The Election Outcome

Well, what did you expect?

Panetta, a former director of the CIA, gave a strong defense of counterterrorism drone strikes and commando raids, calling them “the most precise campaign in the history of warfare,” and indicated strongly that they’re only going to intensify in the coming years.

“This campaign against al Qaeda will largely take place outside declared combat zones,” Panetta said in his prepared remarks, “using a small-footprint approach that includes precision operations, partnered activities with foreign Special Operations Forces, and capacity building so that partner countries can be more effective in combating terrorism on their own.” He referenced “expanding our fleet of Predator and Reaper” drones and beefing up Special Operations Forces by another 8,000 commandos in the next five years. Even if combat is ending for most conventional units, those forces —already frequently deployed — aren’t in for any respite.  (emphasis added)

The euphemism here is rather amazing.  What does one call it when military combat takes place “outside declared combat zones”?  The word that comes to mind for me is “unconstitutional”, you know, owing to that little part of the Constitution that gives Congress the sole power to declare wars and all, but maybe I’m just an old fuddy-duddy in my 31 years. 

But notably, Panetta isn’t talking anymore about killing another “10 to 20 key leaders” and declaring victory in the war on terror, as he did in 2011. The “cancer” of the terrorist network has “metastasized to other parts of the global body.” Talk of the Arab Spring demolishing al-Qaida’s “narrative” has given way to fears that al-Qaida is taking advantage of the fall of regional dictators “to gain new sanctuary, incite violence, and sow instability.”

Killing people, who may or may not be militants themselves, does not occur in a vacuum, as those who lose loved ones, but may not have been militants before may be incensed to take up arms in revenge (metastasis, perhaps?) Indeed, there are consequences.

He said that although Obama had initially retreated from Bush’s “global war paradigm” — which viewed the struggle against terrorism as a permanent war — he said a similar mind-set has “reared its head” in the past 18 months. He cited figures compiled by the London Bureau of Investigative Journalism, which alleged that at least 474 civilians have been killed in Pakistan alone and that at least 50 civilians have died in follow-up strikes, in which civilians who came to the aid of victims of previous strikes were killed.

Officially, the drone program is still “classified”, which of course insulates the government from having to “officially” be accountable for the inevitable acts of barbarity that occur when you fire rockets on targets from halfway around the world via computer monitor and joystick.  The American public will remain in blissful ignorance about the drone program, since it has bipartisan support in Washington, and those things that have bipartisan support are generally not talked about, so that the hoi polloi never get a whiff of what their elected officials are up to.  From the Washington Post article linked just above:

Emmerson also waded into the White House election, noting that both President Obama and his Republican challenger, Mitt Romney, appear to be in agreement on the covert use of drones. He expressed surprise that the issue of accountability for torture or other abuses of detainees has not featured in the presidential campaign and “got no mention at all” in Monday night’s foreign policy debate.

Imagine that, a United Nations “special rapporteur on counterterrorism and human rights” being shocked, shocked I tell you! that the topic of holding our country’s prior leaders accountable for human rights violations did not come up in a debate between the two men running to lead the country!  Accountability is a foreign term to modern American society, at least for those elites at the top of the food chain.  Why give the public any ideas about what true accountability would look like?  Why even provide a rhetorical opening to be questioned about one’s views on charging human rights violators with human rights violations?  The coverup has gone on long enough (ahem, we have been “looking forward, not backward”) long enough that those helping to coverup the crimes may well be implicated themselves.  We have what is called a credibility trap:

A credibility trap is when the regulatory, political and informational functions of a society have been compromised by corruption and fraud, so that the leadership cannot effectively reform or even honestly address the situation without impairing and implicating, at least incidentally, a broad swath of the power structure, including themselves.

The impetus for changing these policies, for ending the prosecution of wars overseas against unnamed, undeclared enemies, must come from the American people.  Our leaders will not stop, for they are all implicated as well.  Such is the way of the world at the close of 2012.

On Inequality

I’ll try and keep this post short, as I really just want to express one economic principle that’s been roiling around in my gray matter for quite a long time now, but that I believe is worth mentioning.

Put simply, apart from any moral or ethical rationales why we, as a society, might desire to reduce the income and wealth inequality that plagues the United States these days, I believe there is an overriding functional principle that goes largely unremarked-upon, from my observation. 

