Tuesday, July 26, 2016

Exit, Voice, or Loyalty: Thoughts on the Sanders Movement

The 2016 primary election season has seen the greatest widespread dissatisfaction and defection from the two-party duopoly in modern times. For both the Democrats and the Republicans, members have challenged the party establishment and promoted insurgent candidates.  How will this all play out through the general election and beyond?  We can consider the case of the Sanders supporters.

One way to approach this question is to take Albert O. Hirschman’s brilliant conceptual triad designed to analyze the options available to those who are dissatisfied with a particular organization, institution, or situation.  The model offers three course of action – exit, voice, or loyalty.  Under the “exit” option one simply leaves or takes their business elsewhere.  This is regarded as the market-based solution.  Alternatively, one can exercise “voice” through the organization of like-minded others and demand change, so that the organization can be transformed into something more satisfactory. Hirschman associates this option with democratic activism. Finally, there is the default option of “loyalty” where one can continue to faithfully support, or remain. in the organization.

Hirschman’s scheme is conceptually elegant, and it can be applied to a wide variety of situations, but fails to consider fully the contextual factors that might constrain the seemingly “free choices” or options facing the social actor.  For example, in the case of a disgruntled employee, “exit” may be highly desirable but not feasible under poor labor market conditions of high unemployment.  Similarly, “voice” may seem an attractive option but there may be few opportunities or the consequences of exercising voice may be dismissal from the job.  What then appears, after considering and rejecting these options, as “loyalty” is in fact really a situation of highly restricted and constrained choice, or no choice at all. 

How do the three options of the Hirschman model currently apply in the short-run to the Sanders supporter? Many may choose to exercise the “exit” option. This could mean not supporting Clinton and either voting for another political party or abstaining all together.  “Voice” could involve working to change the Democratic Party from within so that it more closely aligns with the principles and policies of the Sanders movement. “Loyalty” would entail the strong partisan commitment of supporting whatever nominee emerges from the Democratic Party nominating process.

In the case of the Sanders supporter, there are also contextual constraints that limit easy choices.  One of these contextual factors is the political dynamic generated by a two-party system. As it applies to the exit option, under a two-party system failure to turn out for the Democratic Party, or casting a ballot for a third party, may serve to benefit the Republicans. One is then cast, no matter how unfairly, as somehow responsible for an outcome that may be the least desirable – in this case a Trump victory. 

Some variant of the “voice” option was incorporated into the platform drafting procedures with the appointment of Sanders’ representatives to participate in that process.  Voice can, in the short run, be further exercised through protests and demonstrations at the national convention.  But there are obvious constraints given the fact that the Democratic Party is a corporate dominated party institutionally devoted more toward defending the establishment status quo than promoting radical structural changes that would challenge the balance of social class power. 

Further, the very foundation of the Sanders campaign – as a “political revolution” dependent upon a long-term mass social movement – requires a non-institutionally regulated, sometimes-cacophonous, overture that will disrupt and agitate for substantive social change.   

For this reason, the post-Bernie led movement is best advised, over the post-election long-run, to combine “exit” -- from the shackles of the two party system (which has been the graveyard of social movements) -- with the “voice” of the various movements and existing organizations sharing common ground in seeking justice, equality, and democracy.  

Of course, this will require some level of organization to be most effective. Last night Bernie Sanders communicated the following to those supporting his campaign and movement:

“Our work will continue in the form of a new group called Our Revolution. The goal of this organization will be no different from the goal of our campaign: we must transform American politics to make our political and economic systems once again responsive to the needs of working families.

Friday, July 22, 2016

Trump as Personification of 21st Century U.S. Capitalism

Many of those supporting Donald Trump for President base their support on his record as a successful businessman. But how did Trump amass his financial fortune? A closer look reveals that Trump is, in fact, the perfect personification of the current state of American capitalism -- an economic system that is based heavily on three strands of capitalist practice that today depart radically from the idealized version of the self-made entrepreneurial form.  Trump’s record as a business executive conforms closely to all three strands.

The first is patrimonial capitalism.  This term was introduced by Thomas Piketty in his book Capital in the Twenty-First Century which charts the long-term trajectory of inequality in capitalist societies. His analysis concluded, as the term suggests, that those who dominate and direct our economy base their wealth increasingly on inheritance. It is largely family income and wealth that determines who will occupy the capitalist class rather than merit.  This does not mean that the principle of meritocracy is irrelevant as it does provide, if nothing else, a powerful legitimizing ideology along the lines of “I was born on third base, so I must have hit a triple”.

Trump fits squarely into the patrimonial model as his father, Fred Trump, amassed a net worth of at least $200 million and Donald inherited somewhere between $40 and $200 million. Donald also benefited throughout his business career from a long series of loan guarantees underwritten by his father.

