Our Two Party System

A number of systems of governance are employed throughout the modern world. There is the one party system used by the former Soviet Union where delegates are elected to a ruling body, which in turn selects the country’s leaders. The people have a choice in that they select the delegates or so the theory goes. In a parliamentary system representatives of many parties are elected to the ruling body. Most often there is not a single party that claims the majority and a coalition of various parties is formed to select the leaders.

Here in the US, though in fact we have candidates from various parties (Socialist & Libertarian for example) running in elections, as a practical matter we really have only two major parties that represent the entire electorate. Whereas in the parliamentary systems there are very many small groups representing special interests, Israel for example has 14 parties with seats in the Knesset and some of the smaller of these are made up of multiple parties and in Germany the ruling coalition headed by Angela Merkel is made up of the Christian Democratic Union and the Christian Social Union in Bavaria with the Social Democratic Party of Germany, The Left and the Alliance ‘90/The Greens the minority parties, in the two party system all the various special interest somehow, with ease or difficulty, need to be “shoe horned” into one of the two major parties. This represents a challenge to the candidates as is evidenced in the current primary battle for the presidency where, to attract primary voters, they have to take positions which will potentially alienate the majority of voters in the final election.

In our Free Market Capitalist System there is a natural competition between those selling and buying labor with each looking for advantages over the other. The major function of government is ensuring the prosperity of “we the people” (society) and in so doing try to even the “playing field” between these competing entities. From the most basic perspective, our two parties have aligned themselves, the Republicans with those earning their living from profits and rent and the Democrats with those living on wages. That is the principle difference between the two. Adam Smith in the Wealth of Nations writes about people’s subsistence coming from one of three sources, profits, rents and wages. Even during his simpler times there was some intermingling of the three. (Part of a shopkeeper’s earnings was in essence wages from his labor in the store with the balance coming from profits on capital he has invested in facilities and product.) Corporations were few and primarily made up of trading companies like the East India. Only a very small part of the population held shares in corporations. Most other businesses were either sole proprietorships or partnerships.

Today, though there still are small businesses like the one described above with income coming from a combination of wages and profits, there are a very large number of corporations many of which are publicly held. The ownership of the shares ranges from a large number of shares owned by an individual to institutional investors representing large numbers of individual each owning a small number of shares. It becomes a bit more difficult to place people into Smith’s three groupings of income from profit, rent and wages. Because of this complexity, in the following discussion relating to political parties, I will put those living primarily on profit or rent and the self employed in the “business” category and those living primarily on wages paid by others into the category of “labor”.

Beside the issue of how one makes a living there are a number of other considerations like freedom, equality, justice, opportunity, fairness and the environment to mention a few that tend to unite people. In a two party system, as mentioned above, these other interests need to find representation in one of the two parties.

In the Free Market Capitalist system businesses are driven by profit. Anything that adds to the cost of business, unless it results in greater revenues takes away from the profit. Businesses for the most part want to minimize any restrictions on their ability to make a profit. Though they do favor some regulations, these tend to fall more into the realm of monitory policy, government subsidies and more industry specific regulations minimizing competition like licensing requirements (liquor license requirements granted under the guise of public morality, as a practical matter, really limit the competition for bars and restaurants) and in the case of local businesses but not global ones, restrictions on foreign imports. The majority of regulations however, are intended to improve the prosperity of the society as a whole and tend to interfere with business and thus reduce profit.

The Republicans as representatives of business, having assumed the role of protectors of profit, properly become the “party of no” because at the most basic level most regulations, laws and expenditures, other than those related to protection of property and property rights, though they may benefit society, interfere with business activity. The Democrats, representing those selling labor want to implement policies that improve working conditions. They then become the party of regulations when viewed strictly through the lens of business and labor having pushed for workplace safety, restrictions on child labor, overtime pay, minimum wage and ability to collective bargain through unions.

