I've been reading about economics a bit - the history, the various schools of thought, etc. One thing is clear - it is pretty complicated. AND - it is hardly a science. I see the beginnings of something like a science - ideas tested with actual experiments. But right now, it is mostly a war of words and opinions - a lot like religion! People get religious about their economic solutions, and there is no way to have a rational discussion about it all.
I happened to read two articles about minimum wage which gave me the classic juxtaposition between opposing views. The first one is by Henry Blodgett, and you can find it here:
http://www.businessinsider.com/how-to-fix-the-economy-in-one-simple-chart-2012-8
Mr. Blodgett is a former investment analyst. He is more a journalist than an economist, but he writes fairly knowledgeably about economics and investments.
Share the Wealth to Generate Consumers
His idea is pretty simple. Our economy is primarily a consumer one - that means people buy things they really do not need. And they don't do that if they don't feel they have adequate wealth. Of late, the real incomes of the middle class and lower have been declining. But the wealth retained by corporations is growing rapidly. Companies are making money, storing up profits, and the workers are not. He sees the problem with a simple solution - with a lot of charts to back him up. Corporations should pay more, and have less profit. He says Henry Ford understood that. He paid this workers enough that they could buy one of the cars they were making. He did not have to do that - there was not much competition for that work force - but he did. It was his investment in the rest of us. He made a bit less profit on each car, but the economy boomed.
The problem here is, how does this come to pass? He closes the article on a wish and a prayer, as it were, with a call for companies to pay more. But there are powerful incentives in our system for a company to make as much profit as possible - and no incentive to pay their employees a living wage. It is like the environment. How do we get one paper mill on the Charles River to stop polluting, if that is going to cost that firm more money? The others will compete on price and drive them out of business. The only way to do that is to mandate environmental protections, so that they all have an equal requirement.
How does one encourage employers to pay a living wage? Raise the minimum wage laws? Establish some legal guideline for the worth of positions based on their complexity or training, or productivity? It sounds like a good idea, but tough to make it happen! We have tremendous wealth in this country. Companies like Apple are sitting on hordes of cash - not investing it because of uncertainties. How do we encourage them to invest in the rest of us? Apple doesn't need to encourage more buyers - they can sell all the gadgets they make at huge markups.
Minimum Wage a Bad Idea?
On the other side of this, I also read an article by the Mises Institute on how ridiculous it is to think that we can mandate a minimum wage, or adjust wages in any other way than by the free market. The article is here: http://mises.org/daily/6121/The-Effect-of-WageRate-Interventions.
They publish a kind of ongoing course in the Austrian School of Economics. If you are not familiar with this school of economics, they are pretty much absolute libertarians. Let the market do its work, with the minimum possible human intervention. Ron Paul is a proponent of this school, and most Republicans give it some form of lip service. It is as though God created the free market and we should not meddle with it.
This article argues that it is impossible to legislate wage rates. The market determines wage rates - what people are willing to pay for a good or service, and what wages people are willing to work to obtain. If you get into this mode of thinking, it is pretty seductive. People will eventually figure out what something is worth. If we intervene with legislation we just mess up the efficient working of the market.
There are a few problems with that approach. There never has been a free market. We have managed and regulated markets since the King established the East Indian Trading Company to get some income from all of that trade. And trade groups and industries have been "fixing" prices and wages for centuries. That is why we have things called "anti-trust" laws and labor laws. They have been somewhat neglected in the recent decades, but they clearly had a salutary effect on the market.
Libertarians seem to think that we are all in this together in a communitarian kind of way, and the best outcome will automatically occur if each person selfishly pursues their own personal good. But that really doesn't work! Those folks have lived in these northern climes way too long. In most of the world, everyone is out to get some of yours, not to help you. Northern climates have a bit more of a common goal focus - but it is not universal by any means.
Make the Market Rational
Humans are intelligent. We are not blind adherents to any law of economics. We do not need to descend to the lowest common denominator. We can exercise intelligent control over some portions of our competition for goods and services. We have eliminated child labor and slavery for the most part, which were extremely efficient market mechanisms for producing goods at low cost. We should also establish a livable minimum wage. We will all pay for it, just as we are all paying for the lack of those cheap child laborers. But the price is worth it. If someone is working a 40 hour week, they should make enough to live on - period.
Jobs Disappearing
As our levels of automation increase, it is also highly likely that the actual number of jobs will eventually decline. When all garment manufacturing is being done by that completely automated factory next to the cotton field, what becomes of those entry level jobs? We still generate the wealth, but how do we share it with the general populace so that they can actually BUY the things they produce?