But first, Brad DeLong, an economist at UC Berkeley who worked in the Clinton Administration, provides some context for why the middle class is ailing so much these days in his analysis of economic inequality:

The decline in our willingness to invest in education: a generation ago, we were the best-educated country among the rich nations of the North Atlantic; today we rank 14th. With fewer well-educated people than the trend would have predicted, supply and demand have raised the salaries of the educated relative to trend; with more poorly educated people than the trend would have predicted, supply and demand have lowered the wages of the less-educated not just relative to trend but absolutely. Add in more minor factors, such as the relative decline in the minimum wage and the coming of globalization, and the upshot is that the U.S. Bureau of Labor Statistics tells us that the typical white American male with just a high school diploma earns less today than his predecessor of the late-1970s, even though the country as a whole is 70 percent richer per capita. Thus the top fifth of America today outstrips the rest much more than it did a generation ago: their incomes are higher than their predecessors’ as they have kept up with the 70 percent tide of economic growth, while the statistics say that the rest are more-or-less treading water. (emphasis added)

Every person with some money in their pocket is an investor, of sorts.  Each person decides where they will invest their money based upon the value they place on what they expect to receive in return for their money.  Consumer spending makes up approximately 70% of US gross domestic product (GDP), meaning that, when individual consumers, in the aggregate, have less money to spend the economy necessarily takes a hit.  The function of unemployment benefits, food stamps, and other forms of aid to individuals in difficult circumstances (what are called “automatic stabilizers” in economics) not only keep families eating and housed, but also help to maintain at least a modicum of consumer demand in a weakened economy. 

Because each individual consumer decides where to invest/spend his or her money, that means that there are hundreds of millions of individual “pathways” let’s call them, for money to be injected into the economy.  Furthermore, these pathways are geographically spread all over the country, in cities, suburbs, and rural towns, every place that American consumers live, in fact. 

To me, the central conceit of “trickle-down economics,” and its central failing, is that by redistributing wealth upwards, you get fewer people with more of the money who are somehow supposed to continue to drive demand; who are to continue to provide a significant portion of the consumer spending that comprises 70% of our economy.  Would not such trickle-down policies lead to ever-increasing concentrations of wealth, particularly in those locales where the wealthy would tend to congregate?  Would not the spending habits of the top economic percentiles, and the fact that there are numerically fewer persons in those top percentiles, lead to less overall investment/spending in less wealthy sectors of the economy? 

As I sense that I am not making myself very clear, consider for an example a multi-billionaire hedge fund manager in New York City.  While his financial investments are surely global in scope, his spending habits may be relatively confined to the goods and services that specifically cater to the global elite in New York City – the high-priced housing, the waitstaff, the limo services, etc.  Thus, his spending may be concentrated in a relatively narrow slice of the economy, both in terms of the goods and services provided as well as the geographic spread of his spending. 

That billionaire is unlikely to, for instance, spend his money at a mom-and-pop grocery store in urban Detroit, or an agricultural supply shop in the Kansas farmland.  And yet, if the middle-class patrons of these other shops do not have as much purchasing power due to systemic and long-term wage stagnation, what is to happen to those shops, which are likely important to the social fabric of their neighborhoods?  What happens to the sales or property tax revenues that are lost in those communities, whose schools then become chronically underfunded? 

It turns out that FDR had some views on just this situation, and he addressed those views in a speech in Gainesville, Georgia in 1938:

FDR then went on to speak about how such attitudes affected the nation as a whole, of the consequences of economic inequality and the critical need to provide work and better wages for the "bottom third" of the U.S. population. He insisted it was vital to improve the "buying power" of the millions of unemployed and other workers "who are so under-employed or so underpaid that the burden of their poverty affects the little business man and the big business man and the millionaire himself." Moreover, he also reminded his listeners that better buying power meant not just greater purchases in hard-hit industries but also "many other...things -- better schools, better health and hospitals, better highways."

How much easier and more natural is it for wealth to “trickle upwards” from a base of consumers who have a moderate amount of discretionary income, rather than tenuously existing just above the poverty line?  Henry Ford understood this concept, which is why he famously paid his workers well enough ($5/day in 1914 compared to the industry average at the time of $11/week) that they would be able to afford the Ford cars they were producing. 

Not only was it a matter of social justice, Ford wrote, but paying high wages was also smart business. When wages are low, uncertainty dogs the marketplace and growth is weak. But when pay is high and steady, Ford asserted, business is more secure because workers earn enough to become good customers. They can afford to buy Model Ts.

