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Saturday, February 26, 2011

Off Target: Corporate Spending as "Speech" against Gay Rights

In a 5-4 decision on January 21, 2010, the US Supreme Court ruled in Citizens United that federal restrictions on corporate spending in elections constituted a violation of free speech. Critics called it wrong to equate corporate “speech” with individual speech and said the ruling would allow special-interest money to flood election campaigns. The bipartisan nature of the opposition to this ruling is striking in these largely partisan times. The court’s ruling is opposed, respectively, by 76, 81 and 85 percent of Republicans, independents and Democrats; and by 73, 85 and 86 percent of conservatives, moderates and liberals. Majorities in all these groups, ranging from 58 to 73 percent, not only oppose the ruling but feel strongly about it. Even among people who agree at least somewhat with the Tea Party movement, which advocates less government regulation, 73 percent oppose the high court’s rejection of this particular law. In addition to overwhelming opposition to the decision, there’s also bipartisan support for Congress to try to reinstate restrictions on campaign spending by corporations and unions.

So when Target sent a check for $150,000 to MN Forward, a Minnesota-based political group backing a gubernatorial candidate with penchant for opposing gay rights, people wondered what business Target has in taking sides on that issue, even if the group was also pro-business. MN Forward endorsed and was paying for ads for the Republican gubernatorial candidate Tom Emmer. On Emmer’s website he defines marriage as a “union between one man and one woman” and he has come under fire for his $250 contribution to a Christian rockband that has been known to speak harshly of gays. Emmer told the Minnesota Star Tribune that the controversial rock band “You Can Run But You Cannot Hide,” were “nice people,” following band member Bradlee Dean’s reported comments that Muslim countries that support execution of gays are “more moral than even the American Christians.” To be sure, the managers of Target were not spending their companies’ “free speech” in defense of such a view, but that the wealth qua free speech was nonetheless being spent on a candidate who had made such a comment makes the Target CEO an unwitting accomplice.
Rather than viewing Target managers distancing themselves from Emmer’s view of gays as corporate social responsibility, I contend that the problem lies in taking spending as speech. Put another way, Target would have better stores if it sticked to its knitting, as it were.

Diverting money even to political campaign groups that further a pro-business agenda is off from the business’s main business, which in the case of Target is to sell retail. Besides the collateral damage from unwittingly helping campaigns on issues that are not even pro-business, diverting cash reserves to political campaigns puts corporations in the business of electoral politics, which is another sort of retail. In the case of Target, it is not as though the stores could not be improved from a business standpoint.  Once I accompanied a foreign friend of mine to a Target to return the coat he had given his wife for Christmas. Because he had paid by check, he had only the option, according to the “customer service” employee, of exchanging it. He could not get his money back—though he could have had he paid cash or by credit card. The “reasoning” of Target’s managers was that a check is “like kind” to an exchange voucher.  My friend and I left the store committed not to return, and I have not. Even in terms of influencing electoral politics in a pro-business general direction, Target’s management has plenty else to do closer to home—if indeed it is a home.  Rather than being socially responsible, a company ought to focus on its knitting.  That—doing business well—is the responsible thing to do because it is what a business’s owners expect from the managers of their property. Rather than being able to influence electoral politics beyond their expertise, managers ought to be restrained more by stronger corporate governance. To be sure, managers have a tendency to over-reach. Treating their spending decisions as “speech” only enbles them.

Sources:
http://blogs.abcnews.com/thenumbers/2010/02/in-supreme-court-ruling-on-campaign-finance-the-public-dissents.html
http://abcnews.go.com/Business/target-best-buy-fire-campaign-contributions-minnesota-candidate/story?id=11270194

Corporate and U.S. Government Antipathy toward Federalism

In October of 2009, the U.S. House Financial Services Committee voted to give the federal government the power to block the states from regulating large national banks in some circumstances. The compromise approved by the House allows the Comptroller of the Currency to override the states, but only if that office found that the state law “significantly” interfered with federal regulatory policies.  This clears the way for a new federal agency to protect consumers from abusive or deceptive credit cards, mortgages and other loans.  Adoption of the compromise was a partial setback for the banking industry, which would have preferred to avoid having to comply with state laws that are sometimes stricter than federal rules.  Barak Obama and Barney Frank were pushing in the other direction—for subjecting banks to the relatively strict state laws with no chance of appeal to the US. Government.

This case of compromise points to the influence of large corporations on the Congress as a culprit in the on-going eclipse of federalism.  Large corporations operating in many of the American republics would rather have one regulatory infrastructure, so they push the U.S. Government to assert itself at the expense of the State governments using pre-emption.  Even where the federal government is silent in a policy domain, it can keep the State governments out. This is not to say that industry is the only force behind the march toward consolidation.  Obama and Frank were no doubt assuming that health-care and education are properly directed at the level of the U.S. Government rather than by the States.  This involves adding strings to the spending clause of the U.S. Constitution.

While it might be more convenient to have Washington as the point-person, we might miss the checks and balances permitted by a viable federal system wherein the State governments can hold back an encroaching federal government.  Moreover, we might wonder whether one legislative size fits all in a Union of republics that spans a continent.  There is a reason why the delegates in the constitutional convention designed a federal system; they weren’t just acting on a whim.

So here is my basic point: the present holders of power might have incentives to use it at the expense of the long-term viability of our system of public governance.  In other words, it might not be in the interest of our federal officials and corporation executives and boards to maintain the viability of our federal system. To the extent that their interest prevails in spite of the inherent diversity in the United States, this could be the empire’s undoing before our eyes.

Source:  Compromise Bill Could Block States on Bank Rules http://www.nytimes.com/2009/10/22/business/22comptroller.html?ref=politics

Friday, February 25, 2011

Online Privacy and Advertising Databanks: Kant, Societal Norms, and Regulation

$26 billion-a-year by 2011, the internet advertising market is lucrative to venture capitalists who want to invest into companies that help target online advertising. Between 2007 and 2010, venture firms invested $4.7 billion in 356 online-ad firms. "Its a huge market and it's growing," Chris Fralic at First Round Capital says. Fralic's company has backed 33Across, which analyzes users' social networks, and Demdex, which has a "behavioral bank" of user profiles. Ethically, user on-line privacy is at issue. I contend that user privacy can be protected from dangers of concern to users while willing users can benefit as consumers from information regarding products that they want and would not otherwise know of.

The full essay is in Cases of Unethical Business, which is available at Amazon.

Thursday, February 24, 2011

Physicians and Lawyers: On the Presumption of Ignorance

It would surprise virtually every American (but only a few Europeans) to know that neither the JD nor the MD degree is a doctorate.   Each one is the first degree in its school, or discipline.  Yet we presume them to evince advanced knowledge, even allowing people with two undergraduate degrees to be "professors" (really instructors) in American law and medical schools. In the school of law, the sequence of degrees is: JD (same as the LLB), LLM (hint: M...Masters), and JSD (Doctorate in Juridical Science). The JSD degree includes advance study, a comprensive exam (an academic exam graded by faculty--not a industry-qualifying exam like the bar), and a defended dissertation. A doctoral degree must be the terminal degree of a field, contain a comprehensive exam, and include significant original research in a defended dissertation. The JD misses on all three points. The title of the first degree in law, the LLB (bachalors in letters of law) was replaced with "JD" largely for marketing purposes in 1901 in the founding of the U of Chicago law school (by three Harvard professors) because prospective students were complaining about having two "B" degrees after seven years of school.  People don't like to think they have gone to school for seven or eight years for two undergraduate degrees, but this is precisely what they have done. Nevertheless, the new law school in need of students complied with the "customer" complaint with a feat of mirrored marketing that was perhaps intentionally ambiguous.  To eviscerate the ambiguity in  Juris Doctor and a doctorate, one must look beyond the mere words.