Beside the basic there are tangential issues that “naturally” fall into the realm of either Democrats or Republicans. As the free market churns, creating and destroying, those most devastatingly affected tend to be the laborers. When the shoe industry moved offshore, workers in that industry often fell into poverty. Owners of the factories may have also suffered but more at the level of a change in life style. So social welfare naturally became an agenda of the Democrats. Having struggled to maximize their profits, people making their living from them don’t want to see their profits being eaten up by taxes especially where a portion of them may be used to increase regulations and thus further reduce profits. As representatives of business, the Republican’s effort to maximize the retention of profits also attract wealthy wage earners such as hedge fund managers, entertainers including athletes, CEOs, doctors and lawyers. All laws and regulations, by their very nature limit personal freedom. One challenge is to balances individual freedom and societal prosperity. The Democrats, representing the wage earners enact more regulations. therefore those leaning in favor of the individual (supporters of the NRA fall into this category) will turn to Republicans leaving those leaning toward society to the Democrats. The above are “natural” tendencies consistent with basic positions of the parties.

Having said that, demographics even with the addition of some “naturally” aligned special interests, still leave the Republicans short of followers relative to Democrats. The challenge becomes enticing wage earners to join their ranks with promises of something they value more than their own material well-being. The “trickle down” theory is one way to convince them that the advantages gained by the wealthy (“job creators” in conservative speak) will indeed flow down and enrich them. Another way to entice the wage earners is by dawning the mantle of conservatism, which at its core relies on the established wealth to maintain existing institutions. Up until the Civil Rights regulations passed during the sixties, the Democrats held a strong position in the formerly Confederate South. The southern segregationists, feeling betrayed by the Democratic Party turned to the Republicans who to this day woo them with subtle racial innuendos (the “Southern Strategy”) and an appeal to a new bigotry by stoking fear of Islam. To gain a numbers advantage, another group courted by the Republicans is the Fundamentalist Christian. A few decades ago their churches stayed out of politics. The Republican Party as a strategy decided to bring this group into their fold with three enticements all lumped under the category of “values”. Prior to that time, abortion was viewed as mostly a Catholic issue until a strong campaign by the Republican Party made it into a Protestant “right to life” issue. There was already an aversion to homosexuality in that community but the Republican effort made it a “family value” issue and gave it a means of expression. The third was the promise of a Christian Theocracy. Today on the campaign trail candidates routinely invoke God and if not outwardly than at least hint at a Christian God. Knowing that for the most part the Founders were Deists, Republicans still suggest that the founders had a government based on Christian principles in mind, citing the reference to the “Creator” in the Declaration of Independence as if it not only said “God” and not even the God of Abraham, (Christians Muslims and Jews all recognize the same One) but an exclusively Christian God. I believe the Founders intentionally left the interpretation of Creator to the individual. Had they meant God they would have said God and furthermore had they intended this to be a Christian country they would have invoked the name of Christ.

Republicans claim to stand for a Capitalist Free Market economy, which in its purest form, drives innovation and thus change, knows no boundaries and recognizes no racial, ethnic or religious differences. Their challenge is to rationalize this with the conservative desire to stand still, the patriotic drive for nationalism and the dream of returning to a white Christian past. The Democrats, for their part, play to the black and immigrant voters, who for the most part are poor, as the party in favor of social regulations. Also as the party of society and therefore regulation, they pander to the Environmentalists whose extreme agenda’s benefit to society may be questionable. Their challenge is to not get lost in the tangential details and focus on the primary role of government, which is to ensure the prosperity of its society. To do this they must continue to facilitate the operation of the Free Market while making sure it not only serves the self-interest of business but society as a whole.

In a Two Party System we as individuals need to balance and prioritize our personal agendas, determine what are our most important issues and select the Party that will support them. It becomes a challenge full of large compromises. Having said that, items that naturally fall into the Party become its platform, however the artificial ones tend to be spoken about and highlighted during the primaries and then forgotten anyway. In a Multi-Party System, representatives are chosen based on narrow agendas and throughout their tenure negotiate with other interests to advance their issues. I really had no interest in politics until I started following the Presidential race four years ago. I was of the opinion that there was no real difference between the parties. Now having listened and read more, not only have I become convinced that there is a great difference but I am starting to think that it may be irreconcilable.