We could, of course, shift gears entirely and tax ourselves to pay people to do really USEFUL things for us - not just to create gadgets and trinkets. That sounds like a wonderful idea - and the Scandinavians might be able to pull if off. They do seem to think that we are all in this together - thank you Red Green.
Monday, June 3, 2013
Face to Face Democracy
This is an old document (1996) that has been on my web site for some time. BUT - I am dismantling the website - so I thought I would post it here for posterity, or some such. We invented this thing called democracy - and it sucks, to put it mildly. It's time we fixed it.
The Current State of Affairs
The current form of government utilized in these United States and most parts of the world is a model drawn on the landed aristocracy of the early American Colonies, and the British experience with landed gentry. Ladies and gentlemen, times have changed.
The current system has some serious drawbacks. To enumerate a few:
1. Elected officials, pejoratively labeled as politicians, spend an inordinate amount of time and money and energy trying to get elected and stay elected, so that they can accomplish something. Running for a congressional seat every two years is tremendously distracting from the job at hand.
2. The popular vote is popular, but it is not very well informed. Most people have very little time and energy for government and politics. The net is some horrendous results of popular elections. In my own town, we had a candidate come within 16 votes of a city council seat, although she had moved out of the city and ceased being a legal candidate several months before the election. She was on the ballot, and she had an obviously female name in a crowd of male candidates. No one with any idea of the issues and candidates would possibly have voted for her -- yet half of the electorate did. People vote at the polls based on names -- a scary idea at best.
Another candidate at the state level won her party's primary for attorney general, although she was not an attorney and completely unqualified for the position. Her own party disowned her candidacy. At the state level, she garnered over 30% of the vote based on a female, Scandinavian sounding name!
3. We have had elected officials in major state offices, that were not well mentally. They sounded OK for a few minutes of door to door conversation, but any prolonged discussion with them always went off into never / never land. Anyone that met them, or read any serious commentary about them would have known in five minutes that you could barely trust them to find their way home, let alone run state government.
4. Sound bytes and simple slogans are what sell. We have not had a simple issue in government since the revolution. When I was running for local office, people would regularly want a 30 second description of my position on a controversial topic -- they were never happy when I said it was not quite that simple! This is not the way to get elected.
5. Our major parties are at war -- not at government. In order to get elected, they characterize each other as the enemy, the forces of evil, the beast to be defeated. In fact, often enough they both have decent ideas, which they should talk about and negotiate over. If they felt free to negotiate, to spend time to come up with a creative alternative that would solve our problems, we would be much better served. In place of creative thinking, we have warfare. They can't even talk to each other lest it be seen as caving in. They can't express understanding and concern for the other view, lest they be seen as wishy-washy, waffling, not strong. In our state government, they do not even SIT next to each other! Give me a break.
This is nonsense. We aren't asking them to arm wrestle over issues -- we're asking them to come up with some very creative answers to some very difficult questions. Today it is winner take all, and kill the loser. We all need to live here together, and we will never all agree. Let's move to something that's closer to similar instead of drawing everything as black and white.
6. Voters are NOT rational. The book, Thinking Fast and Slow describes an experiment, where subjects are shown pictures of the candidates for actual political offices, and asked to name the winner. They are 70% accurate just by looking at the picture. What wins? A square jaw and confident smile. Pardon me, but this is NUTS!
We can probably list another 20 things broken with the system -- how on earth does one fix it?
What Can We Do?
First of all, there's no natural law of democracy. We made this up, it's trial and error. We should try to improve it, not just put up with it. We, the people, are in charge of this system. Let's 'fess up that it is broken, and let's fix it.
While it is essential to democracy that the electorate know and feel that they have a say in their government, this participation does not have to be structured as it is now. Today most officials are directly elected by popular vote. We have abandoned this model for many of our courts, and for most of our professional government service staff. We recognize that we simply could not survive if those people were amateurs and subject to change every 2 years.
Why not move to an indirect democracy? We could lay down some simple principles, and try a number of pilots at city, county and state legislative levels and find a practical mix that works. Here are a few basics to my mind:
Executive Officers Directly Elected - NOT!
