vacation.  This obession gives us the illusion that we know the person.  Who is that behind the curtain anyway?   Do we really know, as we watch the screen? 

Source: http://www.nytimes.com/2009/12/23/world/middleeast/23amman.html?ref=world

Savage Beatings in a Government's Toolkit: The Case of Iran

To attend the funeral in December, 2009 of Hossein Ali Montazeri, who was the 87 year-old spiritual leader of the Iranian reformist movement, mourners poured out in thousands into the streets leading to the mosque. However, anti-riot police and plainclothes pro-government Basij militiamen had blocked the area.  Parlemannews reported that Basij beat people, including women, and used tear gas and pepper spray to disperse the crowds. One witness told a reporter,  ”Tens of thousands gathered outside for the memorial but were savagely attacked by security forces and the Basijis.” He said baton-wielding riot police clubbed people on the head and shoulders, and kicked men and women alike, injuring dozens.  “I saw at least two people with blood pouring down their face after being beaten by the Basijis,” he said.

To savagely beat a person reflects on the beater rather than the beatee, especially of the latter was not being violent.   While a government could be justified in responding to violence with violence, to use violence where there is none in opposition points to violence being a tool in a government’s toolkit for changing behavior or political positions.   It is, in other words, for some persons to approach others as being less than human—as a kin to dogs.  Kant wrote about the rational nature being of such value that anyone (or anything) having it should not be treated as merely a means, but also as an end in itself.  To reduce a rational nature to an object to be pummelled is to make a rather basic category mistake.  It is perhaps only natural that the beaters and their “superiors” are then presumed to be objects, for one rational nature naturally views others of its class in like terms.  So the beaters, it turns out, jeopardize their own status as human beings by savagely beating non-violent people.   However, if those being beaten are rational beings, they will naturally recognize that the beaters too, being human beings, are rational beings, and therefore not mere objects (to be dealt with as means only).

Besides this Kantian ethical analysis, it strikes me that to classify “savage beating” along with fiscal policy, treaties, and monetary policy represents a category mistake concerning just what it is to be a government tool.   If anything, a tool is oriented to a purpose, and in the case of beating non-violent people the government’s purpose (support rather than criticism) is not likely to be reached.  In fact, being subject to a government tool that is not really such a tool is apt to firm up one’s resistance.   What sticks in my mind is the dubiousness of the assumed linkage between “government” and “savage beating.”  That these two are linked, even in practice, can be approached as odd or bizzare, not to mention as unacceptable. 

Even with regard to a pet, were I to tell you that I savagely beat my dog last night because he refused to eat the dogfood in his dish, you would stare at me in utter shock and disbelief…as though I were nuts…that such a link would be acted upon, let alone made.    We ought to have the same reaction in reading the article I have cited below from the NYT.  …but we don’t.  It is “normal.”  We are “accustomed” to it.  Somehow or other, we have come to accept the existence of something that would strike someone not of  human “society” as odd.  “I’m sorry, what did you say?  The government savagely beat?…I’m sorry, I just don’t get it. I don’t understand what you mean. What you are saying doesn’t make any sense to me.”   That it does make sense to us…and then we condemn it…is itself a problem.   What I am essentially describing is a slippery slope wherein the once unfathomable comes to be presumed as natural (even if undesirable).

A Tax Unfair to Big Banks?

The Securities Industry and Financial Markets Association claims that the bank tax proposed by the Obama Administration as part of the Financial Reform Act of 2010 might be unconstitutional because the levy would unfairly single out and penalize big banks.  For his part, President Obama urged the financial lobby to stand down when he introduced the tax proposal. “Instead of sending a phalanx of lobbyists to fight this proposal or employing an army of lawyers and accountants to help evade the fee," he said, "I suggest you might want to consider simply meeting your responsibilities.” The banks had tried to head off criticism by starting new charitable programs and by structuring executive bonuses in line with principles set by the federal pay adviser, like paying bonuses mostly in stock instead of cash and deferring the payout of some bonus money in case business declines again.  However, new charities and stock compensation should not obfuscate the fact that banks too big too fail precipitated the financial crisis of 2008 and returned soon thereafter to trading on their own equity (e.g., Goldman Sachs), thanks in part to the TARP funds from Teasury.  That the bank lobbyist organization was oriented nevertheless to void the new tax through lobbying and litigation, claiming it would hurt the big banks disporportionately, demonstrates that the bankers just didn't "get it." They should be glad that the resulting Reform Act left undisturbed the very existence of banks too big to fail. 