In medicine, the MD is the first degree. Substantively, it contains survey courses and some seminars, just as in a BA or BS program in liberal arts or sciences. The D. Sci.M. is the doctorate in the field of medicine, and the M.D. is a prerequisite (so the latter cannot be the terminal degree of the field).  The fact that some schools give the D.Sci. M. degree as an honorary degree does not mean that it does not exist elsewhere as the real, terminal degree. Particular medical schools may give the degree as honorary where there are not enough prospective students interested in a doctorate in medicine. 

In divinity schools, the M.Div (before 1968, called the BD) is the undergraduate degree. It is followed by the STM (the masters) and the DD.   When the BD name was changed to the M.Div name, a perhaps-deliberate ambiguity was created wherein one apparent masters would be followed by another (M.Div. and STM).   It evinces a category mistake to have two masters degrees with one being substantively prerequisite to the second. Substantively, the M.Div. program consists of a year and a half of survey classes, followed by senior seminars (just as in the undergraduate law, liberal arts & science, and medical programs).  To regard a graduate with a M.Div., JD, or MD as having achieved advanced knowledge in the respective field is a fallacy perpetuated by the superfluous esteem we heap on the "professions" on account of their association with money (the religious vocation being revered for sacrificing the vaunted wealth).

It makes no difference how many degrees a person has in other fields before commencing study in a professional school. In beginnning to study law, medicine or theology, one begins with survey courses. Furthermore, it doesn't matter whether one's particular school or even country offers the doctorate in the field.  Try telling people that your BA is a doctorate in English because no Ph.D. in the field is offered at your college or even in one's country.  Every field (just like life itself) has a first degree and a terminal degree.  A student does not obtain advanced knowledge in two or three years in a law, medical or divinity school, but only a first degree's worth in liberal arts and sciences.

Sadly, we as a people have esteemed the physcians and lawyers so much that we have vaunted them by unwittingly appreciating their degrees into the stratisphere.   One degree in a given field does not a doctor make.   Europeans have been correct in refusing to call an American physician, "Dr. Smith."   The fact that Mr. Smith would take offense just points to the arrogance that lies in ignorance.  The rest of us enable Mr. Smith to claim the doctoral title before his last name because we don't know any better.   We give physicians titled trophies that they do not deserve.  Moreover, the use of vocational titles (including Professor Jackson) risks a vocational reductionism wherein a person is rgarded (and comes to regard himself) as that which he or she does.   Is vocation really so important that it eclipses or overcomes a person's identity?

Maybe it is time that we say "enough is enough" on the green glitter and deflate those who have vaunted their own entitlements going along with being a  professional  to a value or level more fitting to what they have earned.   The extent of illusion that a society can create and maintain is astonishing, yet being in the illusion (think here of the Matrix) we do not see it.  It is time to see the green numbers on the wall.  No wonder even the hint of such sight is apt to incur the wrath of the agents who instinctively protect the illusion because they benefit inordinately from it.   It is time, ladies and gentleman, that we wake up, as the sun is already quite high in the sky and there is much to be done.

A Society Based on Corporate Culture: A Case of Sickness behind Fakeness?

Scripted "conversations" for employees.   Some customers as "members," and the others "not."   A larger cup of coffee being an "upgrade."   It occurs to me that a blue collar worker would simply laugh in the face of a chain retail store employee using any of these misappropriations as if they were natural and fitting.  That the rest of us don't laugh and the employees are not even likely to be aware of their own fakeness, much less stop it, tells me that modern society has to some extent adopted the corporate practice, even if tacitly.  That is to say, many of us have been mindwashed into accepting fakeness as authentic in the public square.

The full essay has been incorporated into (or swallowed up by) On the Arrogance of False Entitlement: A Nietzschean Critique of Business Ethics and Management, available in print and as an ebook at Amazon.

Executive Stature: Glimpses of the Man Behind the Curtain

One of the perks of corporate office is the presumption of stature and legitimacy.  In other words, the general public typically brings all sorts of assumptions along when reading about the behavior of a CEO.  I contend that the reality of the person behind the curtain is far different from what is portrayed.  That is to say, at least with respect to how CEO's typically want to be viewed in terms of corporate responsibility, I suspect that the reality in the executive suites is far different.  In fact, the reality can be downright childish.  Richard Fuld, who was the CEO at Lehman Brothers, may well have behaved like a six year old when upset. Had the general public been given a view of Fuld's antics, we would have shaken our heads not simply out of utter disbelief that such immaturity could be in such a position, but also in recognition of the gap between public and private persona.  Such a gap is dangerous in a republic wherein the electorate is to hold the government in check (and the government in turn is charged with protecting the public and the market system itself from being compromised from firms too big to fail). 

The full essay is at "Executive Stature."

God's Gold on Wall St.: A Vaunted Self-Assessment of God's Work

A year after the financial crisis of 2008, Lloyd Blankfein, the CEO of Goldman Sachs,  found himself vilified for his firm’s quick return to risky trading in spite of its new bank holding company status. Populist resentment at the time was especially pitted against the hefty bonuses from the trades. Also, people were upset about the benefits that the bank had obtained from the decisions of its alums in the U.S. Government—specifically, in the U.S. Department of the Treatury. For instance, Goldman Sachs and other AIG counterparties got a the dollar-for-dollar payout from AIG thanks to an infusion of funds for that specific purpose by Treasury. Regardless, in an interview with the London Times, the highest-paid CEO (at least in the financial sector) dismissed such talk and defended his money-making machine and its compensation.  In addition to being the engine of economic recovery, according to Blankfein, Goldman Sachs provides a social function in making capital available to companies so they can expand. Stunningly, he adds, “I’m doing God’s work.”[i]  Such a claim is a far cry indeed from Thomas Jefferson’s warning that banking institutions are more dangerous to our liberties than standing armies.[ii]  Perhaps God intends to undo our liberties by bailing out the banks.

Besides these rather obvious problems with Blankfein's religious claim is his presumption to know what God's work is, and, furthermore, that he is doing it.   Even though a feckless system of corporate governance can enable a CEO to essentially function as his or her own boss, including doing the board's job of evaluating his or her own performance, it is a tall order for a human being to be able to evaluate his performance as God's work.   To be sure, it is possible that God is an intelligent being that bestows favor on his golden stewards for doing His work.

Lloyd Blankfein may have been involved in two conflicts of interest: 1) that of having excessive power over the board whose principal task it is to oversee him, 2) having communicated with GS alums in high posts in the U.S. Government (e.g., Hank Paulson) and perhaps having them enact policies on GS's behalf.   It may be that institutional and personal conflicts of interests can become so ubiquitous that they are simply not seen by the culprits. Furthermore, it could be that the denial enabled by a tacit presumptuousness is like a white movie screen on which even doing God's work can be projected. How ironic it is, that sordid proprietary interest could operate not merely under the subterfuge of being a neutral "market-maker," but also as God's work. Such work is two degrees of freedom away from squalid greed. So it is remarkable that the two could become conflated in a mind.

[i] John Arlidge, I’m doing ‘God’s work. Meet Mr. Goldman Sachs, The Sunday Times, 11/9/09.
[ii] Thomas Jefferson to John Taylor, Monticello, May 28, 1816, in Paul L. Ford, ed., The Writings of Thomas Jefferson (New York: G.P. Putnam’s Sons, 1892-99),  XI, 533.