Yes Virginia, Laws Interfere with Individual Freedom

There is much discussion today about more government or less, more regulations or fewer, too many laws or not enough. Much, though not all, of the discussion really can be boiled down to two issues; the cost of government and who should pay for it and the restrictions on business activities and personal freedoms. Success here and in fact in most of life’s endeavors comes in great part from the ability to balance disparate issues such as these. The beauty of our system is that until now we have been able to achieve a reasonable balance. The pendulum swings to the left and right and for short periods rests in the middle and as long as it is allowed to return, we as a nation will be fine.

The Buddhists call this traveling the middle path (I think). Socrates spoke of individual virtues with bravery being the balance between cowardice and brashness. Jumping between two twenty story buildings separated by fifty feet to save someone is stupid. Not jumping between two buildings separated by ten feet is cowardly but jumping when buildings are separated by twenty feet where there is a real chance, however slim, is bravery. In family life there is a need to balance time put into work with time spent with family and a bit of time for independent personal development and pleasure. Inability to strike some sort of balance leads to divorce or familial misery. To be truly successful, a football team needs to balance the running and passing games. Can’t get into the Super Bowl without it. And so balancing the drive for individuality with the needs of society is a government’s major role.

Genetically we humans are programmed to ensure our survival and that of our offspring while satisfying our urges for pleasure. This instinct obviously served us well before we started living in communities extending beyond our immediate families. As the number of us grew, we had to gather into communities to survive and to survive within a community, be it a village, a state or a notion, some basic instincts had to be compromised. The challenge become balancing individual freedom with the well being of society. Since man started living in communities this challenge has existed. At the extremes on either side of the middle are totalitarian regimes such as existed under Stalin and Hitler at one end and a Libertarian Utopia that to my knowledge has yet to exist, at the other.

Basically all laws, be they just or unjust, restrict someone’s individual freedoms. Nature has prepared females of our species to bear children at the age of 12 or 13 (and getting alarmingly younger) but over the years society had decided that for a variety of good reasons that was too young and in the industrialized countries laws exist that have elevated the age of child bearing to the late teens and custom to the twenties. Humans by nature may not be loyal mates so laws came down in the form of one of the Ten Commandments not to covet thy neighbors wife or governmental laws in some primitive Muslim societies punishing infidelity by stoning a woman to death. We cannot decide to drive on the left side of the road or up a one-way street. I imagine very few would argue against such an abridgment to our liberty. Other laws that infringe on freedom are open to debate. Should the government restrict smoking in a private facility even though it is used by the general public? Should government dictate what sex and between whom should be allowed? There are other laws that most people today would have issues with such as the law against interracial marriage. (There was a survey conducted in Mississippi last year asking whether such a law should be reinstated. Less than one half of the respondents thought it should not. The majority either thought it should or didn’t have an opinion.).

In a primitive village it is the chief or the council of elders who shoulder the responsibility of this balanc. In Medieval Europe or in today’s backward societies, much of the balance was in the hands of the clergy. In nation states today, the chore falls to the governing body. Our governments set the rules that interfere with our “freedoms”, some out of necessity, others out of custom or in response to screams by the general society or unfortunately, by special interest of smaller groups with loud voices. It is “common wisdom” that the conservative want fewer laws and the liberals more. The fact of the matter is that they both want laws, but ones that support them and their understanding of how the world turns. All laws whatever their end intent is, do interfere with individual freedoms. If we all, by nature drove on the right side of the road, or had no sex drives or any genetically driven instincts contrary to the interest of society at large. there would be no need for a laws whether mortal or divine.

The Middle Class, What Might Be Done to Stem its Demise?

Within the context of globalization and minimal disruption to the Free Market, what can be done to restore a situation where a significant portion of the population of the US is able to live well and follow the “American Dream”? Contrary to popular Right Wing opinion, there is a role for Government in the solution. We have plenty of capital in this country though it has dramatically shifted from the middle to the high end and at the moment, much of it lies dormant. We can continue paying a decent wage to people who do not compete globally. The question is what can we do for the merchants, and workers who are displaced by the Free Market? Currently, the farmers are subsidized though as the Right is pushing to reduce the benefits to workers the Left will, if it hasn’t already push to reduce the subsidies to “small farmers”.