Second is crony capitalism.   This refers to the close relationship between capitalists and government officials in which said officials provide capitalists with various favors (e.g. abatements, incentives, re-zoning, etc.) that translate into private profit. Donald learned the lessons of crony capitalism from his father Fred who developed powerful political connections enabling profitable opportunities in the building of public housing. Donald has built on those connections and that strategy throughout his life. This has included relationships with the City of New York for tax abatements, efforts in Bridgeport CT to have existing businesses condemned, the use of eminent domain in numerous locations to obtain property, and obtaining casino licenses in Atlantic City.  Trump has been quite open about his ability to make economically useful connections with any political official, and his “pragmatic” campaign contributions to both parties reflect this practice.

Opportunities for crony capitalism have increased under the neoliberal supply-side economic development model that privileges the needs of capital over the needs of workers and communities. As states and localities are charged with building favorable business climates for capital investment, and the number of so-called “public-private partnerships” increase, government favors can be rationalized as contributions to job creation.

The third outstanding feature of the contemporary US economy is debt-driven capitalism.   Trump proudly has proclaimed himself “the king of debt” and he claims he “made a fortune out of debt”. He has used what is now a common business practice that was the subject of a recent story in the New York Times on Trump’s business record in Atlantic City: “…even as his companies did poorly, Mr. Trump did well. He put up little of his own money, shifted personal debts to the casinos and collected millions of dollars in salary, bonuses and other payments. The burden of his failures fell on investors and others who had bet on his business acumen.”  A variant of this model, sometimes described as “vampire capitalism”, is the standard operating procedure for the private-equity firms which gained national attention when Mitt Romney was running for President.  As reported during that last presidential race: ”Borrowing lots of money and incurring bad debts is not how real businesses make money in a normal world. But we don’t live in such innocent times. Modern American capitalism is rife with sophisticated financial intermediaries who exploit flaws and complexity in the system, as well as insider connections, to make profits off of predatory behavior” 

So when people hold up Trump as an exemplary example of business acumen, it must be put in the context of U.S. capitalism more generally and the larger systemic failure of our political economy that concentrates wealth in an oligarchical fashion, allows government to be captured by narrow corporate interests, and economically rewards those who use financial sector debt for short term gain.

Friday, May 6, 2016

How Has The "Model" Free Trade Agreement with Korea Worked Out?

Free trade agreements, like neoliberal economic policy, are faith-based policies that are promoted by both the business interests that benefit from them and economic policy-makers captured by the ideology of mainstream economic thought, in spite of the overwhelming evidence for their negative consequences (for the larger economy and the working population).

Obama has been working overtime in support of the Trans Pacific Partnership (TPP) but as reported by Lori Wallach of Public Citizen’s Global Trade Watch, there is now more damning evidence for the utter misinformation (lie?) about these trade agreements.

“Today’s alarming fourth-year trade data on President Obama’s U.S.-Korea Free Trade Agreement (FTA) arrived just as the Obama administration has started its hard sell to pass the Trans-Pacific Partnership (TPP). And that is a real problem for the White House.

The Korea deal served as the U.S. template for the TPP, with significant TPP text literally cut and pasted from the Korea agreement. And the Obama administration sold the Korea deal with the same “more exports, more jobs” promises now being employed to sell TPP.

And since then, our trade deficit with Korea more than doubled as imports surged and exports declined. The increase in the U.S. trade deficit with Korea equates to the loss of more than 106,000 American jobs in the first four years of the Korea FTA, counting both exports and imports, according to the trade-jobs ratio that the Obama administration used to promise at least 70,000 job gains from the deal.”

Thursday, April 28, 2016

Fallacious Logic Informs St Johns River Dredging Project

The most recent development in the ongoing contention over the proposed St Johns River dredging/deepening has the St Johns Riverkeeper filing a legal challenge to block state permitting of the project. While much of the debate over the project has revolved around the environmental impact, and the classic tradeoff between environmental protection and economic growth, there is an even more fundamental question worth asking -- what is the likelihood that the presumed economic gains in jobs and revenue will be realized if the project actually comes to fruition? On that score, one can file a logical challenge against the project and its proponents who repeatedly commit a fundamental logical socio-economic fallacy known as “the fallacy of composition”.

This logical fallacy plagues many proposed economic development panaceas. The tendency is to isolate a single case, in this instance Jacksonville’s port, showing how investing in an infrastructural enhancement will make the port more competitive and result in positive economic benefits. But what appears as individually rational -- for a port to seek public funds in order to finance infrastructural expansion and meet the demands of carriers and shippers – may in fact be collectively irrational. This is because Jaxport is not the only port engaging in this activity. Every major port on the East coast is or will be as deep, or deeper, than Jacksonville. Once one considers the larger east coast port population, all pursuing the same strategies and competing for the same limited amount of containerized cargo, it should be obvious that the result will not be equally beneficial for all parties. Some will be more successful than others based on existing and cumulative advantages; and, collectively, scarce public funds will be expended on redundant infrastructure resulting in overcapacity and underutilization.

