distributist critique & the current economic order

With the latest round of “Wall Street Socialism” upon us, I found an encyclopedia article on distributionism, a little known non-capitalist/non-socialist form of economics growing out of Catholic Social Teaching, very revealing. Author John C. Medaille (click the link for an introduction to…for the quotation found on p.1):

[Hilaire] Belloc believed that Capitalism could never achieve economic equilibrium on its own. It is an unstable system for two reasons: divergence from its own moral theory and from insecurity of two kinds. The moral theory of Capitalism is based on freedom, but it tends to accumulate property in the hands of a few owners; as ownership becomes more and more limited, more and more power passes to a small capitalist class. The state increasingly becomes a tool to protect “wage contracts” which are increasingly leonine, that is, based on inequality. One side may refuse the contract (the employer), but the other side, the worker, generally has no choice but to accept it because the alternative is starvation. The state can no longer be a neutral arbiter between classes but becomes a defender of one class upon whom jobs and growth are increasingly dependent.

In addition to this moral problem, Capitalism also has two kinds of insecurity: insecurity for the workers and even insecurity for the capitalists. There is insecurity for the workers because the wage fetches less in old age, nothing in sickness, and jobs themselves are at the discretion of capitalists3 (e.g., “outsourcing”). But Capitalism also produces insecurity for the capitalist. Competitive anarchy makes the system as unstable to owners as it is to workers and results in gluts and underselling. Capitalism responds by becoming less capitalistic; it uses the law to raise barriers to competition and to limit liability; the corporation itself is an adjustment to the inherent instability of Capitalism that allows investors to limit
liability.

In other words, the system fluctuates between oligarchic monopolies (conservative Reaganite Revolution) who then go about after ensconcing themselves in power writing laws to their favor, breaking other laws, and de-legitimizing the market and the market ethos and undermining freedom in a governmental system that on paper puts so much emphasis on freedom (i.e. liberal free market democracies). For an example of this see sub-prime loan business and mortgage industry.

As a result in a Hegelian dialectical fashion (anti-thesis), a left-wing reaction on behalf of the workers takes place, but is funneled via a massive growth of governmental bureaucracy, thereby in one sense empowering (at least granting an ally to) the worker but on the other hand further embedding tyranny–what Belloc called the Servile State.  The Servile State grows through greater expropriation of income (i.e. taxes if you’re a Democrat/ballooning debt if you’re a Republican) as well as manging the redistribution of said wealth (to the lower/middle classes if you’re a Democrat/to the upper oligarchic elites if you’re a Republican).

The rise in more populist economics from the Democrats–Hillary going so far as calling for wage controls in the housing market–is the sure sign of a different economic and governmental outlook and the inevitable backlash against the corporationist monopolistic right-wing economics over the last 30 years. [Recall Bill Clinton won in '92 because of Ross Perot (populist backlash from the right) and the recession (against HW Bush) And the Dems won Congress in 2006 on Conservative Corporate Corruption.]

Looking at Belloc’s predictions (written in the 1910s!!!) I’d say, check, check, check.

Chinese Intellectuals

Video discussion on ForeignExchange with Mark Leonard, author of the new book What Does China Think?

Leonard has opened up the Western press to the previously unknown world of Chinese intellectual debate–political, economic, and social. Absolutely mind blowing.

You can read a summary of his book in this article for Prospect.

Some highlights:

–Arguments between a Chinese “New Right” (think Grover Norquist and economic libertarians) calling for the weakening of the already de-centralized Chinese government and a Chinese new left (social contract/progressive wing not like an old statist Left).

–China as the World’s Globalizer (and pusher of vision for globalization contra the US?):

As it creates these zones, Beijing is embarking on a building spree, criss-crossing the African continent with new roads and railways—investing far more than the old colonial powers ever did. Moreover, China’s presence is changing the rules of economic development. The IMF and the World Bank used to drive the fear of God into government officials and elected leaders, but today they struggle to be listened to even by the poorest countries of Africa. The IMF spent years negotiating a transparency agreement with the Angolan government only to be told hours before the deal was due to be signed, in March 2004, that the authorities in Luanda were no longer interested in the money: they had secured a $2bn soft loan from China. This tale has been repeated across the continent—from Chad to Nigeria, Sudan to Algeria, Ethiopia and Uganda to Zimbabwe.