Tuesday, February 22, 2011

A Critique of Corporate Political Risk Analysis and U.S. Foreign Policy: The Case of Libya

Even though people the world over instinctively recoiled as reports came in of Gadhafi's violent retaliation against Libyan protests on February 21, 2011, the official reaction from the US Government was muted at best. The refusal to act on an intuitive response to immediately remove the Libyan dictator's ability to wantonly kill people resisting his right to rule may have come from concerns that the mounting tumult of a change of government in a major oil-producing region of North Africa could cause even just a disruption in the supply of crude. Indeed, even the mere possibility was prompting a spike in the price of oil (and gas)--what one might call a risk premium. Even the prospect of an ensuing nasty electoral backlash from consumers having to face a possible increase in their largely non-discretionary gas expense was not lost on their elected representative in chief at the White House. 
 
Even five days later, after some serious press on the rising price of gasoline hitting American consumers, the most the president would do is proffer a verbal "demand" from afar that Gadhafi leave Libya.  "When a leader's only means of staying in power is to use mass violence against his own people, he has lost the legitimacy to rule and needs to do what is right for his country by leaving now," the White House said in a statement. The dictator must have been shaking in his boots.  In actuality, Gadhafi had lost his legitmacy to rule five days earlier, and by the day of the statement the American administration could have been actively involved with willing EU states in stopping him inside Libya. Given the progress of the protesters-turned rebels and the behavior of Brent crude that week, the interests of the American consumer (and Western oil companies, as well as the business sector over all) were by then firmly in line with an enforced regime change in Libya.  Oddly, the old dogma of an absolute governmental sovereignty was colluding with an inherently excessive risk-averse corporate political risk methodology to hold America back from acting as midwife to a new political awareness breaking out in the Middle East.

On the day of Gadhafi's self-vaunted shooting spree, Brent crude benchmark vaulted past $108 a barrel (settling at $105.74, a two-year high).  On the following day, it rose to $111.25. On the first day of March, the Dow Jones Industrial Average dropped 168.32 points, or 1.38%, to finish at 12058.02, its third triple-digit decline in the past week. Oil futures on the New York Mercantile Exchange, already up 6% this year, jumped 2.7% to settle at $99.63 a barrel.  Brent Crude in London hit $115.42 a barrel, the highest settlement since Aug. 27, 2008.The graph below shows the change in oil, though the change looks astounding in part simply because the graph only goes to 15%; were it to go to 100 percent, the picture might seem less dramatic.
 
The Wall Street Journal had reported already on February 21st that the rise was "driven by increasing unrest in the Middle East." Specifically, worries that the turmoil in Libya was curtailing output of that country's oil were said to be driving the price climb. However, USA Today cites Darin Newsome, an energy analyst at DTN, as pointing to the role of speculators around the world as propelling the price of oil. "The flow of money plays an enormous role in the direction, speed and volatility of these markets." In fact, the market mechanism itself may be flawed because speculators could push commodity prices out of sync with the underlying supply of the respective commodities. Turmoil in Libya cannot be blamed for the ensuing “creation” of artificial value (such an increase, by the way, had fueled the housing bubble in the US that came in for a hard landing in 2008). In fact, the rise in world oil prices began before the final third of 2010—before the prospect of widespread popular protest in the Middle East was realized. Indeed, the climb during the last third of 2010 looks a lot like that which took place in the first third of 2009 (during a recession). It was not until well into February, 2011, that the turmoil in the Middle East appeared, according to MSNBC, “to pose limited risk to global oil supplies. Neither Tunisia nor Egypt produce oil or gas.” Such “limited risk,” besides being mitigated, cannot very well be projected back well into 2010 to explain the rise in the price of gas.



Incidentally, another interesting feature of this graph is the sustained drop in 2008, before the financial crisis in September (and the U.S. Presidential election in November!).  The “V” pattern at the end of 2008 is classic “electoral.” It suggests that the price of gas may be very attuned to the electoral interests of those in power, and therefore to government policy. My contention in this essay is that this dynamic was alive and well in Washington when Gadhafi was turning on his own people.

 
 

Sources:

Jerry DiColo and Brian Baskin, "A Stealth Comeback for $100 Crude Oil," The Wall Street Journal, February 22, 2011, pp. C1, C3.

http://online.wsj.com/article/SB10001424052748704506004576173961240139414.html?mod=ITP_moneyandinvesting_0

Gary Strauss, "If Unrest Spreads, Gas May hit $5", USA Today, February 22, 2011, p. AI.

http://www.msnbc.msn.com/id/41739499/ns/business-personal_finance/

http://www.nytimes.com/2011/02/24/business/energy-environment/24oil.html?_r=1&hp

http://www.nytimes.com/2011/02/23/business/global/23oil.html?ref=todayspaper

http://www.msnbc.msn.com/id/41785849/ns/world_news-mideastn_africa/

http://www.nytimes.com/2011/03/18/world/africa/18nations.html?hp

Monday, February 21, 2011

Media Wars: A Case of Over-Reaching?

During the summer of 2010, as commentators at Fox, CNN, and MSNBC were arguing, they referred to their own arguments as “trench warfare” and “hand-to-hand fighting.”  Real soldiers would doubtless dismiss such descriptors as attempts by children to count as adults—as something more.  The soldiers would be correct, of course. Insulting or criticizing another person does not constitute fighting in the sense of warfare. Someone at MSNBC calling someone at Fox a racist does not come close to shooting someone with a rifle or even slugging someone with one’s fist.  The protesters in Libya who were being shot at by their own government in February, 2011, would shake their heads in disbelief in hearing of the "war" among media personalities.

Lest it be objected that this makes little matter, the propensity of the media “personalities” to over-reach covers their depiction of news.  For example, they use “crisis” far too often.  For example, there really was a crisis in September 2008 on the Thursday evening in which Ben Bernanke and Henry Paulson told congressional leaders that unless they showed some intent to act, there would not be a financial system by the following Monday. No financial system on Monday: this is what it means to be in a crisis mode. To call the BP oil in the gulf a crisis more than two months after the explosion (and weeks after the well had been capped) a "crisis" does not compare, and is thus a case of the media over-reaching. By its very nature, a crisis is short-term.  The protest in Egypt, for example, quickly reached a do or die point. Such is crisis mode.  So too, when the planes shot at the protesters in Libya: the resulting turmoil, which can only be sustained as such for a brief period before a decision has to be made one way or the other, instantiated a crisis mode.  For republicans or democrats in Congress to refer to budget talks as though they were at a crisis utterly pales by comparison. Yet journalists perpetuate the verbal inflation and get paid in increased attention.  In the process, "crisis" itself becomes like the story of the boy who called wolf too much and was practially ignored when the wolf finally showed.

Every presidential address is vaunted as critical. “The President needs to say X or the sky will fall.”  No mention is subsequently made of the sky still up there even though the President omitted X.  In other words, there is no mechanism of accountability on journalists and pundits when they over-reach. The media companies themselves seem inert to any need for self-regulation. So the media wars are allowed to intensify even beyond "war."  Fox News and MSNBC must somehow sustain and intensify their "battles" so people will continue to watch the spectacle. In the meantime, the real news is sidelined.  The medium becomes the message and the voters are not so informed.  So goes a republic in decline.  So goes a culture in decline.