Avoiding the fallacy of composition would have led the Army Corp of Engineers to conduct a multiport analysis in determining the wisdom of recommending the St Johns River dredging/deepening project (but they did not). Understanding the fallacy of composition would make clear that when every port seeks to gain an advantage through costly infrastructure and channel deepening it will inevitably result in “destructive competition” where no net competitive advantage is gained by any port, while the bargaining position of the shippers and global carriers is strengthened. As one study of port competition concludes: “…interport competition results in an unnecessary and unrewarded transfer of wealth from local taxpayers and users to global firms.”

There is a second similarly relevant socio-economic fallacy known as Say’s Law -- that supply will create its own demand. This has been translated into the equally fallacious assumption made by advocates of the deepening project that “if we dredge, they will come”. But supplying a container terminal and deep water will not automatically produce a demand for port services, as that is contingent not only on the state of global trade but decisions made by the shippers and carriers, who, it turns out, have expressed a clear preference for Savannah and Charleston over Jacksonville.

Finally, one would be remiss if they did not make reference to the more well-known concept of “opportunity cost”. This refers to the lost benefit or value of an activity not undertaken because another course of action is pursued. As it pertains to the river deepening, one might consider whether the estimated $400 million local share of total project cost would be better directed toward an alternative form of public investment that might generate greater benefits for the citizens of Duval county, such as improved public transportation.

In short, one does not need to conduct a technical econometric analysis in order to assess or challenge the logical shortcomings of the proposed dredging project. It is remarkable, but not entirely surprising, that paid consultants conducting economic impact studies would overlook these fundamental, but inconvenient, socio-economic principles. What will be more inexcusable is if public officials actually decide to expend scarce taxpayer resources, in a time of severe fiscal strain, on such a highly speculative megaproject.

Friday, April 22, 2016

Jacksonville Oligarchy

The pattern of autocratic candidate selection should now be depressingly familiar to the citizens of Jacksonville. A political office opens up; a narrow wealthy elite segment of the population, or usually just one single member of the elite known as the “local kingmaker”, endorses a candidate; said candidate immediately becomes the odds on favorite to capture the election, and invariably emerges victorious.

The wishes and desires of the demos – that is, the participation of the people on whom democracy presumably rests – play absolutely no role in this process. We saw this with the endorsement of Mayor Brown, the anointment of Mayor Curry, and now it is playing out with lightening quick speed in the open 4th Congressional seat recently vacated by Ander Crenshaw. Former Sheriff John Rutherford has been chosen by the local powers that be. Case closed; citizens and democracy be damned.

More disturbing still, no one seems to care. Compare this with Hong Kong where recently tens of thousands of people hit the streets to protest the role of the Chinese Communist Party selecting acceptable candidates for their Chief Executive position. What we have in the United States generally, and in Jacksonville in particular, is comparable. Instead of a political elite, it is a corporate elite. But here in Jacksonville, as elsewhere, there is hardly a word of dissent as citizens have become habituated to the faux democracy that is our electoral political system.

Regarding the chosen candidate, there has been nothing said about the qualities Rutherford possesses that would recommend him as a member of Congress. Not a word on his policy positions on national issues, his aspirations, or his ideals. Apparently, the local oligarchy is content that he will represent their interests; but what about the interests of the congressional district’s larger constituency?

It is time that citizens demand a more democratic process and procedure for determining who will be on the ballot, and the choices they will be faced with when they vote for their Congressional representative.

Democrats vs Democrats

In Thomas Frank’s excellent latest book, Listen Liberal, on the conservative drift of the Democratic Party he highlights the fact that the party has largely devoted itself toward mobilizing and serving the interests of the professional-managerial class rather than the working class. More specifically, he notes the party’s fascination with highly educated professionals, the “creative class”, and the associated concept of innovation (technological and financial, the latter responsible for blowing up the economy). 

The growing rift between average workers and privileged professionals, and the Democratic Party preference for the latter (formerly known as "Atari Democrats"), emerged in full view in Silicon Valley as the Democratic Party was pandering to the venture capitalists, who happen to have the campaign contribution largess the party has come to crave. ​

After working in Silicon Valley for years, Morgan Quirk felt good protesting outside the home of a venture capitalist who funded tech startups and fundraisers for Hillary Clinton. He was part of a new splinter group of the liberal party, Democrats marching against Democrats in San Francisco, commuting tech workers against their bosses.