This is not to suggest that Ford single-handedly created the American middle class. But he was one of the first business leaders to articulate what economists call “the virtuous circle of growth”: well-paid workers generating consumer demand that in turn promotes business expansion and hiring. Other executives bought his logic, and just as important, strong unions fought for rising pay and good benefits in contracts like the 1950 “Treaty of Detroit” between General Motors and the United Auto Workers. (emphasis added)

Of course, such a perspective requires that the executive making decisions regarding his or her employees’ compensation take a longer view, beyond simply the next quarterly earnings statement release date, and such management perspectives are sadly lacking in modern business culture on the whole. 

The point, is that each consumer has the ability, in miniature, to set off a “virtuous cycle of growth” in his or her community, depending on the spending choices we make.  Shopping at your local store, rather than online, for example, helps build up that store’s financial position, thus providing the managers more flexibility to someday hire more workers or expand product lines, both investments which cause positive ripple effects to occur further out in the economy. 

But again, if income and wealth becomes increasingly concentrated in fewer hands and in fewer geographic locales, then by nature, those many millions of small virtuous cycles of growth that individual consumers can help to set off all across the country will not be as likely to occur.  This dynamic makes our economy less resilient, as money circulation becomes increasingly driven by the spending decisions of fewer and fewer people, rather than by millions of individuals in many different places.

There is so much more to say on this topic, one blog post can barely scratch the surface.  The main takeaway, though, is that a rising tide truly does lift all boats, as the old saying goes.  And that rising tide operates everywhere, not just in the enclaves of the wealthiest, helping spread and multiply the benefits of a strong middle class in NYC, Detroit and Kansas. 

An Election of Superlatives

Consider the unprecedented nature of the decision we have to make on November 6th between the two major-party candidates.

On the one hand, we have an incumbent President who is also a Nobel Peace Prize winner.  This man, lauded for his efforts to bring “peace” to the world by the perhaps-naive Nobel Committee, is also presiding over the expansion of apparently perpetual secret/shadow wars to kill “terrorists/enemy combatants” on what appears to be a virtually unlimited battlefield through the use of unmanned drone strikes.

Among senior Obama administration officials, there is a broad consensus that such operations are likely to be extended at least another decade. Given the way al-Qaeda continues to metastasize, some officials said no clear end is in sight.

“We can’t possibly kill everyone who wants to harm us,” a senior administration official said. “It’s a necessary part of what we do. . . .We’re not going to wind up in 10 years in a world of everybody holding hands and saying, ‘We love America.’ ”

On the other hand, we have a fabulously wealthy financier whose belief in “American exceptionalism” is so great that he made (and continues to make) quite a bit of his money through offshoring American jobs to foreign nations, including China, a country that he has vowed to “get tough on.”

Right now a company named Sensata is moving equipment out of a factory in Freeport, Ill., and shipping it to a factory in China. Sensata will be laying off all of the American workers, but first they are making the workers train their Chinese replacements. The workers' last day is the day before our election. Here's the thing: This company is owned by Bain Capital, and Mitt Romney -- who says he is against shipping jobs to China -- will make a fortune from the move to China.

The Sensata employees have set up a camp outside the factory that they call Bainport and are trying to stop the Bain trucks that are moving the equipment out for shipment to China. These soon-to-be-jobless workers have asked Romney to come help them.

This is a tremendous opportunity for Mitt Romney. As the former head of Bain Capital and with all the visibility of a presidential campaign, he could step in and help these workers. It offers him the chance to demonstrate to voters that he means the things he says on the campaign trail, and is not just saying these things to get votes. But Romney has refused.

And one more bite at this bitter offshoring apple:

"Romney's campaign did not deny that he profited from the auto bailout in an email to The Hill, but it said the report showed the Detroit intervention was 'misguided.'"

The truth? On June 1, 2009, the Obama administration announced that Detroit Piston's owner Tom Gores, GM and the US Treasury would buy back Delphi.The plan called for saving 15 of 29 Delphi factories in the US.

Then the vulture funds pounced.

The Nation discovered that, in the two weeks immediately following the announcement of the Delphi jobs-saving plan, Paul Singer, Romney's partner, secretly bought up over a billion dollars of old Delphi bonds for pennies on the dollar.

Singer and partners now controlled the company - and killed the return of Delphi to GM.

These facts were revealed in a sworn deposition of Delphi's Chief Financial Officer John Sheehan, confidential, but now released on the Web.