Libya and the World in 2011: A Higher Calling

On February 21, 2011, Libyan military aircraft fired live ammunition at crowds of anti-government protesters in Tripoli. "What we are witnessing today is unimaginable," said Adel Mohamed Saleh, an activist in the capital. "Warplanes and helicopters are indiscriminately bombing one area after another. There are many, many dead." Arabiya television put the number killed on that day alone at 160. Gadhafi's son had vowed on television the day before that his father and security forces would fight "until the last bullet." I suspect that few people were surprised to find that Gadhafi would mount a sustained vituperative effort against the pro-democracy movement that was sweeping through the Middle East. "These really seem to be last, desperate acts. If you're bombing your own capital, it's really hard to see how you can survive, " said Julien Barnes-Dacey, Control Risks' Middle East analyst. "But I think Gaddafi is going to put up a fight ... in Libya more than any other country in the region, there is the prospect of serious violence and outright conflict," he said. As the world received reports of the massacre, a latent question not being asked was whether the world (or even a coalition therein in case of a holdout like China) has the right or an obligation to intervene militarily to stop the offending regime against its own defenseless people. I contend that there is such a right and moral obligation--meaning that national sovereignty does not extend to crimes against humanity. Sadly, at the time of the Libyan protests and Gaddafi's retaliation, the world's government offiicals were still largely impotent and disorganized.

The full essay is at "Libya and the World in 2011."

Source:

"Gadhafi: 'I'm in Tripoli, not Venezuela," February 22, 2011. NBCNews.com.

Sunday, February 20, 2011

Political Black Holes: On the Power Behind the Throne

Our galaxy, the Milky Way, has a black hole. If this is news to you, there is no need to go hide under a rock. It turns out our black hole is not the biggest by far, and it doesn't spew out a lot of excess energy that falls into it. Even so, it is ours, and we can be glad that we have one of our very own even if it isn't the biggest one on the block. In case you are interested in seeing it’s baleful look in a picture, I’ve got bad news for you; it is invisible. No light can bounce off it.  You are probably wondering how the scientists found it.  Well, they knew that black holes are in the center of galaxies, so the crafty lab coats used ultraviolate light to find our center because there is too much gas there for much there to be visible to us.  The scientists noticed that the speed of stars speeds up around a certain point and posited the existence of a highly-dense black hole.

Using the phenomenon of black holes as an analogy, political "scientists" might investigate whether power, whethere in business, government or society, tends by its very nature to consolidate. In the Micheal Moore documentary on capitalism, two members of congress point to the immense power of an anti-democratic corporate banking elite that was able to turn around the House vote on the bank bailout (TARP) using the democratic leadership as runners. If so, such power was invisible to the public. Likewise a black hole is of course invisible. In the case of the banking elite, we couldn't point our fingers at who exactly gave the marching orders that turned around the no-questions-asked government loans to the banks too big to fail.  Nor do we, or will we, know who told the U.S. Senators: hands off meddling in foreclosures.  Indeed, we shall have no idea whether a power behind the throne told Congress not to even debate the alternative of giving the TARP money directly to home borrowers in trouble.  That this was not seriously debated for foreclosures involving mortgages that banks and mortgage companies should not have given in the first place hints of the existence of a massive albeit hidden political black hole. Finally, such a black hole may have been behind the administration's decision not to push for banks too big to fail to be carved up while extant rather than simply "orderly liquidated" once they have fallen under their own weight.

Neither the American people nor the American media companies go far enough in investigating even the existence of invisible black holes in the American political universe, let alone what damage they do from the standpoint of the public or common good.  Micheal Moore suggests that Citibank and Goldman don’t fear popular election much because they expect the 1 person, 1 vote thing won’t turn on them because most people think they could be in the elite too. The financial elite is 1% of the vote; 1% of the population holds 90% of the wealth, so if the other 99% happen to wake up and notice, they might take back the reins. The big business would be worried, but, alas, Wall Street is not shaking in its golden boots. As to why, I would add to Moore’s explanation by pointing to the extent to which Americans are manipulated without even knowing it.  Lest it be missed, the gaint media companies are corporate too.

Is it an accident, for example, that so many stories on Afganistan pop up when it is in the interest of the defence contractors? Are they simply using the people to urge Congress to support a surge?  I would call this “direct manipulation” because we are being summoned to debate what has been put on the table for us.   The other kind is “indirect,” which involves a political black hole keeping an issue or policy-option off our radar screens.  President Obama’s suggestion, for example, that the banks too big to fail be reduced in size (and money) so they would not be so dangerous in failing, quietly went away. In looking for indirect manipulation, the important thing to notice is the absence of  any visible event or change that could explain the removal of a proposal by some new issue being covered by the media. We ought to be examining what political black holes do not want us to talk about because of private interests. For instance, we now know that health insurance companies gave their surrogates "death panel scare stories" to fan out discussion of a public alternative in health insurance.  Scaring a proposal off the radar screen is among the silent weapons used by political black holes.  Again, the source of such weapons is invisible.

So like sheep, the American people is led to debate or focus on something or to forget something else, In the process, we are unwittingly giving up, or failing to grasp, our democratic power, which can be used for the public good. To be sure, there are excesses and drawbacks in democracy and these too should be discussed, but there are hidden dangers to political black holes, and we miss these if we do not even know that such things exist.  That is to say, the democracy we do have may be rather wan in comparison to the gravity of the political black hole at the center of our political society.

Perhaps the question on your mind is:  So how do we get it back?   It might involve nothing short of waking up out of the Matrix.  So many of us don’t realize how much we are being manipulated.  Realizing it, and not tailoring our thoughts and discussions along its lines will wake others.   Once people start waking, we can start to look for candidates who do not, like Obama, take a $1 million from Goldman after promising real change.  We need candidates willing to forego being bought out by the elites who sense that democracy might possibly get the upper hand in an election.  Pay particular attention to the matter of teeth in such candidates’ proposals with respect to big business…and ask at their speeches whether they are taking money from the establish that has a vested interest in the status quo.  Don’t buy the “I’m not influenced by money.”  …which should be treated as a laugh line.   If you find genuine candidates willing to effect systemic change even where it is at the expense of the big corporate players, know that the elite will offer such candidates so much if the elite view the candidates as viable and  not under their control.  Control, by the way, can be more subtle than using a leash.  This is perhaps my major point here…political black holes are invisible and yet their anti-democratic gravity is HUGE…even as it is in a tiny space, or office.

In the Roman Empire, the games in the arena (which means “sand” in Latin) were a devise to distract as well as mollify and entertain the masses.  Today, we have American Idol and the Super Bowl, as well as the World Series.  Besides their entertainment value made possible by the talent involved, these idols are effective in gravitating popular attention…and this can be useful to the extent that the US is a plutocracy (i.e. ruled in the interest of the top 1% of the wealth) and vested powers fear the 1 person, 1 vote power of democracy.  But as Micheal Moore points out, Citibank and Goldman Sachs can rest easier knowing that many of us don’t use the power of the vote to take from the banks because many of us believe we might be among the plutacracy one day. 

I would add that we tend to be easily manipulated into following the media’s current (which, kein Zufall, tends to move around the interests of the major houses so as not to disturb the islands of capital).   We stop wondering about the distant promises to do something about the banks too big to fail because the media has conveniently stopped reminding us.  We forget that an option is to break up the banks too big to fail (which, by the way, have gotten bigger since September, 2008 and are still active at the casino).  We unthinkingly join the media in debating Obama’s banking consumer protection proposal, as though that were primary.  In other words, Goldman Sachs, which was Obama’s largest campaign contributor according to Micheal Moore (over $1 million), is content to have us debate a potentially pain so we will be appeased by Obama’s pledge of “real change” and not ask, demand, or VOTE to apply anti-trust law to financial houses.   In short, we allow ourselves to be dupped and we don’t even know it.  We don’t even realize we are taking our eyes off the eight ball.  Goldman lets Obama have four more years and 1 person, 1 vote is once again not a threat to either Goldman or the change agent that the bank bought.  Don’t expect Obama to rock the boat in bringing any real change that is not in the interests of the most powerful of the corporations.  Obama’s challenge is to show us just enough that looks like real change while not acting outside the interests of his corporate backers.  However, aren’t real change and status quo vested intersts mutually exclusive?  If so, how does Barak Obama get around this?  He gives us just enough to appear…   Meanwhile, the systemic change that is needed on the players at fault in September, 2008, goes by the wayside and we remain vulnerable even though We the People are convinced that a new consumer protection agency will do the trick.  The trick, ladies and gentlemen, is on us–and we don’t even know it.  We don’t know what we don’t know…while we presume we know it.