–In foreign policy, battles between liberal internationalists (the Chinese versions of Fareed Zakaria in a sense) and their own neo-conservatism (what Leonard calls neo-commies)

McCain Will Balance Budget….And Other Fairy Tales

From Politico.com:

Sen. John McCain (R-Ariz.) plans to promise on Monday that he will balance the federal budget by the end of his first term by curbing wasteful spending and overhauling entitlement programs, including Social Security, his advisers told Politico.

Add that to His Fairy Godmother/Dear Santa 2013 Wishlist he proposed earlier.  McCain earlier, lying through his teeth (or unforgivably uninformed for a man in his position running for the Presidency) said that he would balance the budget through cutting earmarks spending alone.  Until he learned that foreign aid to Israel and Egypt were done through earmarks (which he said he isn’t touching) and all the reputable economic analyses show his plans leaving (like every Republican Prez since Nixon) a massively increased federal deficit.

So at least now the cat is out of the bag for those with ears to hear.  The only way McCain can balance the budget is through a massive attempt at the deregulation/slashing of the US government.  Sounding more and more like Rudy Giuliani every day now.  Like the old McCain, I don’t mean the old mayor of NYC Rudy but the Rudy who ran as the ultra-hawk and ultra-tax cutter rich guy during the Republican nomination campaign.

Now McCain will pull off something not even Reagan couldn’t–decrease the size of the federal government)–while proposing enormous cuts in taxes during a WAR that he promises to keep going at full tilt.

Here is Jared Bernstein from March of this year:

As Holtz-Eakin [McCain's economic adviser] put it a few years ago in an opinion piece for The Washington Post, a serious fiscal approach “should rethink the package of support for old-age medical care, long-term care services and retirement income.”

Much like the material on McCain’s Web site, that sounds innocuous enough. It also has the benefit of being true. Absent a “rethink,” Medicare will swamp the federal budget…

But here’s the rub: words like “reform,” “rethink,” and “making tough choices” sound a lot different than words like “cut, and cut deeply.” Holtz-Eakin has integrity, and he likes his numbers to add up. He knows that they can’t do what they say they’re planning to do without going after entitlements big time. As he put it the other day in The Wall Street Journal, “You can’t keep promises made to retirees” (to be fair, he also noted that “you can pay future retirees more than current retirees”).

The Democrats are saying that McCain is Bush’s Third Term but again like in foreign policy he is McWorse.  In the waning twilight years of the Bush presidency, they pulled off a deal with North Korea and have to a (slight) degree become less entangled in their own earlier ideological FP lunacy.  McCain at the same moment is going more hawkish–rattling sabers with Russia and China and calling for the Super Friends League of Democracy.  Now McCain is even more ultra-orthodox supply side economics than Bush.  And he has promised Scalia-Thomas-Roberts-Alito like Justices to the Supreme Court along with pushing for the California Referendum to undue the same-sex marriage statue in California (against the Governor, his buddy Arnold).  Triple hard right whammy.

Oh but he thinks global warming is real so he’s a straight talk maverick/moderate.   WTF?

On the one hand, I have to give him props that he is coming straight out and saying his vision is nuckin futs.  He is running against the head wind of popular opinion (er public intelligence?) on every single issue.  By huge margins.  Iraq, Social Security, Health Care, you name it, he’s going in the wrong direction.  In the midst of the complete collapse of this long held conservative coalition/ideology run aground on a recession and a failed war (and having been built to deal with the stagflation and issues of the 70s), he is quadrupling down on it when any other smart Republicans are trying to run and hide and find anything they can.