Throughout recent history, as the markets churn, creating and destroying, one role of governments has been to see to the people who are disadvantaged in the process. If people are allowed to broadly suffer from market changes, the populous will not cooperate with the changes, the number of consumers will diminish and the markets will implode. There is also talk that industry will no longer need hard working, strong backed individuals but will primarily employ a creative workforce and one with analytical or “people” skills. When more and more of the strong-backed individuals start sinking into poverty, not only will there not be cooperation, there will be social unrest of epic proportions.

We as a nation could decide not to bust unions and continue paying good wages and benefits to the public service sectors and increase the wages paid to others in the “local” economy and allow jobs subject to globalization where we are not competitive to go elsewhere as they will anyway.

If we look around there are many things we can see, changes to which could improve the quality of life for all of our citizens, rich and poor. We can invest in initiatives that will improve everyone’s quality of life such as:
Eliminating slums
Improving facilities and activities that keep our young people off the streets and out of gangs.
Change the economic conditions so that infants can be allowed to more properly develop in a stress free, loving home.
Improve dilapidated neighborhood and public areas
Improve basic education
Increase access to education beyond the three Rs such as music, art and sports
Eliminate poverty
Improve our infrastructure
Once I heard it said that a society is judged by the magnificence of its architecture and I believe there is some merit to that observation. The bleak public building erected in the last century in the Soviet Block is a testament to this. (I was in the former East Germany a few years ago and saw buildings of that era that were nothing but huge “boxes”, very strong and functional but with no esthetic appeal whatsoever.) The general architecture in the post-industrialized era in the west is not far removed. The reasoning for this was that when life is very hard, there is no energy, resource or time for niceties.

Making these improvements in our overall quality of life can give meaningful employment to those that are displaced by the market churn. Improve labor laws, eliminating some of the excesses of labor unions and not only allow, but encourage collective bargaining to keep wages at a decent level. None of this will impact our ability to compete globally. In fact it should continue and increase our attraction to talent from across the world. Our industrialists and financiers are not negatively impacted by the flow of jobs out of the country and the shrinking of the consumer base here will be offset by the rise elsewhere. Their wealth will increase through all these shifts. We have the resources, though in the hands of a very few to do this. We now need the political will to channel these resources more for the benefit of society as a whole. We can increase taxes, particularly on the most affluent. The fear is that they will flee and take their riches with them. If we believe that we are truly “exceptional”, they will not. Eliminate duel citizenship (I have a hard time understanding how one can swear allegiance to two different countries, each with its own interests) and if they leave and want to come back impose a very high price for reentry.

The Middle Class, its Makeup and Decline

Today there is much talk about the shrinking of the middle class and the growth in income inequality. I believe both are not only true but an existential problem. Here is my take on what may be some underlying causes. First I am not sure there is anything close to a common definition of what is the “middle class”. I’ve heard the term “middle income” used interchangeably with “middle class but it does not have the same meaning. It is strictly a mathematical definition as either the median or average income with the median being closer. For the sake of this discussion I will define the middle class as follows: People who derive their income either from wages working for others or from wages/profits working for themselves who can afford to own a modest house or rent a modest apartment, send their kids to college, retire without sinking into poverty and if they forgo many extravagances, have a small vacation home to retire in. At the height of our middle class, this could be achieved with only one member of the family working. Today it takes two incomes. In general I think that it takes income between $50K and $150K, depending on where one lives. (It may be much to low an estimate. It is only my guess based on nothing.)
The problem started decades ago but was not obvious for reasons described by Robert Reich in the December 6th Huffington Post.
“For many years, credit cards and home equity loans papered over the harsh realities of this new economy. But in 2008, the house of cards collapsed. Exactly. But the first papering over was when large numbers of women went into paid work, starting the in the late 1970s and 1980s, in order to prop up family incomes that were stagnating or dropping because male wages were under siege -- from globalization, technological change, and the decline of unions. Only when this coping mechanism was exhausted, and when housing prices started to climb, did Americans shift to credit cards and home equity loans as a means of papering over the new harsh reality of an economy that was working for a minority at the top but not for most of the middle class.
We all know the story by now: Mortgages sold to people who couldn't afford them, or sometimes even understand them. Banks and investors allowed to keep packaging the risk and selling it off. Huge bets -- and huge bonuses -- made with other people's money on the line. Regulators who were supposed to warn us about the dangers of all this, but looked the other way or didn't have the authority to look at all.
It was wrong. It combined the breathtaking greed of a few with irresponsibility across the system. And it plunged our economy and the world into a crisis from which we are still fighting to recover. It claimed the jobs, homes, and the basic security of millions -- innocent, hard-working Americans who had met their responsibilities, but were still left holding the bag.”
What is the makeup of this “middle class”? Following are a few examples.
People working for others
Local, state and federal government workers represented by unions such as janitors, teachers, firemen, policemen, garbage men, etc.
Production workers in low to moderate skill level jobs in manufacturing in unionized shops.
Medium to high skilled technicians working in technology companies
Mid grade management staff in manufacturing
Unionized construction workers
Mid grade engineers and scientists
Nurses and medical technicians in not-for-profit medical facilities
Upper management in the restaurant and tourist trade
Lower management in industry
People working for themselves
“Mom & Pop” shops & gas stations
Restaurant owners
Beauticians
Building sub-contractors
Small “Family” farmers
Very small factory operators