In 2009, Moammar Gadhafi of Libya gave a speech  at the annual opening of the General Assembly at the UN in New York City.  Substantively, he pointed to the drawbacks in having the UN remain in New York.  He also advocated a permanent seat for the African Union in the Security Council.   Fifty-three states are represented in that Union.  In an interesting twist, he remarked that the US contains fifty countries, so Africa too deserved a permanent seat.  I was utterly surprised that the man who was disorganized and sporatic in his delivery (and whose government would kill hundreds of unarmed protesters in 2011) could grasp the nature of the US in terms commensurate to the AU. He added that the EU should have a seat.   This makes a lot of sense because it is not fair for three of the EU’s states to have seats while all of the 50 United States have one. It occurred to me in listening to his speech that he understood the nature of the US as an empire-scale polity better, actually, than most contemporary Americans do. This is a bad commentary on the condition of civics classes in American high schools.  So I was surprised to find the mainstream media report the speech simply as “disorganized" without reporting any of the substance, as though there had been no serious content whatsoever.   Someone must have wanted to discredit Qaddafi for political or economic reasons.   The summary verdict was so immedate and total that none of Qaddafi’s content was covered.   The media’s treatment had all the footprints of a hidden strategy--that is, of a black hole's pull.  If I am correct, I’m left surprised that the subterfuge itself could be so blatant.  For a journalistic standpoint, the reporting was really bad.   Alternatively, the journalists could have reported what the man had said (as well as on his style and approach) and have left it to the readers to decide whether the content should be dismissed due to the style.   Something else was going on.  I’m just not sure what. I contend that something else typically goes on in terms of what is debated in the public discourse via the media. The invisible source steering and pruning what travels across our public radar screen is none other than a political black hole: a very dense concentration of private power functioning akin to an invisible elephant in a small living room. One person senses a trunk--another a leg--but we as a people miss the very existence of the elephant.  We are too distracted, and this is no accident, as it manifests by the very black hole that we do not suspect exists.

In short, both the content and frequency of topics reported by the media bear traces of the black whole that they are orbiting. As long as the source of the gravity is invisible, the black hole will continue to be quite useful.  Put another way, as long as Americans take the press reports as simply journalism, we will miss what is going on behind the scenes and therefore continue to be subject to being manipulated.  Micheal Moore asks: when will democracy ascend over the power of big business?  It is possible, but not probable.   This, by the way, is the expression that Immanual Kant uses in discussing his Kingdom of Ends (treating rational beings as ends and not just as means). Beyond the latent or actual subterranean power of corporate America over our public airwaves and legislative chambers, we ought to reflect on the threat to a republic in there simply being political black holes.
  
See: Nova on Black Holes (http://www.pbs.org/wgbh/nova/blackhole/)

Corporate Social Responsibility: Too Often a Weapon

Typically, responsibility is something people working in a business presume applies to the other guy…whether a customer, supplier or distributor.  The idea is that then the other guy will pay for the problem.  That someone working in the business might have been at fault is not even considered, at least outwardly, in this mentality of otherness-responsibility.  Responsibility here means “I won’t pay; you must pay!”  It is essentially immature self-centeredness and cheapness used as a weapon.

The full essay has been incorporated into (or swallowed up by) On the Arrogance of False Entitlement: A Nietzschean Critique of Business Ethics and Management, available in print and as an ebook at Amazon.

Federalism 101: Is it in the Nature of Power to Consolidate?

There is something unAmerican about consolidated power.   The financial consolidation even after the financial bailouts of 2008, is now generally known to be dangerous economically.  What we don’t typically realize is that it complements political consolidation at the empire-level of Unions such as the US and EU.  I suspect that many Americans have a baleful sense from the various manifestations of consolidation.  We have a vague sense of a trend that seems to go against what our predecessors have stood for (i.e., against centralized power…going all the way back to George III).   Let’s just say that it is in the interest of big government and big business that we continue to forget this point and continue to chase after various demons.  That is to say, the anti-democratic power that has more influence in our government than even the skeptics realize does not fear the democratic element of one person, one vote, because we are scattered.  Should we ever unite and take back our government, it would be interesting to see what the corporate elite does.  Will they allow us to remain a democratic republic, or will they tell our government officials to give us the impression that we are in control?

Lehman Bros: Insufficient Accountability in Corporate Governance

In an executive meeting at Lehman in the summer of 2008, Skip McGee told Richard Fuld and the other top executives that the market was demanding “that we hold ourselves accountable.”  Essentially, he was pushing for Gregory’s outster.  What strikes me is what he didn’t say–namely, something like, “the stockholders are holding us accountable!”  Had he said this, Fuld might have laughed. Of course, Richard Fuld was a major stockholder, so he might have viewed it as “holding myself accountable to myself.”  Given the inherent ethical conflict of interest in such a statement, I don’t think we can rely on corporate governance as a check on excessive managerial risk-taking when executives hold a substantial share of the stock.  Therefore, in including stock options in executive compensation to align executives' incentives with medium and long-term firm performance, boards should add institutional safeguards or accountability mechanisms to corporate governance. In business-speak, there is a cost incurred that boards may not be aware of in aligning executive compensation (and firm ownership) with future profitability.

The full essay is at "Insufficient Accountability."


On the Police Power of Chinese Banks: An Exception or the Rule Worldwide?

In July, 2010, a few days after the Agricultural Bank went public in an IPO bringing in $22 billion, dozens of former bank employees stealthily gathered outside the headquarters of the country’s central bank. Like many other state-owned companies, the bank slashed its payroll and restructured in order to raise profitability and make the bank more financially attractive to outside investors. By Western standards, the bank was overstaffed, a legacy of its role as one of the pillars of China’s socialist financial system. The fired bankers have no legal redress in China. In 2000, the Supreme People’s Court put an end to any hope that the legal system might adjudicate such disputes, saying that plaintiffs from state companies had no standing in Chinese courts. So the ex-bankers protest—at least they attempt to do so before being picked up by a coordinated police response. This dynamic should come as no surprise to anyone.  What might not be so apparent is the ability of the banks to use the police to go after recalcitrant ex-employees. The banks are so powerful that they can enlist the local police to keep an eye on the most troublesome employees, often following them to Beijing, where their protests and petitioning can prove embarrassing for executives back home. One ex-employee said, “The head of my branch said he would never give me my money and spend any amount to fight me to the end.”  I contend that it is troubling that the director of a bank branch whose mentality it is to spend any amount of money to fight an ex-employee has police-power at his beck and call.  Beyond the lack of an independent judiciary in China, the possibility that a banker in any country could have a police force at his or her ruddy fat hands is something that ought to be investigated.  While it might be tempting to relegate such a scenerio exclusively to China, European and American states are most likely not immune either.