I originally thought we could continue to elect the chief executive officer directly, as in the president, governor, and mayor. But in light of our recent history and the current occupant of the oval office, that does not look like a great idea. The same problems as cited above can easily give us a dundering idiot for our fearless leader. We need some other way to encourage a true leader to step forward and be recognized. The Prime Minister, Parliamentary model has some potential. The idea of electing electors - the original US model for naming the President - looks to be as good as any. At a minimum, we get one more level where an independent decision by a thoughtful group might result.
The other alternative would be to make it much easier to remove a leader, given a majority of elected officials agree. Our current impeachment process at the federal level is less than clear.
Given most of our government structures, it's not too dangerous if we get a marginal person in here on occasion. The legislative branch can remove them, and they generally need cooperation from the legislative to make any significant change. But the leadership role is significant. They are our royalty, our rallying point, our spokesperson.
I'd like to remove the partisan politics from this over time, but I don't see a good way to do that now. If we fix the legislative one, perhaps this will follow.
Legislative elected through Electoral Panels
For the legislative branch, adopt the following principles:
1. Maintain the basic structure of city council, county board, state legislature, U.S. Congress. I don't have an opinion about bicameral or not -- I tend to think it is a waste of time and energy at the state level, but it offers some safeguards at the national level.
2. Establish intermediary bodies from the local neighborhood up to the congressional district whose sole purpose is to discuss, advise, and elect the people at the next level up. Make the groups such that people only vote for someone that they actually know. This implies that the electoral body for any given person has to be fairly small. I think 30 would work -- I'm sure 500 would not. They should be able to regularly get together in a room and discuss things. I would like to see the elected official able to poll this group on their opinion, and argue and discuss differences with them. This also implies that the elected person from any electoral body has to originally be from that body. I say originally, because we need to keep them insulated from lower layers -- see below.
We would have neighborhood precincts (a bit smaller than today, I think, but perhaps not), that would each elect one candidate for the next level electorate. Depending on the size of the city, these people would elect the council, or they would elect another body one level up in large cities. This might be a few levels in really large cities, but that's their problem. Most of us know our mayor on sight and can talk to that person if we want to. Let them divide the cities up if they're unworkable. In fact, at a small group size of 100, and a city of 1 million would have 10,000 primary groups or neighborhoods that would elect 100 "electors". For a city of 6 million, they would end up with 600 electors, and that would call for another, intermediate electoral body.
At the county level, the same groups that elect the city legislators elect another electoral panel or panels that name the county representatives. With primary groups sized at 100, up to 50 million voters can be represented by no more than 3 layers of "electors". Counties and cities are the worst problems, given their variable size.
A third group of electoral panels names the state legislators. A fourth group is responsible for the congressional district. These districts tend to be a standard size, and may continue to cut across cities and counties. This electoral panel is only one layer deep -- the neighborhoods and the electors, even for U.S. Congress.
It's possible for an elector to be named to more than one of these trees, but that may generate serious problems with participation at the next level up. I'd start these off disallowing participation in more than one. That would also allow up to 4 members of every group of 100 at the neighborhood level to serve on an electoral panel up one layer -- giving most people with an interest the ability to represent their neighborhood. In my experience, a normal precinct generates 25 active caucus participants in most election years!
3. When someone from an electoral panel is elected to go higher, they are replaced by a new election at their neighborhood. They are no longer their neighborhood's representative, but the representative of the electoral panel that named them. You might think it would make sense to have them all participate at 2 levels. It would cut down on the need for formal communications. But some members are clearly going to be members at 2 or 3 levels, and they cannot function as members of that many groups.
4. Set normal terms at the 4 year level, staggered every year for different layers and the city, county, state, and U.S., so that only a quarter of an electoral panel could be replaced every year. That would keep some continuity and guarantee some independence.
5. In place of term limits, authorize the electoral body for each person to be able to recall that person at any time by a formal recall vote of a very large majority of the group -- perhaps three fourths, naming a replacement from their membership. This would keep each level responsible to their electoral body.
The actual elected legislator can only be recalled by the group that elected that person.
Potential Benefits
What might this accomplish? A number of hopeful things:
Regular political discussions or town meetings should flourish. Everyone would have an opportunity, probably once a month, to get together with the representative they elected to the panel or to the actual legislature to discuss issues, ideas, concerns.
Thoughtful decision-making is possible. The legislators could actually talk with their electoral panel. They might explore difficult issues, explain complex matters, ask for a show of hands or an e-mail vote from their constituents. I would be disappointed if they simply acted on the basis of that vote -- I would prefer that they use their good judgment and act independently of the group.