Source: http://www.nytimes.com/2010/01/18/business/18bank.html?ref=politics

Political Campaign Coverage: A Question of Substance

Popular election presumes meaningful discourse on current issues and political philosophy so the voters can distinguish the candidates.  Too often, however, the media takes its eyes off the ball and orients its coverage to the process rather than the content.  For example, on the eve of the 2010 US Senate election in Massachusetts, the New York Time reported, “Volunteers and campaign workers staffed phone banks for each of the candidates in the Senate race here, as they concentrated on energizing voters to get to the polls on Tuesday.”  Besides being rather obvious, this topic carries with it an opportunity cost—namely, the article that could have been written on the candidates’ political philosophies that go beyond an obsession on the health-care before Congress at the time.   Although it is short-sighted to use a Senate election as a referendum on a current issue, even that would be better than a focus on the campaigns’ mechanics.
Too often in presidential campaigns, media reports are on the process rather than the issues (forget political philosophies).  Because such campaigns are mostly retail rather than grass-roots (after the first few primaries), most voters rely on the media for information on the candidates.   There is a saying that might be pertinent: garbage in, garbage out.  We could do better.

Source: http://thecaucus.blogs.nytimes.com/2010/01/18/get-out-the-vote-pitches-in-massachusetts/

Hints of a Shift Back to Federalism?

In the US Senate race in Massachusetts between Scott Brown and Martha Coakley, there was some resistance to the proposed federal health care legislation. This pushback was in line with reinvigorating a federal system for the United States.

Several independent voters said they wanted to elect Mr. Brown to block the health care bill being considered by Congress.  They denounced the US House and Senate bills as full of deals for special interests — though several said they thought Massachusetts’ law extending near-universal coverage, one of the models for the national bill, had been largely a success. “It’s not perfect, but why should we have to pay again when we have health care?” said Ms. Grenham, who works as a physical therapist.

That it is easier for a state government than the federal government to legislate on something like healthcare is no accident; the founders designed the US Government to be cumbersome precisely so most of the domestic legislating would be done by the state republics, which are closer to the people.  Hence Massachusetts has close to universal coverage while the majority of Texans might want to pass.  One size does not fit all in a heterogeneous empire-level Union.  For the US Government to go beyond its enumerated powers to duplicate what is already in Massachusetts would be to demonstrate the folly of consolidation and the related fallacy that every political unit in a federal system must have the same policy.  Although I firmly believe in universal coverage as a right rather than a privilege, I respect the right of the people of, say, Texas, to disagree and have a republic without it.   Such tolerance is necessary to a viable federal system.  Too many people imposing their agendas far from home must surely end in consolidation, which entails duplication where state governments are not already impotent.

Source: http://www.nytimes.com/2010/01/18/us/politics/18massachusetts.html?ref=politics

The Aristocracy of the Moneyed Corporations

“I hope we shall crush in its birth the aristocracy of our moneyed corporations.” Thomas Jefferson

In Citizens United v. FEC on January 21, 2010, the US Supreme Court held by 5 to 4 that because US corporations are legal persons, they can contribute to political campaigns.   The assumption here is that corporations are more than the sum of an aggregate of persons—that is, more than citizens associating.  The corporate entity has rights in itself.  Ginsberg and Sotomeyer questioned in oral arguments whether free speech applies to spending money, and, moreover, whether corporations should be considered legal persons, much less citizens.  After all, they can’t be drafted, or vote.

On the American Lag in Reorienting to the Reality of the EU

I suppose most Americans are unaware that the EU has a Supreme Court, a Parliament and a Council/Senate.   Few Europeans are wont to admit that these institutions constitute a government, so perhaps we can’t be blamed here in America for not taking greater notice of the relatively new government across the pond.  So it is no surprise to read that President Obama decided to skip the 2010 EU-US summit in Europe.  

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

South Sudan as a Sovereign State: Governmental Change in Slow Motion

Announced in Sudan’s capital, Khartoum, on February 7, 2011, voters in the oil-producing south overwhelming chose to secede from the Arab north. According to the New York Times, 98.83 percent of the more than 3.8 million registered voters in the south chose to separate from the north. The referendum had been agreed to as part of the peace agreement in 2005, after two long and brutal civil wars between the Arab Muslim north and the mostly animist and Christian south. “Today we received these results and we accept and welcome these results because they represent the will of the southern people,” President Bashir said in a statement on state television, according to Reuters. In Washington, the White House released a statement by President Obama congratulating the people of south Sudan and announcing “the intention of the United States to formally recognize southern Sudan as a sovereign, independent state in July 2011.” The New York Times reported that actual independence would be declared on July 9, when the peace agreement that set the stage for the vote expired. In the meantime, issues regarding citizenship, oil-revenue rights and the contested and volatile region of Abyei would be settled.