Sheehan said, under oath, that these speculators threatened to withhold key parts (steering columns), from GM. This would have brought the auto maker to its knees, immediately forcing GM's permanent closure.

The extortion worked. The government money that was supposed to go to save jobs went to Singer's hedge fund, Elliott Management Corporation and its partners, including the Romneys.

Once Singer's crew took control of Delphi, they rapidly completed the move to China, sticking the US taxpayers with the bill for the pensions of the Delphi workers cut loose.

Dan Loeb, a million-dollar donor to the GOP, who made three-quarters of a billion dollars off the legal scam, proudly announced that, once he and Elliott took control, Delphi kept "virtually no North American unionized labor."

In all, three hedge funds run by Romney's million-dollar donors have pocketed $4.2 billion, a return on their "investment" of over 3,000 percent - all care of the US taxpayer. The Romneys personally earned a minimum of $15.3 million, though more likely $115 million - a range their campaign does not dispute.

So there you have it.  Perpetual war from a Nobel Peace Prize winner, and a history of profiting off of job offshoring from the man who claims his business acumen makes him uniquely qualified to lift the American economy out of its doldrums and create jobs.  These are the two candidates who will receive the vast majority of votes in less than 2 weeks’ time.

There are other candidates out there, of course.  There is Gary Johnson, the standard-bearer for the Libertarian Party, and there is Jill Stein, the candidate for the Green Party.  And beyond those two (the most prominent of the third parties, due to their being on the ballot in most states) there are countless other candidates to choose from.

It is notable that the two major party candidates would both bring with them more war, and the two primary third-party candidates would both not only end the wars the U.S. is currently engaged in, but cut the military budget and global footprint further than even proposed under the dreaded “sequester”.  Why do we never hear from the third party candidates in the mainstream media (even when one of them gets arrested outside the second presidential debate for “disorderly conduct” for trying to enter the building and participate)?  Could it be that war is always good for business, particularly for the media?  Are Americans not “ready” to hear what these other parties have to say, or is the game rigged to only operate in black-and-white mode, and thus deny a real choice?

I’m certainly not the first person to notice the conundrum that what we view as American “democracy” is truly a carefully-curated pageant that restricts the amount of political choice Americans are presented with.  According to the Commission on Presidential Debates (the CPD, itself a product of a bipartisan agreement between the two major parties) a candidate must receive 15% of support in national polling to be allowed to participate in the prime-time televised presidential debates:

The CPD's third criterion requires that the candidate have a level of support of at least 15% (fifteen percent) of the national electorate as determined by five selected national public opinion polling organizations, using the average of those organizations' most recent publicly-reported results at the time of the determination.

And how, one might ask, does a candidate receive 15% of public support outside of being involved with the two major party apparatuses?  MONEY!  It certainly worked for billionaire (and anti-NAFTA economic nationalist, I might add) Ross Perot, didn’t it?  He ended up with 18.9% of the vote in the 1992 election, to Bill Clinton’s 43% and George H.W. Bush’s 37.5% after appearing onstage with the two major party nominees – having a well-funded 50-state operation can make outcomes like that happen.

“But we have a public financing system for the presidential race!” you might say.  And you would be right, we do.  But again, you get to the chicken-and-egg difficulty of trying to make an impact on the national electorate without the aid of money, which can help one buy media coverage (or without media coverage, which can help one to raise more money):

Minor or third party nominees may also be eligible for federal funding, but the process is a bit more complex.  A minor party candidate's public funding grant is based on a formula subject to the percentage of votes the party received in the previous presidential general election. The candidate is only eligible for general election public funds if the party's candidate received at least 5 percent of the vote in the previous presidential election.

How does one get one’s name and message out to the public without media coverage, so as to achieve polling and electoral support needed to gain access to both the debates (which again, serve to further get one’s name and message out to the public) and to public financing?  How does one raise money without media support, in order to show electoral viability?  How does one get media coverage without money to run ads, which, again, portray a sense of viability? 

Five percent of the national vote may not sound like a high bar to hurdle, but consider that in the 2008 election, approximately 127 million votes were cast.  Thus, you’d need about 6,350,000 votes to make the 5% threshold that would enable your party to access public financing. 