Reich pointed out in his post that the decline in the “middle class” and the resulting income inequality (he is talking about the US) is attributable to globalization, technology and decline in unions. The first two are natural consequences of Free Market activities. As I have mentioned in numerous posts, the market knows no boundaries, has no conscience and its benefit to society, which indeed exists, is strictly coincidental. This is not a criticism but a statement of fact. Indeed, over time, the quest for profits has created products and services that make life easier and more interesting for an ever-increasing segment of the population. In a free market, enterprises seek the highest profits. They achieve this through lower costs and the ability to differentiate. Since labor represents much of the cost in manufacturing, enterprises seek locations with the lowest labor costs. Within the United states, companies migrate from Northern high wage regions with strong union representation and strict regulations to poor Southern States with cheap labor and lax regulation. The same thing happens on a global scale. In the fifties much of manufacturing went from the industrialized West to Japan which in turn lost it to Singapore and Malaysia who are now struggling to hold on to as much as they can with China’s ascendance as the new manufacturing juggernaut with India on its heals. All this is good for the poorer regions and bad for the richer. Years ago a colleague told me about a mural of a swamp in the cafeteria at Colby College entitle “alligator heaven, frog hell”. When viewed from a global perspective, the middle class has been and continues to grow. Worldwide more and more “poor” people are moving into the middle class and are better off today. In the Industrialized West, however, that is not the case. Some, though by no means all of the improvements seen in the “Third World” come at the cost of conditions in the industrialized countries.

This flow of jobs that once allowed for a middle class standard of living here in the US will not be able to be stemmed without disrupting the Free Market significantly. It is a natural and for the most part a desirable consequence of Free Market activities. This disruption would be ultimately to the detriment of everyone. Representing those earning wages from their labor/profits and business in general, the Right wants to move retreat back to the golden era of the twenties. To try to stay competitive, there is a strong effort on the Right to bust unions to drive down wages and benefits of workers make it easier to compete (ironically while at the same time increasing wages and benefits for upper management). The same people are also trying to undo health and safety regulations to bring down costs. It is interesting that the strategy a couple of decades ago was to “level the playing field” by forcing Third World countries to raise their standards up to our level. Now, in a panic, we are even talking about possible repealing child labor laws. (Although I don’t believe Newt’s comments are taken seriously) This is a poor strategy. Maybe in the very short term effective but in the long term as the middle class in the developing world grow the same regulations that were imposed in the West will, for the same reasons be imposed elsewhere and in the process we may have gone back in time so far, creating social turmoil that we may not be able to recover from and in the process get left in the dust.

