Monday, December 19, 2016

Animal Farm, American style

Raise your hand if you read Animal Farm in high school. I did, too. I can recall an assignment in school to read Animal Farm, and that I had the sense that I was being indoctrinated. Animal Farm is a "fairy tale" by George Orwell about how animals on a farm try to improve their lot by giving everyone an equal share of the fruits of their labor. In the book we learn how some of the animals decide that they are privileged above the rest, so they engineer the rules to allocate more of the pie for themselves at the expense of the others. Sounds familiar, huh?

The problem explored in the Animal Farm story is that there is an instant decoupling of income from productivity. The book attempts to point to the form of government as if that is the root cause of the problem. It is not the form of government that is the problem, it is the people that run it and shape it.

It is fine to assign Animal Farm for reading in class as long as teachers are clear on the point. If the point is to say that communism is bad, well, that's indoctrination. If the point is to compare various forms of economies and governments objectively, then that is a fair goal, as long as we're clear.

In my high school the teachers pointed at communism as the problem. Yet the same thing that happens in Animal Farm is happening here in America. But this time, we call it "capitalism" and that it's "just how the market works". For the poor and the working poor, they are being paid far less than they need to live, much less than to advance their lives. For the wealthy, they are being paid far more than is possible for a human to produce. Both impose a tax on the rest of us.

Economist Dean Baker has documented the decoupling of income from productivity very well from a historical and economic perspective. In his 2007 report, The Productivity to Paycheck Gap: What the Data Show, we see that since about 1973, there has been a growing and now yawning gap between what is produced and what is paid. That gap is the cause of what we now know as the near complete collapse of the economy in 2008. In 2008, we saw that the gap between what people are paid and what they produce was no longer sustainable. I think that on an intuitive level, people were beginning to feel that they could no longer support an economy that failed to meet their needs. Isn't it interesting that Dean Baker was one of the few economists who told us in 2004 about the collapse of the housing bubble before it happened?

That same collapse gave rise to Occupy Wall Street and numerous other groups calling out the wealthy for writing rules for the economy that favored themselves above everyone else. It was the 1% vs the 99%. Isn't it interesting that economic collapse can almost always be traced to self-dealing by the wealthy? When called upon this problem, the wealthy say that they are being paid what the market will bear. But who decides what the market will bear? How the market functions is determined by public policy.

Notice that in much of the mainstream media reporting of the events leading up to and after the collapse of the housing bubble, there was something missing from the news. Most reporting of the collapse of the housing bubble was about bad actors in the economy. Hillary Clinton and many others said that people should not buy houses they could not afford. Some said that the banks should not have made loans to people who could not afford them. Very few discussed public policy as the cause of the housing bubble and its collapse, and nobody touched the story of who was writing that same public policy.

We now know who was writing public policy for the rest of us. The 1%. How do we know this? Because we can now measure the influence of different groups and individuals upon the government and the laws passed by the government. From the study, Testing Theories of American Politics:Elites, Interest Groups, and AverageCitizens:
Each of four theoretical traditions in the study of American politics—which can be characterized as theories of Majoritarian Electoral Democracy, Economic-Elite Domination, and two types of interest-group pluralism, Majoritarian Pluralism and Biased Pluralism—offers different predictions about which sets of actors have how much influence over public policy: average citizens; economic elites; and organized interest groups, mass-based or business-oriented. 
A great deal of empirical research speaks to the policy influence of one or another set of actors, but until recently it has not been possible to test these contrasting theoretical predictions against each other within a single statistical model. We report on an effort to do so, using a unique data set that includes measures of the key variables for 1,779 policy issues. 
Multivariate analysis indicates that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence. The results provide substantial support for theories of Economic-Elite Domination and for theories of Biased Pluralism, but not for theories of Majoritarian Electoral Democracy or Majoritarian Pluralism. (emphasis mine)
Economic elites and organized business groups have influence, huh? I think they were talking about groups like the Chamber of Commerce, a great champion of business interests if I ever saw one. So the wealthy have the cohesion to join associations of businesses, you know, like unions. They also like to sit on the boards of directors of multiple companies in what are known as interlocking directorates. There, they have friends on the board of directors at the largest companies in the world. If a member of one board of directors sits on the board of directors of another competing company, it would seem reasonable to say that those two companies are colluding, wouldn't it?

Did you know that CEO pay is largely a matter between friends? Dean Baker does. If the wealthy can determine their own pay, then they can determine the pay of everyone else, too. This is how they all work together to ensure that the greatest share of income from the companies they control goes to them, not to the people who create the value in the companies: the front line workers. The people who create that value do not receive the full value of their work from the people who pay them because they have no say in how the market works. Sure, they could protest, but by then, it's too late.

Here's the kicker. Both the wealthy and the poor were raised on the reward and punishment pedagogy of American culture. The same culture that tells us we build character from work is the same culture that refuses to pay workers a living wage for the value they create. The same culture that tells us that our value is what we produce isn't willing to admit that we produce much more than what we are paid. At the same time, the top 1% is being paid far more than what they produce. An economic collapse is a symptom of when the wealthy are being paid far more than they produce and are unwilling to let the market determine their compensation.

Once the top 1% figured out how to decouple income from productivity with exclusive influence on public policy, it's party time, right? So they used their money to buy public policy that keeps the gravy train going and it's not going to stop anytime soon. They just love that reward and they are not going to give it up without a fight.

Self-dealing at the top is why we need people like Bernie Sanders, Zephyr Teachout and Tulsi Gabbard in Congress and as president. Corruption in government is why Larry Lessig created mayday.us, a superPAC to end all superPACs and to promote anti-corruption laws with teeth. Corporate corruption is why Dean Baker calls for better corporate governance with his Director Watch blog. They are some of the few who are willing to call out self-dealing in the economy.

Self-dealing is not "evil". I don't believe in evil as it is a religious concept, the term "evil" was conceived as an attempt to assign a supernatural cause to unexplained phenomena. Men created gods to explain what they did not understand. All human behavior can be explained by science and so far, I have not seen an exception. While getting involved in politics provides a good short term and long term solution for change, real change starts with our children.

Real change starts when we remove ourselves from reward and punishment and see challenging behavior as the signal not the problem. From self-dealing to racism, bad behavior is a signal for a problem that has not been solved yet. Here, I'm promoting a holistic approach to human suffering. In addition to getting involved in politics, we need to get involved with our kids and collaborate with them to solve the problems that give rise to challenging behavior that they might otherwise continue as adults.

That's why I'm promoting the book, Raising Human Beings, by Dr. Ross W. Greene. He has created a framework for dealing with challenging behavior in children that will, in my opinion, reduce bad behavior in adults. He calls it, "Collaborative and Proactive Solutions", a framework for raising kids that is non-judgmental, non-confrontational, that helps us to solve the problems that give rise to challenging behavior. Using this framework in schools, detention facilities and in the home could foment a peaceful revolution that could help to change how we look at bad actors, and reduce their influence in the world.

Instead of focusing on the challenging behavior and how to punish it, we could focus on the solutions to the problems that give rise to it - from the school room to the board room to Congress. I believe that framework for looking at human behavior  is the turning point in human evolution, to change humanity for the better.
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