A useful Wikipedia page detailing the 2008 Presidential election fundraising totals shows the overall fundraising and spending breakdowns for the candidates (I’ve only left in the two major party candidates and the Libertarian and Green Party candidates for brevity:

 

Candidate (Party)	Amount raised	Amount spent	Votes	Avg $ per vote
Barack Obama (D)	$778,642,962	$760,370,195	69,498,215	$10.94
John McCain (R)	$383,913,834	$358,008,447	59,948,240	$5.97
Bob Barr (L)	$1,383,681	$1,345,202	523,713	$2.57
Cynthia McKinney (G)	$240,130	$238,968	161,680	$1.48
*Excludes spending by independent expenditure concerns.	Source: Federal Election Commission

To say that the third parties were outgunned in 2008 is a massive understatement.  The Libertarian candidate received about 8% of the 6,500,000 votes he would have needed to cross that 5% threshold to achieve public financing for the next election cycle, and the Green party candidate received about 2.5% of the number of votes needed to achieve 5% of the national vote.  Clearly there is a lot of ground to be made up!

If you view the realm of politics as a market, you will notice that the choices presented by our media and the official apparatus that governs presidential debates comprise a duopoly – there are only two choices, we are told. 

And yet, are there no worthwhile policy ideas beyond the Democratic and Republican 2012 party platforms?  If you care about enhancing the peacefulness of our world, it does not appear that you have a great option among the two major parties this year.  If you care about holding Wall Street accountable for the massive frauds perpetrated on the American public, and want to see the perpetrators go to jail, well you’re not going to find your candidate in the major parties this cycle either. 

Let me be clear: I am in no way, shape, or form arguing that there are not differences between the Democratic and Republican candidates for president this year; such arguments are a frequent meme among political cynics, but they are without merit.  The differences are stark, in terms of foreign policy, fiscal policy, social policy, etc.  Those differences ought not to be glossed over.  I am also not arguing the relative value of one or the other side’s polices at this point, despite my fairly obvious leanings.  Those arguments are for another time.

My point is simply that there are other ideas out there, other voices, and other constituencies that our political system, our democracy, is at present set up to exclude, rather than include.  This amounts to an undermining of free speech, of the free flow of ideas that theoretically characterizes the superiority of a representative democracy over other forms of government.  Let the two major parties have their ideas and policies challenged in an open debate; let the American public be offered something more than a two-party choice. 

Such changes clearly will not happen this election cycle, but through organizing and building constituencies, positive changes can be made for the future to break the two-party hold over political discourse in this country.  I have some ideas on this topic to expand upon at a later date, given the time.

The President’s big speech today

Visit msnbc.com for breaking news, world news, and news about the economy

If you haven’t had a chance to watch this speech, please do, I’ll wait…otherwise, the transcript is here, helpfully provided by the LA Times.  By way of background, the location of the speech today was a city in Kansas where, 101 years ago, President Theodore Roosevelt gave a speech famously calling for a “New Nationalism” and proposing his “Square Deal” to the American people.  Was President Obama being slightly ambitious in his choice of historical contextualization?  Perhaps, but to my mind it was well worth the risk.

Now then.  While this speech was touted as an “economic” speech, the tenor and content ranged far more widely than simple concepts of supply and demand.  President Obama laid out a new framework for the American economy, with the explicit goal being to rebuild and expand the middle class.  He made the argument that government should not try to “fix” all the problems of society, but that government should work on behalf of the people’s interests.

With a forcefulness that has been heretofore lacking in most of his presidential speeches, President Obama called out greed, irresponsibility, and the continuing fallacy that is “trickle-down economics.”  He called for new rules of the road that apply to everyone, not just to Main Street, but to Wall Street as well.  He defended the Dodd-Frank financial reform bill, and made a stirring statement about the importance of the Consumer Financial Protection Bureau and its soon-to-be-blocked Director nominee, former Ohio Attorney General Richard Cordray. 

One of the more memorable phrases to come out of the speech is President Obama’s term “you’re on your own economics” to characterize the preferred economic plan of the GOP.  The contrast came with President Obama’s insistence that American prosperity, long-term prosperity, is gained together, in contrast to the “YoYo” economic ideas of the GOP. 