Another thing leading to the decline in the middle class, also a natural outcome of a free market has nothing to do with globalization. Driven by the quest for profits, in an attempt to bring an ever-wider range of commodities at lower prices to a broader segment of the population, mega retailers such as Wall-Mart are making it difficult if not impossible for the “Mom & Pop” shops to compete. Haircuts that cost $50 in a beauty parlor can now be had in places like Super Cuts for $12 or $8 with a coupon. While the broader society benefits from lower costs, like the workers in the manufacturing sector, the small shopkeepers and businesses suffer.

Technological advances, also a natural consequence of free market activities, driven by the quest for profits leading to a need to differentiate, have changed the workplace. Information technology has eliminated many administrative jobs and ready availability of information eliminates much of the middle management responsibility.

The reasons for the decline described above are unavoidable. Some of the pain, however is self-inflicted. There are well paying jobs in the public sector and some in the private that cannot be exported and are of no significance in international competition. Teachers, firemen, police officers etc have to remain near the public they serve and cannot be exported. The Right is working hard to bring down their wages and benefits. Maybe it is because they feel that it makes it easier to bring down the wages of industrial workers if the public sector worker’s wages and benefits are reduced. Unlike manufacturing, here there is no economic necessity to do this. Relatively small increases in taxes on people who benefit most from globalization can easily allow this group to again live a “middle class” life.

In the next post I will discuss my thoughts of what can be done to maintain a decent standard of living for a large portion of the US population.

Job Creators; More Thoughts

I subscribe to the Liberal notion that the term “Job Creators” as used by Conservatives is code for wealthy individuals. I don’t believe there is a direct correlation between wealth and creation of jobs.
The legitimate quest of business, particularly manufacturing, is to do as much as one can at as low a cost as possible. So there is always a search for ways to reduce, not increase, jobs since much of the cost is in labor. Though much of the shrinkage in jobs, particularly higher paying jobs, in recent years is attributable to technological advances, during an economic downturn falling profits amplify the need to reduce labor and workers are pushed to increase their individual efficiency. With workers fearing for their jobs, the task is easier. Corporations have been extremely effective in reducing jobs during this recession as is evidenced by record profits. There is nothing wrong with this. That is how the system is supposed to work. So, in this sense, the people running business are not focused on “job creation” and should not be considered “job creators”. However, their attempt to increase the value of the enterprise is often accomplished through growth and growth can create jobs so if they create more through growth than eliminate through efficiency, they may be “Job Creators” coincidentally but certainly not by intent.
Much of the wealth today, however, is derived from investment and speculation in the stock markets. Are these investors also “Job Creators”? The fact that most laymen overlook is that when one buys shares in the stock market, with few exceptions, one is buying them not from the corporation but from another individual who owns shares in the company. The corporation is not at all involved in the transaction and the benefit to the corporation is only tangential at best. If many people buy shares it may increase the paper value of the corporation, which may make it easier for it to borrow money or issue more shares. But unless it does either of those, my buying the shares puts no money into the corporation and is inconsequential from the standpoint of creating jobs. So unless I am buying shares from a corporation directly, either through an IPO or new issue, I am not adding capitol to their coffers and even with a stretch cannot be considered a “Job Creator”
What about private equity firms? Are they “Job Creators”? Private equity firms gather money from large investors and operate somewhat like investors in the stock markets except having large amounts of capital they generally take controlling positions in corporations but are not subject to regulations imposed on the public markets. Bain Capital, a private equity firm headed by Mit Romney is used by Liberals to argue against Mit’s claim to being a “job Creator”. They purchased select companies that were flush with assets and unprofitable, convert the assets to cash for the investors, streamlined the operation by eliminating jobs and either took them into bankruptcy or sold them. Their gain comes from stripping assets and/or improving efficiency (by cutting labor) thus increasing profits and the value to the investors. Here again one cannot considering them “job creators”.
Governments, federal, state and local also employ labor, in administrators, teachers and public service and safety personnel. Though they provide jobs, they do not create jobs with the exception of the military and foreign policy activities. Unfortunately this job creation occurs during times of war and global stress. During war the federal government not only hires soldiers, but increases their purchase of weapons. Many foreign policy activities involve providing aid in the form of weapons to countries like Pakistan and Israel or allowing sale of weapons to Saudi Arabia and Taiwan to mention a few. These activities do create jobs but not necessarily the kind of jobs we want to strive to create.
So who are the real “Job Creators”? Venture capitol firms raise money from large investors and invest it in new enterprises or new projects in existing ones. They take on much greater risk than private equity firms and their successes do indeed result in new jobs. They and individuals invested in venture capital firms are truly “Job Creators”.
A very large portion of our GDP comes from consumption and ultimately the behavior of the consumer in the marketplace destroys, maintains or creates jobs. But, since we are embroiled in a global marketplace, we need to think of consumers and the jobs they create on a global scale. Much that is consumed in the US is mined, farmed or manufactured elsewhere and a portion of what we take from the earth, grow and build here is consumed elsewhere. However, regardless of where something is made, it is marketed and transported locally. So increases in demand for even product manufactured in China, as is the case with most of what is sold in Wall Mart for example, creates sales clerk, administrative and transportation jobs. Though the “middle class” has been shrinking in the US it is growing dramatically in “third world” countries and their consumption will have a strong impact on our jobs. The nature of the impact will be determined by how we navigate through the dynamics we are in the midst of throughout the world. Unfortunately on the right there is a simplistic view pushing for less government and lauding unsupported “exceptionalism”. Progress in an ever-shrinking world is a complex undertaking and will not only require government involvement but a “nuanced” one at that.