Source: http://www.nytimes.com/2010/08/16/world/asia/16china.html?pagewanted=1&_r=1&dbk

Consolidation in Russia: Federalism and Democracy at Risk

United Russia, the party led by Prime Minister Putin, decided in August, 2010 not to submit the name of the governor of Kaliningrad, Georgy V. Boos, for reappointment. The decision appeared to put pressure on governors to do more to ensure the satisfaction of those they govern, or to at least keep a lid on dissent. Governors had been popularly elected in Russia until a 2004 decree by Mr. Putin, then Russia’s president, that gave the president responsibility for appointing them. In that decree, the president is to select governors from a list of candidates drawn up by the governing party. Critics have said that the practice has made governors beholden to the Kremlin and insensitive to the popular sentiments. This can be problematic on two grounds.

In an empire-scale polity the size of Russia, which is inherently diverse,  insensitivity to popular sentiments can create pressure that could cause the federation to eventually explode. Being geographically separted from the rest of Russia and comparable to a small country, Kaliningrad is undoubtedly in a position to have expectations arise from its people concerning some extend of self-governance. As Russia treats its constituent republics like a republic’s provinces, the people in the republics are likely to take offense and demand more in terms of self-governance more in line with that of the EU’s states.

Secondly, the appointment power evinces a democracy deficit. The inability to elect governors was one of the central grievances when 10,000 people protested in Kaliningrad in January, 2010 to call for Mr. Boos’s ouster. Konstantin Doroshok, the head of the Kaliningrad branch of the opposition group, Spravedlivost, said of United Russia’s decision to deny the governor a second terms, “On the other hand, it is important to understand that the people have not been given the most important thing: the real opportunity to independently elect governors.” To the extent that the protest was over the constitutional change rather than Georgy Boos in particular, United Russia may have taken the wind out the Baltic sails without having to directly address the raison d’etre of the complaint. Even so, the pressure for more self-governance is likely to intensify in Russia’s republics. In excessively consolidating, Russia may go the way of the USSR.

Source: http://www.nytimes.com/2010/08/17/world/europe/17russia.html?_r=1&scp=2&sq=russia&st=cse

Electoral Fraud in Afghanistan: A Precursor to the Protests in the Middle East?

The UN’s Electoral Complaints Commission recommended in 2009 that Afganistan’s Independent Election Commission invalidate 210 polling stations where the ECC found “clear and convincing evidence of fraud.”  The IEC in turn announced a run-off election because Karzai no longer had over 50% of the vote.  MSNBC reported that “the Karzai-influenced election commission may refuse to call for a runoff.” CNN reported that Karzai and Abdullah were trying to “cut some sort of deal” on a coaliation government that would have obviated, or skirted, a run-off.  Such a compromise would have been woefully inadequate from the standpoint of democratic process.

Even Karzai’s announcement that he would go along with a run-off can be read as presumptuous.  If he didn’t want to go along with it, he need not have taken part.  That one candidate’s feels his refusal to participate would or should cancel an election suggests a rather squalid presumptuousness that ought to be made transparent to the voters.  It is a sad commentary on representative democracy that the Afghan IEC’s decision was probably dependent on Karzai having been under international pressure to agree to the run-off.   Is it too idealist to insist that the candidate should have been informed by the IEC of its decision rather than permitting it?   For one of the candidates to have had a de facto veto on the election commission evinces a lack of democratic infrastructure.  It is like a cart pulling the horse.

In retrospect, we know that Karzai’s victory was fraudulent, even though he continued on in the campaign as a viable candidate.  What does it say when fraud is not punished?  Is having a run-off sufficient punishment?  Were all of the candidates benefitting from the fraud tossed out and a new open election held, would this be so catastrophic? I contend that the protests that occurred in the Middle East in 2011 for greater democracy can be interpreted as having been occassioned by years of frustration stemming from the sort of electoral facade perpetuated by dictators such as Karzai.  If so, the costs of not nipping electoral fraud in the bud far outweight any trouble involved in insisting on electoral accountability.  In the case of the U.S., foreign aid to Afghanistan could have been cut off in 2009 unless or until an open and fair election could be verified. With such a substantive signal given and repeated with regard to other dictators in the Middle East who were using the facade of democracy for legitimacy, some of the mass protests taking place two years later might have been obviated and lives saved that were otherwise lost.

Sources:
http://cnnwire.blogs.cnn.com/2009/10/23/karzai-challenger-prefers-opposition-to-coalition/
http://www.msnbc.msn.com/id/33394277/ns/world_news-south_and_central_asia/

Prohibiting Interracial Marriage: Testing the Limits of Tolerance in a Federal Empire

In October, 2009, it was widely publicized in the press that a justice of the peace in Louisiana had been refusing to marry interracial couples (what if both people are multiracial?). He was subsequently fired. Keith Bardwell, justice of the peace in Tangipahoa Parish, said it is his experience that most interracial marriages do not last long. "I do ceremonies for black couples right here in my house," Bardwell said. "My main concern is for the children." As astounding as this sounds in the twenty-first century in a modern society, the case demonstrates the thesis that an empire, or Union of many States, is inherently diverse--incredibly diverse in fact. Europeans tend to view the United States as though it were itself akin to a state (i.e., homogeneous). In truth, the United States are indeed as diverse as is the European Union (language is not the only basis of diversity).  A person in Boston reading a newspaper about the justice in the peace in Louisiana could be excused for thinking for a moment that Louisiana is another country. To be sure, the large states in the U.S. are equivalent in size to the large member-states in the E.U. Territory does matter in terms of cultural diversity.

The full essay is at Essays on Two Federal Empires.


Health-Care Insurance Reform: A Spectrum of Alternatives With Respect to Federalism

In 2009, the U.S. Senate’s majority leader, Harry Reid, proposed a government-run “public” health-care insurance option with an “escape hatch.”   According to The New York Times, “A state could refuse to participate in the public insurance plan by adopting a law to opt out.”    While this proposal would barr a State refusing the public option from participating in the coops that are also a part of Reid’s proposal, the basic “opt out” arrangement is in line with federalism and, moreover, with the inherent heterogenious or diverse nature of an empire spanning across and continent and beyond. In contrast, Olympia Snowe’s preference for “a fallback, safety-net plan” that would trigger the public option in States where insurance companies fail to offer affordable plans is antithetical to federalism because the States would have no choice in whether the plan was triggered.

The approach most in line with federalism would be for the health-plans to be designed in the State governments, with the U.S. Government focused on matters that the States cannot (not will not) do, such as presenting a united foreign policy to the world.  If there is a lowest common denominator for health-care in the US as per the fundamental principles of the Union, a basic program passed by the U.S. Government would be consistent with also having State plans.   Next closest, the U.S. Government would supply money for health-care, which the State governments would decide how to spend.  Even less in line with federalism would be the design of the programs being done by Congress and the WH, with separate opt-outs for the public and coop insurance plans.   Reid’s proposal was less in line with federalism, and finally, as least in line with it, was Snowe’s preference.

The U.S. Senate: What Is It Really? (Part 2)

The US Senate is “absurd.” So said Katie Connolly of MSNBC in 2010.  She was referring to Sen Shelby (R-AL) being able to singlehandedly place a hold on all pending nominations.  Citing a congressional scholar, Johathan Chait noted that a blanket hold has never been used before. Connolly argued that Shelb was doing it “because he wants a European corporation to build some planes in his state.”  Such a reason would be ubiquitous if not squalid enough in either body of the US Congress, so it is certainly plausable.  One might recall the money Sen. Ben Nelson got for Nebraska by agreeing to the health care reform bill.  In needing all 60 votes from the democrats and two independents, that bill gave us all a reminder of what an international body is like where each member has a veto.  In singlehandedly blocking all pending nominations before the US Senate, Sen Shelby was drawing on this theory as well.  While it is easy to trounce on each Senator (or each state) having a veto, I would argue that it is far less sordid than Shelby’s reason (i.e., more pork).  Because every state in the Union is semi-sovereign (and enjoys residual sovereignty as per the tenth amendment), there is constitutional support for any state represented in the US Senate having a veto on any legislation or appointment.  Because the veto is based on governmental sovereignty (i.e., the US Senate being in this respect an international body—unlike the US House), Alabama can use its veto even for reasons we might find disgusting.

