PROCÈS-VERBAL

Some random thoughts I put out there just for the sake of argument:

• After reading Men Not Working, and Not Wanting Just Any Job, I think there’s one thing which should be made absolutely clear from the start: the economic “utility” of the vast, vast majority of jobs could only be quantified in negative numbers. And really, even under the best conditions, who would want to work for a bunch of people (shareholders) who believe you are lazy, think that cutting your wages and eliminating your benefits is a good thing, and are happiest (given AAPL’s share price) with a mute, compliant workforce out-of-sight in any foreign country?

  File this under, “I want to be an corporate cog when I grow up!”

• Belonging to, believing in, and identifying yourself with any organization necessitates tendering the individual’s moral proxy to the organization. Who today would want to work Goldman Sachs? In the political realm, taking back one’s moral proxy is, in itself, a radical act.

  Full disclosure: By another criteria, believing in the need for major structural reform makes me a “radical” as well. However, I am content (but not overjoyed) to do my own thinking and bear the burden.

• Once you’ve taken back your moral proxy, it’s easy to note the myriad ways the organizational precepts both underlie and are reinforced in the media. Over time, the foreign press is frequently shown to be a more reliable gauge of America than we are of ourselves. The downside is that participatory government is only as strong as its electorate.
   
  
• The big difference between now and when Hayek and Von Mises were developing the economic philosophies we today call neoliberalism is that we now have decades worth of good, hard data and the computing power to view and analyze it, which didn’t exist then. I commend you to the revelations shown by viewing a century’s worth of income tax records as well as The Two Income Trap, based on real data from the Department of Commerce.

  Many times I’ve claimed that free markets expand to absorb all resources (even real, but intangible resources like time and human capital), and Elizabeth Warren’s work does a fine job of documenting this in action.

• Those who were rich in land, and derived their incomes from rents are in what ways different from those who have fat bank balances and derive their incomes from renting their money out in financial markets? Aren’t they all rentiers?
   
  
• The retail investor with his sexy eTrade (or any other) platform . . . is nothing more than a noise trader.

Any more of this and my head will explode, however I do want to note an interesting exchange I had with CNN’s Ram Ramgopal and Richard Murphy, co-author of Tax Havens: How Globalization Really Works. Beginning with the tweet of a story about how identity thieves might be responsible for $26 billion in tax return theft, I countered with the fact that it’s estimated that $15 Trillion sits in tax havens worldwide, and Murphy chimed in with the finding that tax evasion could be removing as much as $3.1 Trillion from the world’s taxable income annually.

CNN’s face on Twitter had this to say: “Wow, that’s big. Had no idea.“

Who does? Of course I’m a radical, but is this because I am a bomb-tossing nihilist or the result of a massive failure of the mainstream?

Now you can go back to watching the Military Channel, some major league sports, NASCAR or Dancing With the Stars.

Lately, I’ve been harping a lot on the “rentier economy” of the US, and this is not entirely accurate and by no means comprehensive. But it is very significant and a hard-headed clarification of roles and terms is called for.
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The libertarian bastion Cato Institute is at this moment in court fighting for its life. The attack comes not from the dreaded government, not from the liberal left, but from its libertarian founder, Charles Koch, who apparently believes Cato should abandon the trappings of a think tank in favor of a more directly partisan role in the 2012 election cycle.

Cato was founded in 1974 as the Charles Koch Foundation in Wichita, Kansas. To put this in perspective, this was a period when the groundwork was being laid for a revival of Lochner era jurisprudence, i.e., a reluctance on the part of the courts to uphold any law which infringed upon the machinations of free markets. During this period, Bernard Siegan penned his Economic Liberties and the Constitution, James A. Dorn, his Economic Liberties and the Judiciary, along with Henry Manne, who is described here as an intellectutal entrepreneur, and who was busily on tour giving lectures, holding seminars, and becoming dean of George Mason University Law School.

It was in this period of intellectual ferment that Charles Koch used his wealth to get in the game. The Cato Institute now publishes two peer-reviewed journals, The Cato Journal and Regulation, as well as a variety of newsletters, research papers and more. Apparently, however, this is no longer enough for Koch. As a nonprofit corporation, the Cato Institute has an unusual structure allowed under the laws of Kansas. Funded entirely by donations, Koch enjoys some unusual rights even though the Koch Brothers are no longer the primary donor:

Although they don’t receive dividends like shareholders of a for-profit company, the structure gives the Koch brothers power to appoint half of Cato’s board. In most nonprofits, new directors are elected by the organization’s membership or the current board members.