Uncertainty

I really hate political “one liners”. “job destroying”, “job creators”, Medicare killing” etc. My current least favorite is “uncertainty”. All economic woes, particularly unemployment, are attributed to the “uncertainty” faced by the “job creators”. Republicans have been using the term and more and more businessmen are jumping on board. We would hire people but for the regulatory and tax uncertainty.
During one of his early speeches Rick Perry talked about the great job he did in Texas creating an environment where businessmen could “risk their capital” to create wealth. (The Right attributes nobility to risk in business but never to sweat in labor. But that’s another topic) Getting back to risk of capitol and uncertainty. I particularly get riled when businessmen start whining about uncertainty. After all, a major justification for profit in business is the risk; the greater the risk the higher the potential for greater profit. A characteristic of a good businessman is the ability to manage risk.
Without uncertainty, where is the risk? What will be the price of tin? Will it be a rainy season or will we be faced with a major drought. What will the dollar trade for in Europe? There is always regulatory uncertainty. Stores selling wine worry about the impending lifting of restrictions that exist in some states on shipping wine by mail thus reducing their monopoly. Funeral parlors worry about removing restrictions on transporting corpses across state lines. My Father in Law passed away in Massachusetts and was to be buried in NY. A New York undertaker could not pick up his remains from his residence. By law, we had to get a local undertaker to take the body to the Connecticut border, transfer it to a hearse that took it to the NY border where finally a New York undertaker moved him to the place where he was to be prepared for the burial. (A secondary point I am trying to make is that not all regulation is anti business. Many, if not most, regulations are lobbied for by business trying to limit competition, the greatest detriment to profits.)
Anyway, risk, and by implication uncertainty, whatever its nature, is an inherent part of business and one of the factors that conservatives point to that distinguish business from labor. I don’t mean to suggest that risk is not a strong consideration in business decisions. The greatest is the risks of making a profit and since income taxes are a tax on profits they do not affect amount of profit but what portion of it will remain with the organization or individual to do with whatever. Though regulations do affect the cost and availability of supplies and labor, they are with some exception minor. Some notable exceptions are tighter immigration regulations will restrict the availability of cheap labor and there is indeed a cost for limiting pollution and increasing safety in the work place. I don’t believe there is any movement to increase regulation in the pollution or safety areas so the uncertainty may be in whether and to what degree the regulations will be eased not increased. That uncertainty, were it a real reason for economic slowdown, certainly could not be laid at the feet of liberals. There is always risk and there is always uncertainty in business but the emphasis of regulatory and tax uncertainty’s affect on employment is greatly overstated strictly for political reasons. The real uncertainty is when will the consumer get enough disposable income to start spending wildly again?