Though I suppose he’ll just have some more journalists over to his house for a BBQ and will regale them with some personal anecdotes, so it’ll all work out in the end.

On the other hand, relevant to this domestic policy he’s hugely full of caca because it’s not of course like any of this would ever see the light of day if McCain (God forbid) were elected.  He will among other things have a Democratic Congress in both houses.  That’s guaranteed.  Who will not pass his upper elite friendly tax cuts or massive spending cuts to things like Medicare or Social Security.  And as every Republican from Nixon on has learned running government involves compromise.  It’s one thing to spout this Grover Norquist ideology another to actually achieve any of it.  If Bush couldn’t with a Republican Congress, how in the name of Milton Friedman is McCain going to do it with Democrats in Congress?

Shock Doctrine Video

In this earlier Iraq post I referenced Naomi Klein’s Shock Doctrine.  The video below which warning has some graphic imagery covers the ideas well.  Notice the connection between Abu Ghraib style torture and economic shock therapy.  Alfonso Cuaron of the amazing Children of Men helped make this film.

With the new oil contracts (particularly in Kurdistan) and the Iraqi Oil Ministry run by a man (Sharistari) who is out to break the power of unions and national ownership of the oil, you see her thesis in perfect display.

Mind Blowing Factoid of the Day

Photo here.

Thus the average person in the world of 1800 was no better off than the average person of 100,000 BC.  Indeed in 1800 the bulk of the world’s population was poorer than their remote ancestors.  The lucky denizens of wealthy societies such as eighteenth century England or the Netherlands managed a material lifestyle equivalent to that of the Stone Age.  But the vast swath of humanity in East and South Asia, particularly in China and Japan, eked out a living under conditions probably significantly poorer than those of cavemen.

–Gregory Clark  A Farewell to Alms: A Brief Economic History of the World p.1

I’m reading this book now and it puts forth the very intriguing thesis that the Industrial Revolution (which is when humans finally broke through the Malthusian Trap detailed in the quotation) took place due to higher levels of reproduction among the higher English classes (higher survival rates as well) which was selected for in the population, bringing “down” in the class hierarchy the cultural attitudes necessary to a capitalist society.  I think he overplays this line as the most determinative factor (underplaying say the rule of law, private property, etc.) but it’s a brilliant text nonetheless.

The Near Poor

A summary of the work, The Missing Class by Katherine Newman and Victor Chen on at the New America Foundation.

They are neither the middle class, nor the traditional blue-collar (now shrinking) unionized working class nor the poor. They are the near poor. They also focus on those who moved up to the near poor status from poor via Welfare Reform and the late 90s economy. Rather than those who have fallen into the near poor status via home foreclosure, health care costs rising, loss of jobs.

Also an interview with Newman in the Nation here.

E. Klein Quote for the Day + My Own Snark

Klein’s post here.

The analysis of Obama’s and McCain’s tax proposals and their respective effects on their taxes here.

EK:

In the Obama plan, the Obamas would have saved about $6,000 off their tax bill in 2006. The McCains would have kept a bit more than $5,000. Notice that the savings get smaller as you travel up the income ladder. Under the McCain plan, by contrast, the Obamas would have saved $49,000. And the McCains? They would have pocketed an extra $373,000! In other words, if you think the primary problem with our tax code is that it should do more to make the top .1 percent of earners even richer, then the McCain plan has got you covered. It’s rather remarkable that the candidate who’s always talking about sacrifice is trying to give himself a $400,000 tax break during wartime and despite massive deficits, but it’s okay because everyone knows McCain is a good guy and lots of fun to talk to. Sigh. It’s hard to know how to write these posts sometimes. Is snark really enough? This sort of thing should be a scandal. Yet the media won’t care.

Now he’s certainly right this should be unconscionable and it won’t be raised at all (Obama did flip flop on campaign finance after all not that er McCain isn’t violation of a law he wrote on the subject but nevermind).  On the other hand, it should be noted that were McCain to win (right now his odds of doing so pushing under 45% in my book) he would inherit a Democratic Congress who would never pass the kind of massive upwardly redistributionist tax policy McCain has at the center of his economic policy.