“They sell you a dream at startups – the pingpong, the perks – so they can pull 80 hours out of you,” said Quirk, a 26-year-old software engineer. “But in reality the venture capitalists control all the capital, all the labor, and all the decisions, so yeah, it feels great protesting one.


Sunday, March 20, 2016

Trump and the Double Backlash Boomerang

The rise of Donald Trump has generated a range of explanations for his electoral appeal. The most convincing explanations link his success to the actions and rhetoric that has been coming from the Republican Party since at least the 1990s.  A more accurate description of this dynamic might be what I refer to as the “double backlash boomerang”. It is a two-step process, with “Trumpenstein” as the end product.

The first backlash was identified most poignantly by Thomas Frank who introduced us to “The Great Backlash” with his book What’s The Matter With Kansas. Frank described how the Republican Party, unable to attract naturally the white working class on economic issues given their pro-corporate agenda and country club constituency, resorted to cultural appeals that painted the liberals, and by association the Democratic Party, as arrogant and condescending elitists who look down upon the working-class masses with disdain for their attachment to God, guns, and traditional family values.  Portrayed by Republicans as secular humanists intent on social engineering through government policies aimed at curtailing basic freedoms and liberty, liberals are more concerned with undeserving minority groups and immigrants than hard-working, God-fearing, Christians. This rhetoric served to both anger and mobilize a significant portion of the working class against the Democratic Party and in support of the Republicans.  

What Pat Buchanan termed the “culture wars” has now become the routine, standard operating, Republican strategy of “stirring up the base”. Most recently it has involved increasingly outrageous charges against liberals who, it is claimed, are destroying the country from the inside. This strategy was ramped up further during the Obama administration, with the ever-present and not so subtle racist overtones, in the form of questioning Obama’s citizenship and his sympathies, and charging him with being a foreign agent and a communist dictator.  The Tea Party movement, cultivated and funded by the Koch brothers, was the most visible manifestation of this “ginned-up” base.  This described the first backlash, which has been fairly successful in fueling Republican electoral support among a segment of the white working class. 

But the ultimate electoral purpose was to advance the economic agenda of the corporate elite. As Frank argues: “Cultural anger is marshaled to achieve economic ends. And it is these economic achievements — not the forgettable skirmishes of the never-ending culture wars — that are the movement’s greatest monuments. The backlash is what has made possible the international free-market consensus of recent years, with all the privatization, deregulation, and de-unionization that are its components. Backlash ensures that Republicans will continue to be returned to office even when their free-market miracles fail and their libertarian schemes don’t deliver…”

And any chance that the culturally wooed working class would return to the Democratic Party is undermined by the fact that the Democrats, for their part, are equally complicit in joining the “free market consensus”.  This neoliberal economic agenda introduced under Reagan, privileging the needs of capital over labor through lower taxes, weaker unions, deregulation, and a far less generous welfare state, was deepened and normalized under Clinton (see NAFTA, welfare reform, repeal of Glass-Steagall), continued with a vengeance under Bush II, and largely left in place unabated by Obama despite its direct role in creating The Great Recession that he inherited.  The neoliberal consensus, driven by the bipartisan addiction to corporate campaign contributions, has left the working class with no party representing their interests.  Instead of a class-based appeal through alternative pro-labor economic policies, which would alienate their corporate backers, the Democratic Party has developed a codependent relationship with the Republicans using their own cultural and identity politics to attract the educated white-collar professional-managerial class who is likewise mobilized in opposition to the crude and intolerant cultural values advanced by the Republicans.   

Abandoning the working class, as Frank puts it, has been the “criminally stupid strategy that has dominated Democratic thinking” since the 1970’s.      

So as the 2016 primary season kicked off, you have the mass base of the Republican Party ginned-up and angry, continuing to suffer economically, unable to turn to the now-despised liberal Democrats, yet wanting to “Take Back America”.  But they do not see the Republican establishment responding proportionately to the purportedly grave threat to the American way of life posed by Obama and the Democratic Party. If everything they have been told by Republican politicians and Fox News is true, how come the Republican Party has not taken the drastic actions required to stop and halt the clear and present danger? Instead, the Republican establishment, despite the incendiary rhetoric, is perceived as too willing to accommodate and compromise with, rather than aggressively attack, the identified source of American decline. 

Thus, the second backlash is unleashed as the base turns, en masse, toward a Donald Trump, in hostile opposition to the Republican Party institution, with Trump promising, through appeals to cultural chauvinism and economic nationalism, to “Make America Great Again.”

Originally fueled by the first Great Backlash, we are witnessing more broadly the boomeranging blowback from years of cultivating dog whistle racism, misogyny, xenophobia, bellicose nationalism, anti-intellectualism, know nothingism, and generalized rage.  In short, the Republican Party has spawned a custom-made constituency for the neo-fascist demagoguery of Donald Trump.