Monday, August 27, 2012

Invisible Hands


            Adam Smith first linked to markets the idea of the invisible hand in his work The Wealth of Nations which came out in 1776, the year 13 American colonies declared independence. He had introduced the concept in an earlier work The Theory of Moral Sentiments (1759), but markets and capitalism had not been discussed in the earlier work. The idea, which has renewed currency today, is that in a free market greater good is achieved by free exchange of goods and services because prices are driven lower by competition and products are improved in the process. Therefore, society as a whole benefits from the pursuit of selfish interests by individuals.
            What Adam Smith never dreamed of was that competition would become something to be eliminated. Increasing market share by any means would undermine competition. By the early twentieth century John D. Rockefeller, Chairman of Standard Oil, is accused of saying: “Competition is a sin.”
            Furthermore, the sophistication of finance and advertising in addition to the development of large scale industry would reduce competition considerably. Corporations on a large scale, especially multi-national ones, would shed all pretense of competition and strive to command a market share so significant that their annual budgets would rival those of many noteworthy countries. Today, these gigantic corporations have a life of their own and declare allegiance to the country with the lowest taxes.
            Finally, these huge corporate entities have been blessed with "personhood" and subsequently given their own veil of secrecy in the form of a Citizens United ruling by the U.S. Supreme Court. This ruling gives them the capacity to spend their astronomical resources on disinformation campaigns against American political candidates they dislike and for candidates they support without ever disclosing who they are. It is, in effect, another invisible hand, not one intended by Adam Smith.
            The election of 2012 is in danger of being decided by the latter invisible hand in honor of the preservation of the first. The second hand serves the trickle-down notion of the greater good by funding candidates that favor laissez-faire capitalism and therefore believe in the first invisible hand. What a neat trick. I can hear it now: the sound of two invisible hands clapping across two centuries. I guess Machiavelli would approve, but would Adam Smith?

Saturday, August 18, 2012

Nooks and Crannies



            Thomas’s English muffins were on sale at Safeway today, so I bought a couple of boxes. As I stood at the kitchen counter to pry open a fresh muffin with a fork, I thought of the ad the company uses to promote its muffins: nooks and crannies. In actuality the nooks and crannies are the bubbles that get baked into the muffins. In other words, they are empty space, not product. And yet the company has convinced us that these nooks and crannies are good somehow. They hold more jelly or peanut butter than denser muffins because of the nooks and crannies. You, the consumer, of course, fill in the gaps, cover the spread. 
            I actually prefer Bay’s muffins, which are easier to pry apart, denser, and tastier than Thomas’s, but I have nooks and crannies imbedded in my psyche thanks to the conditioning I received long ago by vigorous advertizing, and I occasionally buy the less satisfying muffins out of a latent Pavlovian response to slogans and discounts. 
            Nooks and crannies remind me of the Tea Party and the political reforms it is trying to “serve” or less euphemistically “shove down our throats.” When I think of muffins I think of crackers as well, and both can accompany the serving of tea. And when I think of crackers I imagine “southern crackers,” a major component of Tea Party membership. 
            The economic theory that the Tea Party folks hold very dear starts out looking like a Thomas’s English muffin. It not only has nooks and crannies, it has rather large craters into which the country could fall and then spend years struggling to escape. It’s amazing what a lot of hot air can do to a muffin and an economy. The Tea Party’s whole notion is based on trickle-down economic theory. It goes like this: if we lower even more the taxes on the rich, and cut services to the poor, the middle class will thrive.
            Whoever Mr. Thomas was, at least his muffin generally holds together in spite of the typical minefield of nooks and crannies. But even Rube Goldberg couldn’t come up with a contraption let alone a muffin that represents the Tea Party trickle-down theory. The nooks and crannies have been replaced by rifts and faults.
            One fault in Tea Party logic is the fact that corporations have been shipping jobs out of the country for decades. The so-called trickle of job creation has been piped overseas. Before we build a pipeline to bring crude oil from Canada to refineries in the South, we need to shut down the pipelines that send jobs abroad.   
            Another fault is the fact that the national debt will not be reduced without both cuts in spending and increased taxes. No neutral assessment says it can be reduced simply by cuts or taxes. And yet the Tea Party insists on a one-sided solution or half a muffin.
            The Tea Party is a posse of supply-siders. They look at the economy from the top down. Somehow they think gravity will cause the trickle downward. Unfortunately they have their heads in the clouds where their funders fly their private jets. They cannot see that the current ground in the U.S. is a desert in many places. Rain may fall from clouds over a desert, but it seldom hits the ground. The clouds are too high-based and the water evaporates long before it can reach the earth. That’s what happens when the rich become so rich they are miles above the hoi polloi and lose contact with the reality of common folks.
            A Grand Canyon of an illusion in the Tea Party theory is that somehow by privatizing public works such as education, health care, and social security, and putting them in the hands of for-profit companies that will compete, somehow their competition will bring down cost. To see so-called competition at work, one needs only to look at the for-profit segment of higher education already in place and the debt with which it has saddled countless struggling upwardly striving young people. These ambitious students are modern day wannabe Horatio Alger stories waiting to succeed, only to have their dreams deferred or even destroyed by overwhelming debt. Corporate colleges are geared to make profits first, and to make short-term profits even sooner.There are many of these "competing" institutions. Just as the sub-prime mortgage vendors duped unsuspecting clients into buying houses they could not afford, so do for-profit colleges dupe their clients into taking out college loans they will spend the rest of their lives paying off. Clearly, privatizing is not the answer. 
            Finally, the Tea Party philosophy is all faith based. It places blind faith in markets as a panacea; it places faith in religions generally run by men to dictate to women how they should live their lives; it places faith in the principle that “that which governs best governs least” unless it has to do with social issues. In other words, it is rather unevenly applied (lots of nooks and crannies) and it wants to cut government spending except for defense, which it insists on increasing to feed the ever cavernous yap of the military-industrial complex.
            America has tried supply-side economics for the last three decades. It has reduced taxes on the rich, and yet the poor are getting poorer and those in the middle class are about to qualify as an endangered species. There are simply too many gaps, canyons, rifts, faults, nooks and crannies in that tired, worn-out theory. It’s time to throw the Tea Party itself overboard and get on with solving America’s problems. The Romney-Ryan ticket is a one way trip in the wrong direction. Romney and Ryan are serving the same old supply-side stale muffin that will surely crumble, it has so many holes in it. Nooks and crannies, indeed.

Tuesday, August 7, 2012

Up on the Rooftop




Up on the rooftop Seamus paws,
On goes St. Mitt to his own applause,
Down through the years with lots of ploy,
All for the Presidency
Boy O Boy.
Chorus:
Ho, Ho, Ho!
Who’ll ever know!
Ho, Ho, Ho!
Who’ll ever know!
Up on the rooftop
Click, click, click
Down through the years with
Good Saint Mitt.

First Bain Capital, what a trip:
Fills dear Mittens’ money clip;
Off shore deposits, Cayman and Swiss,
Export jobs, he just can’t miss.
Repeat Chorus

Next the governor, what a ride:
Socialized Medicine done with pride;
Now Mitt’s denying it can work for all,
Its clone Obamacare he’ll recall.

Repeat Chorus
Good St. Mitt’s an L. D. Saint
But true to church he really ain’t,
Gambling’s not good Mormon fun,  
Mitt takes dough from Adelson.

Repeat Chorus
Good St. Mitt is a slippery guy
One who easily tells a lie;
Then goes on to deny and deny,
Enough to make pooch Seamus cry.
Repeat Chorus