Second Thoughts on "Free Enterprise"

After thinking about Nick Hanauer's TED presentation the last few days I went back to some of my older blog posts. The following was first posted in October of 2009 and looks at the realities (good and bad) of globalization. 

Here are the main points; you can read the whole thing to get more nuance:

1. What we call globalization is just the labor market on a larger scale -- and if we don't share the jobs, somebody's going to take them by force.
2. Successful entrepreneurs leverage a system that rewards them for driving prices down by subsidizing the cost of the goods and services they sell to us -- McDonalds is able to sell cheap burgers because of farm and tax and transportation (etc.) subsidies. 
3. Perhaps inevitably, businesses that have achieved success will do whatever is necessary to guarantee future success -- including taking advantage of subsidies and cheap labor and regulations that protect the stays quo. Capitalism is fundamentally hegemonic/monopolistic, but now on a global rather than market scale.
4. Labor -- the human beings who do the work -- are a fungible commodity. Workers are on the books as a liability, not an asset. Productivity gains go to shareholders, not stakeholders.
5. This is not up for argument. It's already the received wisdom by the global financial/political elites. But there is still a "What's next?" question to be answered.

Entering the Summer of 2012, our eyes are on Greece and Spain in Europe, but the of capitalism may also be found in places like Bangladesh or Singapore or, god forbid, Somalia.


The piece was meant to be provocative, somewhere outside the dialog at the time. I'm pleased (or saddened) to find it still current. Let me know if you think we've learned something.

WHY FREE ENTERPRISE ISN'T (October '09)

Among the inescapable lessons drawn (by me) from the current economic tsunami are:

•  Globalization is absolutely necessary: if we want to keep every ambitious or desperate third-worlder from coming to where the jobs are (here), we have to send at least some of the jobs to where they are. 
• Globalization means that the American working middle class is history: it was their jobs that got sent wherever.

This is not happenstance. There is a key human, behavioral imperative in operation. It is a trait, an instinct perhaps, which has allowed us to compete so successfully with the other species in our environment. We (you and me) would not be here without it. And it could easily be  the imperative that cause the collapse of our global society.

In virtually every human culture we know about, humans demonstrate competitive behaviors, played out in the acquisition of money and/or power. Not every individual is driven by this, certainly, but most cultures reward that minority of individuals who are the most competitive personalities large amounts of control over everyone else. You can argue that ethnic and political cultures gained strength to the degree that they formalized the ascent to power (to prevent endless battles) and balanced the interests of the power elite (who may be less competitive than their founders) with the interests of the plebes (some of whom may be more).

If that balance is lost, the natural urge to dominate is by definition more unbridled, even manic.  The American economy has gone through several cycles of this excited, almost pathological activity in its history. We have been shrugging it off as a necessary aspect of an efficient free market. Sounds good. But the definition of "free" is what is at the center of this.

It was a blog posted by Robert Singer on disinfo.com that got me thinking about what free market really means (at least in this version of capitalist democracy) with the statement:

"You don’t eat the hamburger at McDonalds because it’s a dollar: It’s a dollar to get you to eat it."

 Singer's point is that Ray Croc could sell a hamburger cheap because the grain (which made the bun and fed the cattle ground into the patty) was subsidized -- farmers could sell it for less than it cost to grow. That was because somebody -- taxpayers -- paid them a subsidy that made up the difference.

Now, Ray Kroc could have sold the burger for a higher price and have gotten rich that way. But the genius of Ray Kroc is that the burger he sold bought him both your dollar and a powerful piece of the market. This was about Ray versus everybody else slingin' burgers. Which was mostly diners and cafes run by moms and pops and small entrepreneurs -- gone. The dollars he got from us let him buy a lot of real estate  -- the asset value of McDonalds is primarily in the land the stores sit on, not the number of burgers served. The burgers pay the mortgage. Or perhaps we all do.

Singer sees this an example of the "downward manipulation of prices," a deliberate strategy supported by the Federal Reserve and big finance from its inception:

"Butler’s investigation has identified JP Morgan Chase, one of the founding members of the Federal Reserve, as the prime suspect, in the “ongoing intentional, not accidental” great crime of keeping the price of commodities low so the middle class can afford the American dream, a nightmare for the planet."

It's the same strategy employed by Standard Oil (and all its offspring) and the agribus monoliths, in terms of domestic policy and building reliance on chemical fertilizers and engineered seed. And it's the same strategy, but now leveraging global IMF inequities, that WalMart employs to use low-paid, off-shore labor to supply the goods that will purchase our domestic dollars.  A subsidy here, a controlled wage there, every little wrinkle lets me buy more customers.

But for now, we should know that every piece of food, virtually every consumer item, is paid for in unseen ways -- by manipulated commodity pricing, and by the use of virtual slave labor to work our farms and factories.

The lesson: if you want to win, you've got to own the market, and one way to do that is to decouple everything from value, make it only about price. It's anything but a "free market," unless you mean that by becoming the dominant player you are now free of pesky rivals, other than those that play by your rules. And the players are now global, concentrating huge capital wealth among a tiny fraction of the world's population. Local communities, national societies and cultural ties mean virtually nothing to them. If you buy the competitive thing, at that level it may only be about dueling with the other big players, mano a mano.

Along the way, in our particular culture, we have undervalued skill and knowledge, and have created a glutted workforce that will take slave wages rather than no work at all. And Wall Street continues to reward those companies that add to the unemployment role, because workers are simply costs, and costs must always be cut.

There was a time when slash-and-burn agriculture was probably key to human survival. It provided sunlight for earth that was rich with the ash of the burned plants. But after a year or two the fertilizer was consumed. It took decades for the biomass on that patch to build to the same level of nutrients. Not a big problem in a big forest with few people.