“We think it’s a really bad structure,” said Robert Levy, Cato’s board chairman. “We’ve repeatedly asked that it be changed.”

So here we are, witnessing an absurd chain of events in which a corporate board of directors battles founders for control of one of the most influential conservative think tanks in America. We are also witnessing the power of the Koch family wealth, as well as the scope one wealthy individual enjoys. One wealthy individual who has no problem varying from the truth:

We seek no ‘takeover,’ and this is not a hostile action.

This is at odds with both the words and deeds of the Koch brothers of late. Last year, they used their shares to place two of their operatives – Kevin Gentry and Nancy Pfotenhauer – on our board against the wishes of every single board member save for David Koch.

We want to ensure that Cato stays true to its fundamental principles of individual liberty, free markets, and peace into the future, and that it not be subject to the personal preferences of individual officers or directors.

Let’s take a look at a few of these new board members of ours. Kevin Gentry is a social conservative activist who’s also vice-chair of the Virginia GOP. Nancy Pfotenauer is a former spokesperson for the McCain campaign who has argued on television in favor of theIraqwar [sic] and the “don’t ask, don’t tell” policy pertaining to gays in the military. Ted Olson is a Republican super-lawyer who’s never identified himself as a libertarian.

The shareholder agreement ensures that donor intent will be honored.

Sometimes I hear that this is less about donor intent than it is about founder intent. Well, if we define “founders” as those initially given shares in Cato, only three of the five original shareholders remain alive and thus can have an informed opinion about these goings-on; Charles, Ed, and George Pearson. Two of those three are appalled by what is going on and want the shareholder agreement dissolved.

This is simply about the rule of law.

Regardless, as you well note, this bid by the Kochs to take over Cato – if successful – can only lead to the destruction of the most prominent and influential libertarian think tank in the world.

The shareholder agreement has worked well thus far and so it should continue to be respected.

Shareholder control has been dormant for decades. The shareholders have not met – in person or on the telephone – from 1981 through 2008. No shareholder had asked for a meeting over that time despite a requirement of annual meetings.

—Jonathan H. Adler, The Volokh Conspiracy, Koch V. Cato — A View from Cato. Accessed 4 March, 2012.

In attempting to pack Cato’s board with GOP political operatives (and dispensing with the pretense that the Cato Institute was ever anything but politically driven), the Koch brothers are attempting to get all their ducks in a row for the 2012 election cycle, uniting Cato with Americans for Prosperity, if not it’s poorer sibling, FreedomWorks, both Koch organizations as well. This is how American politics works. A few wealthy people can cobble together a coalition of voters and activists spanning class and regional differences: Cato for the thinking conservative. Americans for Prosperity for the businessmen who do, and FreedomWorks for the culture warriors. Both FreedoWorks and AFP provided substantial support for the Tea Party movement as well. Is this the secret of GOP unity, or merely an affect? I don’t know. However, having major, well-funded, and diverse organizations under such tight control is certainly a fact of American political life which cannot be ignored in either case. Certainly, it is a wonderful illustration how just two people with enough money can build such enormous political reach.

I cannot say that I’m not enjoying watching these libertarians revolt against being given their marching orders from the “private sector,” or that I have not escaped feeling rather smug while watching my intellectual and political opponents make my point that, at the very least, being driven by government fiat is no worse than being driven by the whim of a wealthy individual or a corporate group.

So while I sit back and enjoy the show, it should be noted, once again, that irony should be avoided at all cost.

Hello there.

I hope you’ve enjoyed the magazine so far. Now I’d like to let you in on something of great importance to you personally. Have you ever been tricked into saying yes? Ever felt trapped into buying something you didn’t really want or contributing to some suspicious- sounding cause? And have you ever wished you understood why you acted in this way so that you could withstand these clever ploys in the future?

Yes? Then clearly this article is just right for you. It contains valuable information on the most powerful psychological pressures that get you to say yes to requests. And it’s chock-full of new, improved research showing exactly how and why these techniques work. So don’t delay, just settle in and get the information that, after all, you’ve already agreed you want.