No election campaigns. If you regularly meet with 100 folks, or the 25 who show up, your major problem in getting elected at the grass roots level would be to generate interest in those who do not normally attend the meetings! This would be good, not bad, and you should be able to bear an expense like that with minimal fund raising.
Political parties might remain. They would still work for the executive branch, and they could rally people around ideas and movements -- but they would have no power to dictate candidates.
Elected officials might work together. They no longer need to play to the masses -- just to the 100 people that they meet with monthly. They might work with their "colleagues" to come up with truly creative ideas to resolve our differences, instead of waging war.
Copyright Carl Scheider, 2013, 2019 - changes to CEO election process.
The Current State of Affairs
The current form of government utilized in these United States and most parts of the world is a model drawn on the landed aristocracy of the early American Colonies, and the British experience with landed gentry. Ladies and gentlemen, times have changed.
The current system has some serious drawbacks. To enumerate a few:
1. Elected officials, pejoratively labeled as politicians, spend an inordinate amount of time and money and energy trying to get elected and stay elected, so that they can accomplish something. Running for a congressional seat every two years is tremendously distracting from the job at hand.
2. The popular vote is popular, but it is not very well informed. Most people have very little time and energy for government and politics. The net is some horrendous results of popular elections. In my own town, we had a candidate come within 16 votes of a city council seat, although she had moved out of the city and ceased being a legal candidate several months before the election. She was on the ballot, and she had an obviously female name in a crowd of male candidates. No one with any idea of the issues and candidates would possibly have voted for her -- yet half of the electorate did. People vote at the polls based on names -- a scary idea at best.
Another candidate at the state level won her party's primary for attorney general, although she was not an attorney and completely unqualified for the position. Her own party disowned her candidacy. At the state level, she garnered over 30% of the vote based on a female, Scandinavian sounding name!
3. We have had elected officials in major state offices, that were not well mentally. They sounded OK for a few minutes of door to door conversation, but any prolonged discussion with them always went off into never / never land. Anyone that met them, or read any serious commentary about them would have known in five minutes that you could barely trust them to find their way home, let alone run state government.
4. Sound bytes and simple slogans are what sell. We have not had a simple issue in government since the revolution. When I was running for local office, people would regularly want a 30 second description of my position on a controversial topic -- they were never happy when I said it was not quite that simple! This is not the way to get elected.
5. Our major parties are at war -- not at government. In order to get elected, they characterize each other as the enemy, the forces of evil, the beast to be defeated. In fact, often enough they both have decent ideas, which they should talk about and negotiate over. If they felt free to negotiate, to spend time to come up with a creative alternative that would solve our problems, we would be much better served. In place of creative thinking, we have warfare. They can't even talk to each other lest it be seen as caving in. They can't express understanding and concern for the other view, lest they be seen as wishy-washy, waffling, not strong. In our state government, they do not even SIT next to each other! Give me a break.
This is nonsense. We aren't asking them to arm wrestle over issues -- we're asking them to come up with some very creative answers to some very difficult questions. Today it is winner take all, and kill the loser. We all need to live here together, and we will never all agree. Let's move to something that's closer to similar instead of drawing everything as black and white.
6. Voters are NOT rational. The book, Thinking Fast and Slow describes an experiment, where subjects are shown pictures of the candidates for actual political offices, and asked to name the winner. They are 70% accurate just by looking at the picture. What wins? A square jaw and confident smile. Pardon me, but this is NUTS!
We can probably list another 20 things broken with the system -- how on earth does one fix it?
What Can We Do?
First of all, there's no natural law of democracy. We made this up, it's trial and error. We should try to improve it, not just put up with it. We, the people, are in charge of this system. Let's 'fess up that it is broken, and let's fix it.
While it is essential to democracy that the electorate know and feel that they have a say in their government, this participation does not have to be structured as it is now. Today most officials are directly elected by popular vote. We have abandoned this model for many of our courts, and for most of our professional government service staff. We recognize that we simply could not survive if those people were amateurs and subject to change every 2 years.
Why not move to an indirect democracy? We could lay down some simple principles, and try a number of pilots at city, county and state legislative levels and find a practical mix that works. Here are a few basics to my mind:
Executive Officers Directly Elected - NOT!