So if each Senator (who represents his or her state as a political body even though he or she is elected by the citizens of his or her state) having a veto makes the US Senate “absurd” (and I join with those who are frustrated by it), we might want to consider the consequences that would be involved in depriving the political members of the Union of their vetos in the General Government (ie., Washington).  We could expect an acceleration in the consolidation of power in the General Government at the expense of the state governments—resulting in one size fits all in a heterogenous empire-scale Union (i.e., empire).  Any state government objecting to Washington taking over yet another domain of power would be powerless to stop that train without breaks running down the tracks toward a central state.  Meanwhile, that train would be able to pass more legislation through the US Senate, further accelerating its speed.

Some time back, I asked Sandra Day O’Connor of the US Supreme Court why she wasn’t objecting to the US Government going beyond its enumerated powers.  She replied to the small group that Congress was acting like a state legislature.  Disgust was palpable in her voice.  In a sense of futility, she added that it takes five on the US Supreme Court to have a majority decision (meaning that a majority would not go along with her on the enumerated powers matter).   You might be wondering what is wrong with Congress acting like a state legislature. The problem is that the US is in scale (and its make-up) commensurate with an empire by today’s standards.  In other words, most of our states are equivalent to countries.  You just can’t (or shouldn’t) run a combination of countries as though it were one country.  For one thing, a combo is inherently diverse.  Also, its center is further from the people.  It means less democracy or republican principles of representation because there are far fewer US Reps and Senators than state Reps and Senators.  Also, the US Government is designed as an empire-level polity.  Whereas the states’ Senates represent citizens (just as the states’ assemblies do), the US Senate (unlike the US House) represents political entities (the states) rather than US citizens.  In other words, both US citizens and US states are members of the US.  The US Government isn’t fashioned like a state government because the Union is a combination of such states (whereas a state is not a combo of republics in turn).

So we ought to be very careful about kneejerk reactions to fix the “absurd” US Senate.  To be sure, holding up appointments to get pork is squalid even by a pig’s standards, but turning the US Senate into a state senate would drastically alter what the US are.   Even though we use “the US” as a singular noun, the entity itself and its government were formed and designed with it as a plural noun (the states) in mind.  The US constitutional convention delegates invented modern federalism to suit this new genus of an empire: the Union.  The EU has since come into being along similar principles because it is of the same genus.  To treat either the US or EU as though it were commensurate with one of its states would be to treat something other than what it is.  That can only lead to a downfall.   So perhaps rather than change the US Senate to fit our understanding, we might alter our understanding to fit what the US are. This would entail taking the pressure off of the US Senate by returning most of the domestic legislation to the state governments (where there is more democracy).  Consider the coherence in having the US Senate  mainly involved in foreign policy (and regulating between the states) and having a filibuster (which is close to the principle of international organization).  That is, the state governments meet in the US Senate technically on an international basis. Moreover, the U.S. Constitution forms a hybrid between or composed of international and national governance.  This unique situs fits with the empire-scale of the United States, especially as they have expanded to fifty. 
Treating the US Senate as a state legislature…legislating on everything from healthcare to education…is a gross departure from this coherence.  It is indeed absurd—only we have the arrows reversed.  It is our use of the US Senate that is absurd—not the Senate’s principles (even though they can be abused, such as by Nebraska and Alabama). Treating the US Senate (and the Union) as other than what it is can only lead to the fall of our empire…our Union of States. To be sure, every empire that rises must fall.  So why write?  I’m merely trying to stay the fall a bit, but the outcome is certain.  In the meantime, let’s not help it along.  This will take more humility and much less presumptuousness in what we think we know about our system of public governance.  With more humility, perhaps more of us will be content to get involved in our state governments.  As it is, we overlook them and advocate changing the US Senate into our own image of what it should be, presuming the extant Senate is "absurd" (perhaps it is sheer hubris to make such a summary judgement?).

Source: http://blog.newsweek.com/blogs/thegaggle/archive/2010/02/05/need-more-evidence-the-senate-is-absurd-look-no-further.aspx

The U.S. Senate: What Is It Really? (Part 1)

In 1928, the Senate stopped the bill that would have given WWI vets their bonus then rather than in 1946.  Mass protests for weeks by thousands of vets on the U.S. Capitol may have swayed the U.S. House, but the Senate was undaunted: passage of the bill would be economically disasterous .   Such a scenerio is exactly what the delegates in the U.S. constitutional convention in 1787 would have predicted.  They designed the House to reflect the passions of the people, and the Senate as a check on such passion where it is intemperate.   Looking back at Shays’ Rebellion in Massachusetts, the delegates feared excess democracy.  No supporter of the Senate, Madison nonetheless points out that “a numerous body of Representatives were liable to err also, from fickleness and passion. A necessary fence against this danger would be to select a portion of enlightened citizens, whose limited number, and firmness might seasonably interpose against impetuous councils” (Madison’s Notes, p. 194).

However, the delegates also designed the U.S. Senate “to represent the wealth of the Country” (Pinkney, in Madison’s Notes, p. 198).  Col. Mason claimed that “one important object in constituting the Senate was to secure the rights of property” (Madison’s Notes, p. 200).  Does being wealthy make one temporate or enlightened?   Madison observes that “wisdom & virtue” are among the objects of the proposed Senate (Madison’s Notes, p. 195).  Does being wealthy mean that one is apt to stand up for virtue?  Does wisdom come from having inherited or earned wealth?

As if these two purposes etched in the design of the U.S. Senate are not sufficiently disjoined, the delegates also intended that the Senate represent the State governments so as to proffer them a means of defending their turf against encroachment by the U.S. Government.  Senators were selected by State governments before the ratification of the 17th Amendment in 1913.  It was debated in the convention whether popular election would give the senators a sufficient incentive to protect their respective State governments.  The delegates concluded that it would be insufficient, and history has proved them right–as the governments of the States have steadily lost power to the expansive U.S. Government.

So, the U.S. Senate was designed as a check on the excess democracy possible in the U.S. House, to protect the interests of property, and to represent the State governments and protect the balance of power so crucial to the viability of federalism.   It is not clear to me that these three functions are mutually-supporting or even compatible.  I don’t see evidence in Madison’s Notes of Debates in the Federal Convention of any consideration of the assumed compatibility.

Just as any human institution is apt to subtly morph if it endures for a sufficient time, the U.S. Senate has changed through the centuries.  As a result of the 17th Amendment wherein U.S. Senators are now popularly elected (by State), the U.S. Senate is more democratic–hence more like the House.  The six year senatorial term is a buffer, to be sure. However, re-election is never too far off to be absent from a given Senator’s political and legislative calculation.   Hence we are unwittingly leaving ourselves vulnerable to our own excesses.  Are we assuming that our passionate, spur-of-the-moment, collective impulse cannot be reckless and ultimately not in our own best interest?

I have already pointed to the implications for the State governments, and we have seen their eclipse through the last century.   What about the protection of property?  How does this mix with the more-democratic “structural tendency” in the Senate?   Are Senators more oriented to the upper-class voters while soothing the rest as if we too are being represented?  In other words, is there a sort of duplicity built-in to this combination?