As the forest fills up with hungry people, slash and burn is probably not a good strategy, except it's always worked before. We know how to do it. It's someone else's problem.

At some point, we may change our short-term tactics to match long-term imperatives. Or the winners will just keep fighting over the remaining forest. For that kind of social disconnect, think London in 1870: toffs in the clubs, corpses in the East End.  I've seen articles/ads on Newsmax.com promising to give you the secret to being a "Robber Baron" in this financial crisis. Something to think about.

TED and the Conventional Wisdom

Over the last few years TED has established itself as a forum for new thinking, a platform for ideas that question (in many cases) the current conventional wisdom. A couple of months ago Nick Hanauer, who has been an enthusiastic entrepreneur for a few decades, and canny enough to make a pile of money, made a brief presentation to a TED audience.

Nick spoke as a capitalist, a person who uses his resources to build new businesses. His point was that capitalists do not create jobs. In fact, as a capitalist he knows that hiring people is one way to scare investors off. He made the point that it is delusional to think of capitalists as job creators -- the transfer of wealth to the 1% (and rising un- and under-employment) over the last few decades of lower marginal tax rates should prove that assertion.

TED, for reasons of its own, decided that it would not post the talk on its website. Nick, who has also been writing about our political culture for several years, pushed for posting. Yesterday, after the issue got picked up by some media outlets TED posted the presentation -- on YouTube -- and got about a quarter million view in the last 17 hours.

Despite TED's characterization of Nick's speech as "partisan" it comes across as low-key and fact-based -- a rich man who recognizes wealth is its own blessing and deserves no other favors. So why TED's insecurity about his talk? Is it a little too at odds with their conventional wisdom? Is TED just another arm of the MSM? Or is this a clever plan to get Nick's message beyond the TED auditorium?

Beyond that, can you think of a reason why this viewpoint, and perhaps Nick himself, is not given greater coverage and discussion in the media?



- Posted using BlogPress from my iPad

Ends and Means

I grew up in the midst of the cold war, which for many of us was a clash between "godless communism" and democratic political systems organized around the judeo-christian tradition. The fact that such a division left out huge parts of the planet did not much concern us.

At the time I was taught (and learned) that the difference between them and us was they believed the end justifies the means. You could explain both fascists and commies by saying they were willing to do evil things if they believed in the importance of the ends achieved. Which is why we were better: we knew that the evil is evil, and no outcome excuses evil deeds.

So excuse me if, over the years, I've been a bit confused at the actions of some of those who define themselves, outspokenly, as christians. The so-called pro-life movement is one example: "violence against clinics, and against doctors, etc., is okay because: ..." --  you know the argument. Let me be clear, I do not say that all christians accept this reasoning. I do say that too many christians, especially those in positions of political influence and power (e.g., Randall Terry), do not make it clear that such logic is immoral and counter to their principles.

At the same time, I don't really think it should be only christians that reject the ends-justify-means formulation. From a humanist point of view, one big problem is that the ends are a promise; the means are the actions taking place in the present. If I'm being asked to trust in a promise I'm being asked to trust intentions, and I have no way to judge intentions. It's all about faith in another mortal. And mortals are inherently unknowable and therefor untrustworthy. So it's more realistic to judge actions on their own terms and leave intentions to individual meditation.

For instance, Dick Cheney et al. may have believed, even knew, that there really were WMDs in Iraq, no matter what the intelligence was saying. So invading Iraq, and incurring more than 4000 US dead, and many (200?) times that number of Iraqui dead, was OK because their intentions were good. Because intentions are as good as ends.

I have come to believe that the most important reason to deny ends-justifies-means is because it explicitly says that a superior moral position allows one to force acceptance by others. "I know what's best for you, so just do what I say." Which, while not only despots might say, is what despots always do say.

One of the other key lessons from growing up as a devout protestant (Lutheran) was that what differentiated christians from Old Testament believers (and other faiths) was the operation of choice. What made christianity meaningful, divine, a clear break from the past, is that it gives us the freedom and responsibility to choose belief. If one is coerced into righteous action, it is no different from sin. The ends are justified by the means.

When Christ commanded his followers to spread the Word, he did not say the evangelist's responsibility was to get everyone to believe. The charge to the faithful was to give a true accounting of the gospel, so that others could make the choice, the commitment, to follow. It is a way to make a believer consider his whole life an example of the power of the Word. Success would be measured by what happens on the inside, not the outside.

I have no doubt that my early upbringing in faith led me to be profoundly skeptical of organized christianity and any other belief expressed as a creed. I find almost all of them have been seduced by the desire to tell other people how to live. Religion becomes just another arena in which humans play out their lust for power. We give lip service to the idea that morality can't be legislated, and then we go try to do just that. And the US ends with up the highest total documented prison population in the world.

My early learnings have left me with the conviction, now tested by decades of experience in many different social settings, that freedom is better than coercion for forming constructive citizens, and building cultures (life, liberty, pursuit of happiness, etc.). My travels have also left me with the clear understanding that American culture does not (yet?) have the experience or vocabulary to fully deal with individual and cultural freedom. If it is a learning curve, we are ahead of many, but lag behind others.

There is also the very real possibility that human beings, as a group, will always swing between the dark sureties of faith, putting me squarely at the the center of the universe, and the unsettling brilliance of science, illuminating my insignificance in (and interconnectedness with) the vastness of the universe.

I suppose that sense of interconnectedness may be the most important thing I took away from my early experiences of faith. And it may the  thing I see the least of in most people who seem to connect to traditional belief. Are we all part of this universe (which I have come to think of as god), or are we each separate, vulnerable, estranged? Whichever reality I see, you have to find your own. That's what Jesus would do.