The referendum is in line with the political principle that popular sovereignty (i.e., of the people) transcends the authority of governments. That is to say, people have the right to establish government (rather than vice versa). In this case, the southern Sudanese decided to form a new and separate state. The result of the vote, being almost unanimous, proffers an excellent snapshot of a will of the people.  Typically, this term is abused, such as when a candidate wins reelection by a margin of fifteen or twenty percentage points.  Receiving 65% of the vote does not represent the will of the people; rather, it is the will of a majority of the people. There is a difference. In the case of south Sudan, we can say with confidence that it was the people's will to separate. That is to say, the people spoke with one voice. How rare it is for there to be a will of the people; hence we treat the view of a bare majority as such--essentially over-generalizing.  Politicians typically do the same with mandates.

What is unclear from the referendum is how the people feel about waiting until July for actual independence.  To be sure, there are outstanding issues that need to be worked out, but is it really necessary for independence to wait for everything to be worked out; President Bashir has already announced that his government would recognize the independence of the south. The acceptance of July by the Obama administration is similar to that administration's decision at the time not to push President Mubarak of Egypt to step down before September when elections would be held even had there not been mass protests.  In short, government officials seem to be oriented to time in slow motion.

The Obama administration's announcement that it would recognize south Sudan as a sovereign and independent state might not seem fitting, as the new state would presumably be a new state in the African Union (AU).  However, that union, unlike the EU and US, is a confederation akin to an alliance wherein the states continue to hold all of the governmental sovereignty. In contrast to confederations such as the AU, modern federations divide governmental sovereignty between two systems of government--that of the federation and that of the state governments.  That the AU had not intervened in the internal discord in the Ivory Coast, Egypt and Sudan suggests that that union is simply a league of friendship, merely able to mediate if invited, as in Zimbabwe during the crisis between the President and prime minister. The feckless condition of the AU can also be seen in the fact that it took so long for south Sudan to even vote on independence in spite of the fact that it was the will of the people in south Sudan. Was it really necessary, for example, to wait until 2011 when the peace treaty was signed in 2005? A union with teeth might have been able to expedite things. Unlike the states of the EU and US, the typical state in the AU is run by a dictator rather than being a republic in fact as well as name. The American Founding Fathers believed that a federal system could only have republics as members; dictators would guard their power too much and thus be too inclined to break off. Unlike a dictator, government officials in a republic are used to sharing power, so ceding some sovereignty to an empire-scale federation is not so hard. However, it can be in the political or economic interest of even a Leviathan dictator to transfer some governmental sovereignty to a federal union. Specifically, a dictator may be expected to benefit from the economic and political gains that come from a united political front and a common market. Twenty percent of 100 is more than 100% of 10. A federation of non-republic states is thus possible.

In terms of south Sudan, the cost of a weak AU was having to suffer a snail's pace on the road to independence. To be sure, such a pace was in the interest of Sudan's government. However, issues are only intractable if they are seen as such, and the people in the south could have voted on a date as well as on whether to secede. The dissolution of the Soviet Union attests to how quickly polities can change.Just as it was not clear in Febrauary, 2011 that President Mubarak had to stay in office in Egypt for seven months in order for there to be order, it should not have been presumed that south Sudan had to wait until July. Even if top government officials are typically old people, governments need not move in slow motion. The dragged-out pace evinced by south Sudan's independence even after the overwhelming 99% voting to secede suggests that governmental time is not our time and that we, the people, can move the old clocks an hour ahead in keeping with the increasing daylight. Whereas the progress of the twentieth century was largely technoligical, in the twenty-first century the human race may reach a threshold of perception wherein the dogmatic or arbitrary nature of governments is finally seen for what it is, and exercise greater popular sovereignty to make our governments more responsive. As of 2011, a critical mass of perception had not yet occurred; hence it could not yet be said that the human race itself had reached a new sense of its power over its governments.


Monday, February 7, 2011

Unaccountability at Bank of America

Andrew Cuomo, who was the Attorney General of New York in February of 2010, filed suit then against Bank of America and two of the bank’s employees, Ken Lewis and Joe Price.  In his complaint, Mr. Cuomo said that the bank first chose not to disclose the losses involving Merrill Lynch, which topped $16 billion, to its shareholders who were voting to approve the deal. Then, the bank told federal officials that those same losses had persuaded bank executives to consider backing out of the deal, unless the government provided a second bailout. “Throughout this episode, the conduct of Bank of America, through its top management, was motivated by self-interest, greed, hubris and a palpable sense that the normal rules of fair play did not apply to them,” Mr. Cuomo said. “Bank of America’s management thought of itself as too big to play by the rules and, just as disturbingly, too big to tell the truth.”