Robert B. Cialdini, The Science of Persuasion

No, this isn’t about Jane Austen’s last novel, but about the Cialdini’s work on the psychology used to sway people, extracting the decision and/or action you want out of an individual.
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There are many instances of what could be called a state of the union address already written. One which comes to mind immediately is Nicholas Kristof’s excellent op-ed, America’s Primal Scream published last October:

IT’S fascinating that many Americans intuitively understood the outrage and frustration that drove Egyptians to protest at Tahrir Square, but don’t comprehend similar resentments that drive disgruntled fellow citizens to “occupy Wall Street.”

I am certain most Americans have seen other examples. Suffice it to say that most Americans, even if they disagree on certain fundamental issues, such as the role of government in society, agree on the reality of inequality in America. It is well and reliably documented.
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If you’re interested, parts one through six of my #occupywallstreet #occupyboston series:

• Part 1 – Premises
• Part 2 – Race to the Bottom
• Part 3 – The Beginnings of a “Demand”
• Part 4 – A Work in Progress or Mission Accomplished?
• Part 5 – 150,000 New Reasons To #occupywallstreet
• Part 6 – Who Has Our Backs?

Speaking for Myself . . .

I begin this post on 1 December 2011, the day Suffolk Superior Court Judge Frances McIntyre held a hearing to hear cause why a temporary restraining order restricting the City of Boston from evicting the camp at Dewey Square be lifted. As well as as attempt to get inside Judge McIntyre’s head, it’s also a reflection on the issues at hand. Right off the bat, my attempt to get inside Judge McIntyre’s head is, I realize, a fool’s errand. I’m not a lawyer. I am just a sporting amateur who happens to care deeply about the issues surrounding and involved with the existence of the camp at Dewey Square. I happen to feel that there is no other voice in all of American politics who speaks for me and my issues. As a life long labor democrat and then an active ex-blogger at the Big Orange Satan for years, I am convinced that it is no longer the fatally compromised Democratic party.
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I don’t know, but protesters cite California Civil Code 52.3 which might state:

(a) No governmental authority, or agent of a governmental
authority, or person acting on behalf of a governmental authority,
shall engage in a pattern or practice of conduct by law enforcement
officers that deprives any person of rights, privileges, or
immunities secured or protected by the Constitution or laws of the
United States or by the Constitution or laws of California.
(b) The Attorney General may bring a civil action in the name of
the people to obtain appropriate equitable and declaratory relief to
eliminate the pattern or practice of conduct specified in subdivision
(a), whenever the Attorney General has reasonable cause to believe
that a violation of subdivision (a) has occurred.

How much faith have we in California’s Attorney General?

A note on the source: I don’t trust the source on this, though it should be pretty straightforward whether this is accurate or not. Seems fairly close to what I could tell of one #OccupyLA protester was reading to the LAPD & LA Sheriff officers.

A definitive guide to the California Civic Code didn’t come up in Google.

If you’re interested, parts one through five of my #occupywallstreet #occupyboston series:

• Part 1 – Premises
• Part 2 – Race to the Bottom
• Part 3 – The Beginnings of a “Demand”
• Part 4 – A Work in Progress or Mission Accomplished?
• Part 5 – 150,000 New Reasons To #occupywallstreet

“President Obama is the only candidate for president who shares our vision of America as a land of opportunity for everyone. We need a leader willing to fight for the needs of the 99 percent, and stand with hard working families to say that the world’s wealthiest corporations must pay their fair share”

      —SEIU President Mary Kay Henry’s endorsement release

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“Speaking For Myself . . .”

In an earlier post, I expressed my feeling that the story of wealth inequality playing out across America was merely the tip of the iceberg. It is, in fact, little more than a soundbite. In various and subtle ways, the structural weaknesses and injustices (negative externalities) generated by free financial markets impose costs many of which remain off balance sheets but are, nonetheless, imposed on all either through market prices or through taxes. Simply leveling the playing field through measures like the financial transaction tax and Tobin tax, which I think are vital, does nothing to address other underlying problems which unregulated finance has inflicted upon us all. Today’s absentee landlords are known as shareholders, and include a huge proportion of working Americans, who know very little of where their money is being invested and nothing at all about who is managing their money or how they are managing it.