In my opinion, the U.S. Senate can represent the State governments while simultaneously serving as a check on the intemporate excesses possible in the U.S. House.  Property is sufficiently represented in the U.S. Government as a whole, given the small number of elected and appointed officials relative to the entire population.   I would look to the commensurate European Council in the E.U.   The Council not only represents the State governments, the chief executives of the States (or their ministers when specialized topics are decided) sit on the Council.   It is a viable check on the European Parliament, which is commensurate with the U.S. House (i.e., elected representatives by the people of the EU).   We could do better by emulating the European Council.

Accordingly, I recommend that the governors sit in the Senate (which would meet periodically…with the governors’ respective staffs doing the leg work), with the relevant members of the States’ cabinets meeting on specialized topics.   This might seem confusing, but it works in Europe.  Essentially, officials in the respective State governments would meet in a common council.  50, not 100 members.  The latter number is too numerous for a council.   Because governors are elected, democracy would not be shirked even as the Senate would be a viable check on the excesses in the House (because the governors acting in a council are “two degrees” from the voters while the U.S. Reps are only one).   To be sure, the Senate would not be meeting every day, but meeting periodically to decide the major points.

The Senate representing the State governments would distinguish the Senate from being a replica of the House.  Do we really need two Houses?   Strictly speaking, proportional representation applies where citizens are being represented.  In contrast, in an intergovernmental council each government is a member–a person, as it were–regardless of how much each weights (e.g., different populations, territorial size, or wealth).  The European Council deviates from the “intergovernmental council” model because the number of votes assigned to the governments is influenced by its population.  I don’t see why the Senate would no longer be an intergovernmental council just because the votes are proportional; the key would be that governments would be voting, so the one vote per government could be relaxed.  Because proportional represention is the rule in the U.S. House, the big States can protect themselves.  So I don’t view the one vote per government in the Senate as problematic in terms of the Congress as a whole.  In general terms, the more we can distinguish the two bodies of the Congress, the more we enrich our system of government by taking advantage of the unique contributions from different forms of polity.   If there is a downside to proportional representation,  a Senate not partaking of that method would automatically be a check (and vice versa, of course).

Debating Federalism

One might argue that federalism gets in the way of solving problems that are simply too important to go unsolved.  In short, the argument is that federalism impedes progress on important issues. State to state differences should not be tolerated, he argues, where important needs are involved. “Resources and die-hard beliefs in the role of local government vary too much from state to state” for us to trust State government to deal satisfactorally with grave problems.   I suspect this view is widely held today.

In response, I would argue that the choice of a governance system should only partly be determined by the ease by which particular problems are solved.  In designing the U.S. Government to include a separation of power between the three branches, the delegates in the constitutional convention of 1787 were looking to thwart the solution of problems by the Union’s general government.  In addition to fearing tyranny from a consolidation of power into a few hands, they believed that the functions of that government should be limited because the state legislators are closer to the people, and thus better as republics.  Rather than being problematic,  differences between the States (generically), or republics (more specifically), are natural.  Given the scale involved in many of the States alone, how could a Union of many such republics be anything but inherently diverse?  To ignore the differences and impose one solution on all is artificial and likely to build up pressure for eventual dissolution.  Such pressure can unwittedly be built out of ignorance.   So “ease in solving problems” may actually be antithetical to the criteria we want for designing our system of governance spanning a continent. I would argue, moreover, that it is short-sighted to re-orient a system of governnance to the whims of what is best for handling particular problems of the day.  To subject long-term viability to the vissitudes of the day is to subject one’s posterity to ruin.

One could also point out that federalism is a historical means to forming the Union and is therefore antiquated (as the Union is now formed).  Some of the delegates to the constitutional convention would argue that they had to put up with the continued existence of the States simply due to the politics (i.e., the intractability of the delegates defending their respective States).   Certainly Hamilton would have preferred to do away with the States—replacing them with administrative districts of the federal government.  I believe that a significant number of Americans today share Hamilton’s view.  If this sentiment is dominant among the citizens, we should give serious thought to a constitutional convention for the purpose of replacing federalism with consolidation, officially through an amendment.  Even though I believe that this option is not compatible with having a republic at the Union level, if a super-majority wants to change our system of governance, it should be changed (assuming a “constitutional moment” of reflection and debate on the proposal).

I do not believe that federalism was merely used as a political means of achieving agreement on the creation of a general government.  As I have written in another post, the diversity spanning an empire-scale polity can be accommodated by federalism.  Some large States are sufficiently large in themselves that they have diversity that could justify a federal system.  Consider, for example, California and Illinois.  Each of these republics is sufficiently diverse in its provinces that federalism could accommodate the different cultures and bring legislation that is more fitting and less compromised for all concerned.   That new States have been added to the Union since its founding—some of the last of which being quite different culturally from the others (e.g., HI and AK)—means that there could be even more diversity within the Union today than when it was founded (assuming that transportation and communications technology has not totally overridden the diversity inherent in the territorial scale of empire).  Paradoxically, the need for federalism could be more pressing today.  I have already argued that republic principles may be stretched too thin at the empire scale.  This, plus the matter of accommodating diversity within the empire, strongly points to the utility of restoring federalism. 

Finally, someone could say something like,  ”I believe in the power of each State, but I have NO confidence in the people” running the State governments.”  This point may resonate with the extant condition of state government today in the United States. That is, the eclipse of the State governments has almost certainly had an impact on the quality of the representatives the State level.  Do the best and brightest really want to work in a legislature that has been reduced to considering by and large local government issues?  What sort of person would agree to campaign for a rather impotent position?   The situation now is markedly different than in the revolutionary period, when the preference of the best and brightest of the politicians was to serve their respective countries.   Even as late as 1860, General Lee felt obliged to fight for his native Virginia—turning down Lincoln’s request that he fight for the U.S. Government.   So presumably were a balance of power restored such that State governments would have real power over the issues that really concern us, we might find the quality of our State reps improve.  We might have better candidates to choose from, and we might take more interest in their campaigns.  So I would argue that the enervated conditon of State government today should not be taken as indicative of how such government would look were it restored to a balance of power with the U.S. Government. For example, were the National Governor's Association given a formal role in determining American foreign policy, we might see better candidates running for governor.

In closing, I want to note that being in a large Union that is inherently diverse does require a certain amount of tolerance for regional differences.  “Not trusting” a State’s people who have a different understanding of government or who feel a different way on a problem is not consistent with having a Union.  That is to say, we won’t last as a Union if a dominant faction in one region imposes its ideology on States in other regions spanning the continent.  A certain humility is necessary.  Of course,  a Union has certain bed-rock common principles (in our case, representative democracy, for example) that delimit certain behavior and laws (e.g., holding other races in slavery).   The problem is the slippery slope wherein one uses “common principles” to impose one’s own ideology and the natural diversity spanning a continental Union is not accommodated.   The people of a republic will naturally want out if their way of life is imposed upon without justification.   In short, being in a Union requires having a sufficient tolerance that can admit that not every State is going to solve your important problems in the way you want.   I suspect that this Union has lost too much of this tolerance (contributing to divisive partisanship at the federal level).   One size fits all over a polity spanning across a continent (and beyond!) is likely to involve bitter partisanship because people view the approach as all or none.   To be sure, there may not be sufficient tolerance anymore among Americans to allow for a viable system of federalism.  Moreover, federalism itself is not perfect, so debate on it could lead to a decision by the popular sovereign to make the United States officially consolidated.  In my view, however, such a debate is urgently needed, for otherwise the American people will continue to live a consolidated lie under the rubric of federalism on parchment.