The $373,000 actually might be an underestimate as the McCains (specifically Mrs.) have done some interesting (not illegal just quite unusual) declarations of moneys earned.  Cindy McCain has not released her full tax records.  Which itself should not be allowed, but there it is.  Also we learned that the Obamas have practiced fiscal responsibility in their lives while the McCains have $100,000+ credit card debt.  That doesn’t inspire confidence in me.

Not only that but McCain has no plan for paying for the cuts in the taxes other than increasing debt.  Not to mention a certain war I recall reading something about via the intertubes.  [Oops I forgot the war is on the "supplemental budget" not the real one.  Like vitamins, just a supplement.]

Here is the Brookings Institute analysis of both candidates taxes plans.  Short version, neither good, but McCain’s much worse.  Much worse.  The only argument again I guess one could make with that is that McCain’s would never see the light of day (since it would never be passed in Congress) while Obama’s most certainly would if elected.  But I’m not sure McCain would engender great affection by campaigning for tax cuts that he will never pass.

I would like to see Obama follow the lead of his adviser Robert Reich and push for an elimination of the corporate tax (as well as the fiction of the corporation as a person/legal entity who can be “responsible”, socially, monetarily, ecologically or otherwise) instead of pushing for an increase in corporate tax rates.  I think his elimination of taxes on elders below a certain income level is questionable.

For a primer and one argument this op-ed by Roger Lowenstein on the taxes that are needed.

[That's assuming an era of increased governance which while I'm not a big fan of, structurally looks like a done deal, and at least ought to be paid for].

A Blurb on the Book I’m Currently Reading

The title is The Origin of Wealth by Eric Beinhocker.  As the blogger I’m about to quote correctly points out it doesn’t change my worldview so much as structure and give clarity to what I already somehow intuited.  On to the quote:

He effectively dismantles the present discipline of economics (I hurt my shoulder punching the air with every shot) which has bizarrely held “gold standard” status in the social sciences for far too long, outlines the work in complexity previously done, shows how the complexity models explain social and economic development far better than others, and outlines the strategies that businesses and organizations need to follow to adapt effectively to the environments that confront them.

Most of all, he crumbles the “liberal-conservative” dichotomy that has crippled our confrontation of the problems that clearly face us, including (by implication) the problems we have in corr sent policy. One of the more direct applications is his treatment of the impact of trust or lack of it in building constructive communities and the loss of legitimacy of institutions when a culture doesn’t maintain strong communities. This comes after the discussion of the role of social technologies, including law and justice institutions, in providing the structure for ordered progress.

The book finally applies complexity theory and evolutionary paradigms to economics, thereby relativizing classical economics (of both the left and right varieties).  It places classical economics in the same place as say General Relativity Theory and Quantum Physics did to Newtonian physics. It’s not wrong simply a rough first approximation and only applicable in a flat-space time environment (i.e. in economics an equilibrium environment, prior to mass technological, social, and capital evolution).

It opens as the blogger’s comment suggests the possibility of a public policy built around human flourishing/adaptation/resilience which does not fit into neatly into any of the categories in common political currency.

Beinhocker devotes a chapter to its application to business strategy but a more expansive treatment of much the same ground in the brilliantly conceived and written and equally poorly named It’s Alive.

Jus Post Bellum

Jean Bethke Elshtain, Prof. at University of Chicago Divinity School, has an intriguing (but I think ultimately misguided) essay in the current World Affairs.  Read it here.

Elshtain discusses an oft forgotten part of the just war tradition:  jus post bellum (justice after the war).  Traditionally just war theory often focuses only jus ad bello (just reasons to go to war, e.g. self-defense) as well as jus in bello (justice/just action in war, e.g. not targeting civilians or civilian infrastructure, not torturing captured prisoners).