But President Obama’s speech led up to what I felt was the culminating point: illustrating for the American people that there is a different form of capitalism available; one that is more responsible and ultimately self-sustaining than the winner-take-all capitalism we’ve endured the past 30 years.  The President spoke of Marvin Windows, of Warroad, Minnesota, and described (skip to the last 7 or so minutes of the video clip to catch it) how the company has never laid off a single worker in its 100+ year history, despite enduring the Great Depression and the ongoing Great Recession.  How did Marvin achieve that feat?  Simple; through shared sacrifice from both the workforce and the management when times have been tough.  The President didn’t get into details, obviously, but his simple illustration of what could be summed up for the audience that change, true change, is within our grasp if we see each other as fellow citizens, and recognize that prosperity will be gained through helping each other out, rather than shorting each other constantly.  Responsible capitalism is what we ought to strive for, rather than a corporate ethos solely driven by the fiduciary responsibility to shareholders.

The President attacked inequality sharply, broadly, and directly, and proposed some new/old ideas to guide us out of the predicament we find ourselves in as a nation.  If it was a speech somewhat lacking in the soaring rhetoric of campaign Obama of 2008, the sober tone reflected the weighty concerns facing the man as President.  In time, I believe this speech will be seen to be a major one, where he describes the economic goalposts as they have been set for the past number of decades, and proposes that we, as a nation, make the effort to shift them back so that the goal is within the majority’s reach once again.  This speech sets the stage for the 2012 campaign, surely, but it also challenges Americans to greater collective achievements. 

I don’t normally watch presidential speeches, but this one had me riveted from the start.  I’ll give Greg Sargent the last word on this topic, the final paragraph of a typically insightful blog post on the speech:

Political scientists will tell you that individual speeches don’t matter; and that grand themes are very unlikely to supplant the direct experience of the economy as a motivator of voters. But we’ll be hearing these themes countless times between now and election day. And anyone who had hoped that Obama and Dems would make an unapologetically populist and moral case against inequality and economic injustice central to Campaign 2012 should be pretty pleased with what they heard today.

Elite tensions with democracy

Visit msnbc.com for breaking news, world news, and news about the economy

Chris Hayes has been the Editor at Large for The Nation magazine for a few years now, among numerous other gigs, and now has his own show on MSNBC on Saturday and Sunday mornings.  It’s a brilliant re-envisioning of the stale weekly public affairs shows dominated by the same rotating cast of characters, in part because of the sheer diversity of the guests Hayes features.  Sunday’s program had 3 women at the table along with Hayes and another male guest, for example.  Try finding that sort of gender-ratio on “Meet the Nation News Sunday.”  Beyond the guests, however, the show strives to offer a diversity of opinions on a multitude of topical stories, and to dig into the details of what’s happening and why in a way the typical news program is simply unable to.  As a perfect example and segway into my point, in the video above, Hayes lays out an argument as to why the Supercommittee’s failure this past week is in fact a good thing for America; his sentiments are ones that I have been mulling over recently myself.  Do watch it.

Hayes mentions the recent ascensions to the top leadership posts of two technocrats in Greece and Italy, noting that their jobs, their mandates upon entering office, are to push through deeply unpopular austerity packages over the will of the majority of their supposed constituents. 

Technocracy has suddenly become all the rage amidst the debt crisis of the eurozone. In Greece, prime minister George Papandreou was ousted in favour of the unelected former central banker Lucas Papademos, after he had the effrontery to call the referendum that never was. In Italy, Mario Monti, the unelected former EU commissioner, has anointed a cabinet of academics, bankers and an admiral, without a single representative of Italy’s political parties. This novel step is designed to reassure international bond markets, which have recently pushed Italy’s yields to perilous levels. (emphasis added)

Key takeaway: the political process is anathema to international finance. 

Consider a few short weeks ago when then-Greek Prime Minister George Papandreou had (shockingly!) called for a national referendum to be held on the terms of an European Union/International Monetary Fund bailout plan that would have included harsh austerity measures to be imposed on the Greek people.  The markets crashed, and the two biggest European economies’ leaders reacted with scorn:

At a bruising meeting in Cannes on Wednesday night, French President Nicolas Sarkozy and German Chancellor Angela Merkel warned [Papandreou] that Athens would not receive a cent more in aid until it met its commitments to the euro zone.

Greece was due to get a vital 8 billion euro installment this month and says it will run out of money in mid-December if it does not get the loan.

Despite the turmoil in Athens and uncertainty over the euro zone, European stock markets and the euro rallied in volatile trading as the likelihood grew that Greece would not hold the highly risky referendum.

Note that opening the decision-making process up to those who will bear the brunt of any economic decisions made by the powers-that-be, the citizenry, is tantamount, in this calculation, to introducing high risk into the equation.  The cold logic of finance, of interest rates and debt-to-GDP ratios, does not comport well with the warm inefficient fuzziness of the electorate, with their myriad voices and parochial/familial concerns.  How are the financiers supposed to get their bailouts when the poor rubes paying for it demand something more than the simple extraction of wealth from their country? 