While “too big to play by the rules” and “too big to tell the truth” are striking  and warrant serious reflection in an economy wherein corporations are allowed to continue to operate even though they are too big to fail, my eyes are caught on something else in the quotes that is apt to be missed by many readers in the present era of corporate capitalism.  Consider “the conduct of Bank of America, through its top management…”  Does anything seem odd to you about this phrase?  In the wake of the US Supreme Court’s decision that corporations’ “free speech” is protected by the US Constitution’s first amendment, the debate on whether corporate entities should be considered legal persons has emerged from law school classrooms into the public square.  Reading “the conduct of Bank of America, through its top management,” I wanted to rewrite it as “the conduct of Ken Lewis and others in their capacities in working at Bank of America”.  This would be more accurate.  That corporate conduct must be through human beings means that corporate entities cannot themselves act or have conduct.  Accordingly, to say that a corporation apart from its human beings is a person does not make sense (because conduct applies to persons).  To say that BOA conducts itself through people is really to say that the conduct is done by the (human) persons.  

Besides questioning the corporate legal person judicial decision and the related decision that corporate “persons” have the same right to free speech as human beings have, I would argue based on my analysis here that the individual employees who were involved in the alleged understatement of losses and overstatement of an intent (and ability) to pull out of the deal (i.e., holding the economy hostage to get the feds to pony up in the deal) should be viewed as the recipients of the punishment.  Because a corporation is wealth rather than a person (i.e., it cannot go to jail), a fine could also be imposed on it even as the guilty employees go to prison for their conduct (regardless of the size of the fine on the bank).  But this wouldn’t mean that the corporation is being punished.  Rather, the stockholders (and anyone else who could otherwise draw on the retained earnings) would be punished  for lax corporate governance. If the employees’ fraud circumvented reasonable corporate goverance, however, perhaps the stockholders should not be punished/fined.

My point is that we should hold the individual decision-makers (and implementers) accountable (if they committed fraud) because they are persons.  Human beings commit fraud—not corporations.  So we should not fall under the illusion that some corporate entity greater than the sum of its human parts is somehow responsible (i.e., as if a corporation could make decisions apart from the human beings working in it).   A corporation doesn’t have hubris; persons do, which is to say human beings.  Projecting human qualities onto legal entities may feel good and be convenient for those who want to evade responsibility; what concerns me is when the rest of us unthinkingly go along with the illusion and take it for real, writing statements like ”the conduct of Bank of America.”  Reading this, one ought to think to herself, ”that doesn’t even make sense.”  Unfortunately, the lapse is so ubiquitous that few of us object to it, not to mention notice it.  When something that does not make sense comes to be routinely taken as a given, something is really wrong in a society.  The problem is particularly lethal when it is not even transparent because it is akin to flying blind.  Let’s just say that it is the financial interest of those human beings who benefit from corporate wealth that we continue to fly blind.

Invigorating Popular Sovereignty

A republic is characterized by the citizenry electing representatives, who in turn legislate (i.e., make law). As an alternative, the citizenry itself could vote directly on legislative proposals. The latter is called direct democracy. Ancient Athens, for example, practiced it. In the United States, the republic form is the prevalent form of government.  In spite of Wilson’s comment made in the constitutional convention that representation “is made necessary only because it is impossible for the people to act collectively,” direct democracy has typically limited to an occasional “referendum” question even though more vital questions could be put to the body politic directly. Typically, referendums have to do with elections (and thus with representative rather than direct democracy) or with general taxing or spending limits for a government. The rationale for putting general taxing or spending limits up for referendum is that they apply to a government as a whole—this perspective being from that of popular sovereignty (i.e., the citizenry, whose electoral power transcends their government). Rarely, an “issue” is put up to be decided directly by the voters. In 2010, for example, Californians decided on whether to legalize pot in California. I contend that many more matters of policy could be decided directly by the voters. Since the elected representatives represent the citizenry, the former should not be presumed as having the definitive right of such decision. Deciding on matters of general policy are primarily value-judgements, rather than requiring expertise.  Issues such as abortion, gay marriage, the Bush tax cuts, and the Iraq and Afghanistan wars could—and I would argue should—be decided by the voters directly. Beyond issues, the voters could decide more general governance questions, such as whether federalism should be continued. Such a question could lead to more specific proposals at the next election. For example, if the majority of American voters want the US to be of federalism, representatives could work on not only constitutional amendments, but also proposals for the voters on which broad areas of power would be transferred back to the states (or the voters could be asked—assuming a majority still want federalism—whether X or Y areas of power should be transferred back to the States). Should elected representatives counter that we should not trust the people to make such decisions, I would argue that it is nonsensical for an agent to contend that his principal is somehow inferior to himself. In a representative democracy, the representatives are the agents of the people; it is not the other way around.