For Elshtain taking seriously jus post bellum requires as he sees it:

There will be, for the next decade and possibly the one after that, no substitute for America’s presence and role in regenerating Iraq’s capacity to defend itself. An ethics of exit, with this recognition in mind, points ineluctably in the direction of a careful, long-range, and measured withdrawal of major combat forces from Iraq, rather than any withdrawal in line with the pre-fixed timetables offered on America’s campaign trails.

On a policy front this is along the lines of the Colin Powell Pottery Barn Rule (which whether he actually said it or not, he’s said it now in the common memory which is just as/more important): you break it, you own it.

And there is a part of me that certainly sympathizes with this view, i.e. in some measure of actually thinking about Iraqis and the horrors of their reality.  That’s why I’ve always favored at the bare minimum (a la George Packer) extremely accelerating the rates of VISAs for Iraqis who have helped the Coalition Authority.  Don’t leave them in Iraq.

I also have always believed following the analysis of Michael Ware (CNN) and Thomas Ricks (author of Fiasco) that the US will be in Iraq for 10-15 years minimum.  The question being at what level of troop numbers and for what stated goal/strategy.  And here there is a wide gap between Obama and McCain.  I’m far from convinced this is a good policy, but it’s going to happen seems to me regardless.  Obama has promised no permanent bases which McCain is for, so at minimum that is all I can really vote (i.e. if you think the campaign pledge around all troops out in 16 months is real, think again).

But that being said, there is still for me a whiff of unreality/hubris about the whole piece.  There are moments when the Prof. realizes that this situation is different than post WWII Germany but then tends to back away from the abyss of recognition.

She writes:

Yet there is great unanimity among just war thinkers concerning the U.S. commitment to jus post bellum criteria—namely, the obligation to leave Iraq with something better, or at least not worse, than what went before. How, then, might the just war tradition bear on an ethics of exit? The end of a war must be consistent with the initial argument for conflict as couched in just war criteria—that is, to repair or to remedy a major injustice or act of aggression. Another just cause might be to prevent nigh-certain and massive harm from occurring before it has occurred. But, again, the basic aim of jus post bellum is a more just situation than that which pertained before the armed conflict.

Not to put too fine a point on it, but is this even possible?  While again I sympathize with the moral reflection inherent in jus post bellum, how is this achieved?   The argument from the William Odoms of the world (scroll half way down page) has always been that the presence of US troops is what prevents Iraq (or whatever you want to call the fiefdoms of that region) from reaching some new equilibrium status, however shaky, corrupt, or “minimal” state it might be.  And more disturbingly likely involving more not less violence.

While there are certainly counter points to be made, this argument is not to be dismissed as simply ideological cover for wanting to cut moral responsibility.  It might be based rather on a clear eyed appraisal of what the US can actually do/who actually holds the power (i.e. the militias, including the one we call the government).  And who is simply a negative force (the US Army) and by negative I don’t mean evil but rather only has power to prevent some things from happening but has no influence to effect positively the kind of strategic change it seeks.   i.e. Temporarily prevent more ethnic cleansing/genocide, civil war, and outside powers from invading.  But might have no recourse to build momentum towards a new order, however defined by Elshtain.  No ability in other words to promote political end game scenario, no matter what local deals can be struck militarily or reconstruction wise.  All of which stand on extremely tenuous ground without a larger political context within which to fit them.

Ehlstain spends the rest of the article outlining the criteria of jus post bellum and shows in each case that the US is obligated under said criteria.  These include having a major role in the military conflict, disbanding the army/police and therefore having responsibility for the protection of the citizenry.  I don’t see any illogic in theory with any of those criteria per se and his analysis that the US is bound to them.  But what I am saying is I’m not sure these categories apply in practice (in this case) or rather if they do that there be a separate and currently missing criteria:  feasibility/actual ability to achieve prior criteria.

Moral reasoning in politics minus some hard headed realistic assessments are often well meaning and thoughtful but not always helpful in pinning down what should in fact be done or rather what can be done, often less than the best wished for situation.