The power relationships on evidence in the foregoing snippet of the Greek referendum situation are revealing: the larger “creditor” economies of France and Germany here acted as front-line enforcers with the wayward Greek leader Papandreou; the EU, a supra-national body of European nations acted in concert with the IMF, another supra-national body representing the strictly monetary interests of client nations, to craft a bailout package for Greece that brings great pain to the Greek people; meanwhile, the Greek people are demonstrating and rioting in the streets by the tens or hundreds of thousands to show their disapproval, and yet, they are pawns in the grand scheme.  What are the Greek people supposed to do when it seems the entire world (particularly the sanctimonious Germans) is blaming them as a people for being profligate – where are they to turn to voice their opinions democratically when the one opportunity they would have had to do so is brutally snatched away from them by shadowy international forces?

---------------------------

This sordid and ongoing tale of crisis in Europe reveals the flipside to the ethos of globalization that has dominated international politics since the early days of the “Washington Consensus”.  In order to govern worldwide flows of goods, services and capital, world-bestriding structures of governance must be created.  To the extent that those structures are endowed with the authority to act in crises, those actions are by nature going to be out of the direct control of the citizenry of the nations affected, thus denying the citizens of the world recourse to shape the responses of those supra-national institutions.  The structures of these institutions ensure that their responsiveness will be primarily directed towards the largest stakeholders – the largest economies and the largest private financial institutions – thus making the decisions made representative of the policy prescriptions of an even more rarefied status of elites.  Power is thus concentrated further, with the results trickling down upon the rest of us.  And again, we have effectively no recourse to change much at all. 

---------------------------

The notion that centralization=efficiency, related to the economic concept of “economies of scale,” has reigned supreme in much of the modern industrialized world.  We see these tenets manifested in the superstores we shop at, the industrially-produced agriculture we purchase, and the (public) school systems we send our children to be educated at, for just a few examples.  Our governmental policies, and indeed, the growth of the federal government itself in the past century, has reflected the notion that centralized governance is necessarily better for all due to greater standardization of outputs and efficiencies gained.

And yet, centralization creates with it a certain culture as well, an elite culture where those well-versed in the human power relationships and bureaucratic operations of the institutions influence the direction of decision-making to their own ends.  Centralization creates, not only an institution’s set of substantive actions with which it operates in society, but an entire class of administrators devoted to the upkeep and promulgation of the institution itself through budgeting, revenue collection, inter-institutional lobbying, and so forth.  Institutions, first and foremost, desire to keep existing, thus creating a tension with their public service functions.

I would argue that much of the Occupy-inspired debate currently ongoing in our society is at least in part related to the discussion of how much the public interest is served by various institutions of government versus how much those institutions merely serve as vehicles for particular interests to enact their wills.  The public wants accountability for the financial sector, but the relevant regulators have shown themselves to be rather more beholden to the interests of Big Finance than the public interest (see my posts on housing for more on that).  The public wants more investment in clean energy, yet there is an institutional structure within our government dedicated to fossil fuels, from the military fighting wars that just happen to be in oil-rich regions, to the massive tax breaks and other indirect subsidies for fossil fuels baked into our tax code.  How do we get the changes the populace wants enacted into law?  We have to rely on elected representatives with a slew of other institutional and professional competing interests to act on our behalf – not an easy thing to do, apparently!

The clear answer to these problems appears to be decentralization – a reduction of the scale of decision-making to a more manageable, democratic, and community-oriented size.  The General Assemblies occurring at the Occupy encampments around the country have represented that trend most vividly, as Chris Hayes highlighted in the clip above.  While some efficiency may certainly be lost along the way, democracy and true representation can be gained, ensuring that the rule of an unaccountable elite, such as we are witnessing today, is significantly more difficult to achieve.  Consider the supra-national institutions I’ve noted above – they are, if anything, abstractions of representative government; meta-representative democracies, if you will.  Who are their constituents but other client states and their assorted national economic interests?  Who are their leaders but those who have been most agreeable to said client states and economic interests?  How have you been personally helped by the IMF lately?

I hope to pick up further threads of this discussion in a future post, as there’s a lot to the topic of decentralization to discuss.  As always, your comments are welcomed and appreciated in the comments area below.