In short, I contend that popular sovereignty ought to be strengthened rather than vitiated. Elected representatives are best suited to working out the technical details rather than deciding broad questions of policy.  An election campaign is a bricollage of factors; it is rare for a victor to be able to claim a mandate on a particular issue. In fact, a representative may be elected for reasons having nothing to do with his or her positions on “the issues.” The midterm election of 2010, for example, could be informed by a mix of factors; it was not even clear whether people voting Republican, for example, were saying yes to that party’s platform or no to the previous two years of legislation (which was informed by both Democratic and Republican law-makers—neither party being able to enact its platform as given).  Even voters blaming the Democratic Party for the resulting legislation is not strictly speaking accurate, as compromises had to be made with Republicans.  So an election of representatives is a broad brush that cannot be divined as a mandate on particular issues.  Regarding particular policies—even foreign policy, such as whether the US Government should continue to support Israel—the only way to know if there is a mandate is to put the matters up for decision by the voters. Political parties could have a say on how the questions are worded so they are objective (or two versions could be provided). Courts would still be able to declare the resulting law unconstitutional, but even here constitutional amendment is possible.  Even in terms of amendments, the voters, rather than their constitutional delegates or state or federal representatives, could decide directly.  For example, the voters could decide whether US Senators should continue to be elected, or whether they should be appointed by the state governments or be the governors themselves (the US Senate being like the European Council of the E.U.). The voters could also decide whether abortion should be decided by the state or US courts, or directly by the voters—by state or US—as an amendment.

At the very least, basic decisions would be made that have been mired in disputes between governmental institutions and/or government officials. We are depending much too much on elected and appointed government officials to “make” policy. Ultimately, the will of the people should be freed up and exercised beyond the confines of simply electing representatives—being subject only to the judiciary protecting individual rights (which can be overruled by constitutional amendment, which can be of the people).  Sadly, those in power—the elected representatives—will naturally and ironically resist efforts to expand the will of the people. Because the election of a representative involves many elements, an elected representative could easily get around interpreting his or her victory as a mandate to expand the will of the people.  This is precisely part of the problem, and it maintains the monopoly of power that our elected representatives enjoy.  I suspect this is no accident. Hence I am not optimistic on any expansion of popular sovereignty any time soon.  Even so, I hope my thoughts here are thought-provoking. Although not the best person to cite, Richard Nixon pointed in one of his books to the need for political development: “In terms of material progress, the twentieth century has been the best in history, but in terms of political progress the record has been disappointing.”  (See Richard Nixon, 1999 Victory Without War, New York: Simon and Schuster, 1988, p. 16). What I am suggesting is that our political system is so antiquated that were it to develop as technology has, our use of elections could make quite a leap forward.  In spite of all the technological change, we tend to hold very rigidly to the way things have “always been done” in politics.  It is time for politics to catch up. In fact, the technological progress could facilitate the expansion of popular sovereignty.  For example, voters could surf the internet for information before voting on general policy areas. The challenge may well be in how to enable illiterate voters to be able to take part.  As one possibility, voters could vote at desks (as in a classroom) while a reader reads through the questions on the ballot. My point is that we can begin to think outside the box and shake loose our assumptions.

Source of Wilson quote: James Madison, Notes in the Federal Convention of 1787. New York: Norton, 1987, p. 74.

Efficiency, Corporate Social Responsibility and Full Employment: Squaring a Circle

The New York Times reported that President Obama urged American businesses on February 7, 2011 to “'get in the game' by letting loose trillions of dollars being held in reserves, saying that they can help create a 'virtuous cycle' of more sales, higher demand and greater profits that will put people back to work and turn around the sluggish economy.” Obama continued, “If there is a reason you don’t believe that this is the time to get off the sidelines — to hire and invest — I want to know about it. I want to fix it.” In the speech at the U.S. Chamber of Commerce, Mr. Obama said that companies have a responsibility to help the economy recover. The trouble is that responsibility is a rather vague term that can be variously applied. This is one reason why the corporate social responsibility concept could mean providing society with the products and services that are sought via the marketplace (e.g. Milton Friedman of the Chicago school) while meaning for others increasing corporate philanthropy to alleviate a society problem such as poverty. In other words, responsibility can be made concrete in various ways that can accommodate and indeed reflect the ideologies of those applying the term.

The full essay is at "Efficiency and CSR."