Fortunately for me, we have yet another example of Wall Street mismanagement: 150,000 is the number of investors, some of whom will have to wait for years before they see their money, directly affected by the MF Global collapse. I know these people, or people very much like them, and in the larger sense, almost all of us are these people. If you have a 401k or an IRA. If you have or are thinking of investing in financial markets, you are one of these people. You are those who largely accept the tenets of capitalism (I do, but with caveats): that if you work hard enough, you get a little lucky, and you get to reap the rewards of your efforts. If you are one of those who believes in the integrity and good faith of those you entrust to handle your money, do your accounting, and those who run the firms you invest in, you are one of those people. I believe markets are the most efficient means to determine value/price, though not always-witness the housing bubble. There is a very good case for wondering if this has been warped as well – take a good, cold hard look at securities markets today and ask yourself the degree to which greater fool theory determines value, because really, who is a value investor anymore? What else does technical analysis actually describe? Underlying value? Please. We treat the hard-work-yields-success paradigm as if it were a cause-and-effect dynamic, but the truth is, more than a little luck is needed. And to those who wish to throw the maxim that people make their own luck (through diligence and intelligence) at me, I’d have to say that luck plays a far greater part than you might think. One can fail through lack of effort at a crucial point or the flaw intellect has failed to detect, but neither hard work nor smarts will guarantee success either, because strength has limit, knowledge is not perfect and the state of the marketplace itself is dynamic. The markets at all levels, like life, really are a gamble.

We assume that the managers act with integrity (but we don’t know), and that the regulators are on the case making sure that forms are followed (which is hardly ever true).

So I admire the small business entrepreneurs, whether they make it or not. They makes the attempt knowing that they don’t know everything they need to know, and hope that flexibility, determination and thought will suffice to make up the shortfall; and they hope that the vagaries of pure chance and hazard pass them by.

About a year ago, a customer came up to me with a few books on how to start your own business. Her teen-aged daughter stood next to her. Dressed as a professional, she looked bright enough, and I took a deep breath then asked her if she was thinking of starting her own business. She said she was. I glanced over at her daughter, then looked her straight in the eye and told her that if she decided to go ahead with this, she should have the backing of her family beforehand, because she wasn’t going to be available for them for several years, and that was the case if all went well. She smiled and thanked me.

I saw her again a few weeks ago. I didn’t recognize her, but she knew me. She told me I was right. She said that her business was doing great and she had even been offered a publishing deal in the event she wanted to write a book. (If not a secondary profit generator, it is at least fabulous marketing opportunity.) She told me that she thought that she could control the business, rather than the reverse, but that plainly, business demands had trumped all other concerns.

Running a business is more absorbing, more demanding, than having a family. I know. I’ve been through the startup adventure five times.

For the record, about 66% of all startups fail within 36 months. Yet another reason to admire their grit, and the truth is that their hard work is rewarded with failure rather than success by a whopping margin.
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I don’t know how it began. I’ve seen AdBusters magazine but I admit I’ve never opened one up. I’m really hazy on when it began too. I’m a johnny-come-lately to the #Occupy movement, and if I hadn’t spent the past three to four years playing catch-up in economics and political economy, I’d probably be pissed off when a “Breaking News” segment about events taking place at an #Occupy site (which probably would only have been the result of a police raid) interrupted the ballgame or movie I was watching just like everyone else. As it turned out, targeting Wall Street was perfectly tailored to my concerns because in a quiet way, I’ve been examining some of the basic assumptions underlying our corporate economy for years myself.

So I don’t think buzz over #Occupy Wall Street and wealth inequality goes far enough, but that’s for another post. It is, nonetheless, a good place to start.

I have, on quite a few occasions, told tweeps that the #Occupy movement would trade the tents and sleeping bags in a heartbeat for CNBC, WSJ, Bloomberg’s cable channel and BusinessWeek, CNN Money, Barrons, and all the news slots devoted to the daily market news. A huge media behemoth devoted to, as the ads during the 70′s when individual investing began to take hold used to say, “making your money work for you.”  (As opposed to actually going out and earning a wage and surviving on that alone. In America, more than anything else, it matters where your income comes from.) All of which was concerned with “Your Money,” the insane antics of Washington and the European debt crisis, or whatever market moving news of the day turned out to be, along with business friendly commentary from the likes of Larry (“Lawrence of America”) Kudlow, who had at one point two prime time slots on CNBC. #Occupy has tents, and the intention of staying until . . . something happens.
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