For example:

There is a delicate balancing act involved in repairing the political infrastructure of a state that has been the victim of decades of misrule and military invasion. The aim is to restore legitimate authority. If you played a major role in military operations, your degree of responsibility for this goal is enormous. It follows that to abandon the occupied state before this aim has been accomplished would be an act of moral dereliction of the most egregious kind. That is the bottom line of any ethics of exit from Iraq.

Of course the aim is to restore legitimate authority.  Who doesn’t want that?  But Is this aim possible?  Specifically in Iraq.  With is history, its  current political actors, the failed policy of the US in the aftermath of the defeat of the Baathist regime.  If so, how?  What evidence can be pointed to that suggests such?  Or is this a blanket open ended McCain style commitment?  Practically can the US military afford such a situation even if it were possible?

To invoke Thomas PM Barnett for a second, the force necessary to do exactly what Elshtain calls for doesn’t actually exist–what Barnett calls the Dept. of Reconstruction/Systems Administrations Force.  That gap has been filled by the US military, which it is neither designed to do nor capable of doing (no shot at them, that’s their not their job).  Even with the recent surge we see that the gains have been in military (surprise surprise) terms.  Not political.

More into the weeds for a second, the surge has had to align itself/coming to accept the reality of the militia-ization and fragmentation of Iraq.  i.e. The Surge qua tactic actually works against the kind of state buildup Elshtain would like to see.  Unless one militia/one leader seeks a renewed dictatorship (Maliki?) which would violate the principle of not leaving the situation the same/worse than before the war.  Undoing the surge tactic would revive violence (breaking another one of the jus post bellum criteria). So you see the pickle.

Canajan News Roundup

Time for some local/national news.

Foreign policy

The Afghan government has inked has set up a four-way between Turkmenistan, India, China, and itself. Kinky. The deal is to create a pipeline from Turk. (which has got gas as it were) to India and China (which lack it). The pipeline however would run right through Kandahar and the surrounding areas in the south of Afghanistan, i.e. headquarters for the Taliban and stations of the Canadian and British troops.

Except increased fighting and new protest signs when I go downtown for church on Sunday past the Art Museum where all such (lame) protests occur: Blood for Gas

The Taliban likely employing systempunkt will target the pipeline. You can guarantee it. 1)to prevent large scale connection, national government extension as well as to siphon off any fuel they can to sell on the black market to fund their operations.

National

The Liberal Party and its leader Stephane Dion has introduced a carbon emissions tax proposal.  You can read it here (I’m still going through the details).  The claim is that it will be revenue neutral, the taxes offset by cuts in income tax.  While in the aggregate the numbers may even out for individuals there could be a hit.  The conservatives as usual have started a bit of over the top fear campaign (as well as disinformation the Liberals contend) rather than rationally critique the thing. The tax is not a pay at the pump tax (already one of those).  It is more like a cap and trade type emissions tax, taxing tonnage of carbon output at $10/tonne raising $10/tonne/year up to $40/tonne by the fourth year.  It attempts to signal to the economy to move away from carbon.  This is/will be opposed by oil-rich Alberta and Saskatchewan.  BC has already moved to similar legislation and the Premier (Liberal Party, equivalent to Gov. of States) of Ontario has reversed his earlier opposition and seems to be in favor of the bill.  The bill is also to be timed as part of an eventual calling of an election and an attempt to thrown down the current Minority Conservative Party government.

Though on the positive side for conservatives, PM Harper has formally apologized to Aboriginal peoples for the government’s involvement in the residential schools program, part of the broader governmental program (until the 1970s) of Europeanizing (colonizing and “civilizing” in the old language) aboriginal peoples.

Local/Provincial

A sixth foot was found this week near the Campbell River.  This is an on-going disturbing phenomenon.  Turns out this sixth one was a hoax (was an animal non-human foot in a shoe).   The perp of such action wins my coveted Candidate for Burning in Hell/Fin’g Bastard of the Week Award.  Or maybe Year.  Not cool.