Society’s Impact on Good Parenting (Correction)

I previousloy duplicated the last post under this heading. Here is the correct one.

I have a fundamental belief that children are the most important asset to the future success of our nation. I further believe that there is a normal distribution of reasoning ability that is a genetic part of the individual and to maximize the probability of success we must allow them to rise to their maximum potential. I read and hear more and more that the jobs or the future depend on three attributes; analytical thinking, creativity and social skills. The first two of these, though they may be able to be enhanced by education, for all intents and purposes cannot be taught. As I discussed in a previous post on education, universities, though they do not create analytical thinkers or creative individuals, do “brand” them. The higher the degree, the greater the probability that they have these thought-after characteristics. With rare exception, individuals without degrees may not be recognized as being analytical or creative. So I am interested in expanding education to certify as many of the talented as possible. The more we get into our mainstream the better for our future.
As I have followed debates on education, I hear much about the importance of good parenting. The debate regarding the impact of parenting is not whether good parenting has an impact or not but is it a 50% or a 95% issue. That being the case the question boils down to how can parenting be improved?
May 5th I watched a special on Democracy Now, a very liberal broadcast, which featured a composite of three different interviews of Dr. Gabor Mata, a Canadian physician who studied and wrote about addiction, autism and attention deficit disorder. Gabor Mata, a Jew, born in Hungary during the Nazi regime and brought up in a home where the family was in work camps and in general, given the Nazi attitude toward Jews, under tremendous stress. As he discusses various studies he also often cites himself as an example of behavior consequential to his early upbringing. (I also find some relevance to my own symptoms though I am sure my formidable years were not nearly as terrible as his.)
He started by pointing out that unlike most mammals, the humans, because of the size of our brain need to enter the world before the brain is fully developed and spend the first two years of our lives continuing the development of the neural connections and whatever else goes on in the brain. During this period, for proper development, it is crucial to be in the presence of a calm loving person. He attributes the bulk of the above ills and their increase to improper development brought about by parents living under more and more stress and thus depriving the child of the environment needed to properly finish the development started in the womb. His conclusion is that whereas these diseases are considered and treated as medical or psychological maladies, they really are societal ills. He cites the increased stress brought on by deteriorating economic conditions requiring mothers in two parent households to work and the revision of the welfare system forcing single mothers to go into the workplace as conditions that remove the loving hand and their ability to comfort.
If there is merit to his argument, (I believe he has hit the nail on the head) what can we as a society do to improve the development of the infants and thereby improve our future society? In the LA area there are “Mother’s Clubs” which provide a setting where mothers from impoverished families can go and spend some time with their children in a calm atmosphere while learning to read and write and basic parenting skills. Though I think, such are very worthy efforts, they reach a very small number of people and don’t get to the root cause. The answer need to come in the form of policies that reduce the stress on families and allow for more parental contact during the time the brain is developing. The zeal with which the Conservatives want to punish “free riders” and thus improve our Nation may back fire. It may result in a society with ever increasing dysfunction which hurts them as much as the people they insist on not helping. To succeed in an ever competitive global economy we must deploy the best talent we can and not allow a significant segment to fail because of improper development. I can’t imagine a two year old being branded a worthless “free rider”, even by the staunchest Libertarian.
It would be interesting to compare the level of addiction, ADD and autism in various countries against the policies they deploy affecting early childhood development. All advanced industrialized nations are in essence Free Market Capitalist Welfare States though they vary with the level of “safely net”. The US has one of the lowest and along with the very low minimum wage and strong advantage of business over labor, makes it both easy and necessary for mothers to work. In countries like Germany and Italy with Christian Democratic governments, it is very difficult to fire a worker and minimum wages are high. High minimum wages make it harder to get childcare there than in the US and the increased job security for the man of the house makes it both difficult and less necessary for the mother to work. I am not suggesting that that is what we want to do but only giving an example of policies that may have a positive effect on early childhood development. In the former Soviet Union where everyone worked and there was extensive government supported child care, I suspect, along with the very high rate of alcohol addiction, there probably is also a high rate of ADD and autism, though they may lag substantially in diagnosing these.