I originally thought we could continue to elect the chief executive officer directly, as in the president, governor, and mayor. But in light of our recent history and the current occupant of the oval office, that does not look like a great idea. The same problems as cited above can easily give us a dundering idiot for our fearless leader. We need some other way to encourage a true leader to step forward and be recognized. The Prime Minister, Parliamentary model has some potential. The idea of electing electors - the original US model for naming the President - looks to be as good as any. At a minimum, we get one more level where an independent decision by a thoughtful group might result.
The other alternative would be to make it much easier to remove a leader, given a majority of elected officials agree. Our current impeachment process at the federal level is less than clear.
Given most of our government structures, it's not too dangerous if we get a marginal person in here on occasion. The legislative branch can remove them, and they generally need cooperation from the legislative to make any significant change. But the leadership role is significant. They are our royalty, our rallying point, our spokesperson.
I'd like to remove the partisan politics from this over time, but I don't see a good way to do that now. If we fix the legislative one, perhaps this will follow.
Legislative elected through Electoral Panels
For the legislative branch, adopt the following principles:
1. Maintain the basic structure of city council, county board, state legislature, U.S. Congress. I don't have an opinion about bicameral or not -- I tend to think it is a waste of time and energy at the state level, but it offers some safeguards at the national level.
2. Establish intermediary bodies from the local neighborhood up to the congressional district whose sole purpose is to discuss, advise, and elect the people at the next level up. Make the groups such that people only vote for someone that they actually know. This implies that the electoral body for any given person has to be fairly small. I think 30 would work -- I'm sure 500 would not. They should be able to regularly get together in a room and discuss things. I would like to see the elected official able to poll this group on their opinion, and argue and discuss differences with them. This also implies that the elected person from any electoral body has to originally be from that body. I say originally, because we need to keep them insulated from lower layers -- see below.
We would have neighborhood precincts (a bit smaller than today, I think, but perhaps not), that would each elect one candidate for the next level electorate. Depending on the size of the city, these people would elect the council, or they would elect another body one level up in large cities. This might be a few levels in really large cities, but that's their problem. Most of us know our mayor on sight and can talk to that person if we want to. Let them divide the cities up if they're unworkable. In fact, at a small group size of 100, and a city of 1 million would have 10,000 primary groups or neighborhoods that would elect 100 "electors". For a city of 6 million, they would end up with 600 electors, and that would call for another, intermediate electoral body.
At the county level, the same groups that elect the city legislators elect another electoral panel or panels that name the county representatives. With primary groups sized at 100, up to 50 million voters can be represented by no more than 3 layers of "electors". Counties and cities are the worst problems, given their variable size.
A third group of electoral panels names the state legislators. A fourth group is responsible for the congressional district. These districts tend to be a standard size, and may continue to cut across cities and counties. This electoral panel is only one layer deep -- the neighborhoods and the electors, even for U.S. Congress.
It's possible for an elector to be named to more than one of these trees, but that may generate serious problems with participation at the next level up. I'd start these off disallowing participation in more than one. That would also allow up to 4 members of every group of 100 at the neighborhood level to serve on an electoral panel up one layer -- giving most people with an interest the ability to represent their neighborhood. In my experience, a normal precinct generates 25 active caucus participants in most election years!
3. When someone from an electoral panel is elected to go higher, they are replaced by a new election at their neighborhood. They are no longer their neighborhood's representative, but the representative of the electoral panel that named them. You might think it would make sense to have them all participate at 2 levels. It would cut down on the need for formal communications. But some members are clearly going to be members at 2 or 3 levels, and they cannot function as members of that many groups.
4. Set normal terms at the 4 year level, staggered every year for different layers and the city, county, state, and U.S., so that only a quarter of an electoral panel could be replaced every year. That would keep some continuity and guarantee some independence.
5. In place of term limits, authorize the electoral body for each person to be able to recall that person at any time by a formal recall vote of a very large majority of the group -- perhaps three fourths, naming a replacement from their membership. This would keep each level responsible to their electoral body.
The actual elected legislator can only be recalled by the group that elected that person.
Potential Benefits
What might this accomplish? A number of hopeful things:
Regular political discussions or town meetings should flourish. Everyone would have an opportunity, probably once a month, to get together with the representative they elected to the panel or to the actual legislature to discuss issues, ideas, concerns.
Thoughtful decision-making is possible. The legislators could actually talk with their electoral panel. They might explore difficult issues, explain complex matters, ask for a show of hands or an e-mail vote from their constituents. I would be disappointed if they simply acted on the basis of that vote -- I would prefer that they use their good judgment and act independently of the group.
No election campaigns. If you regularly meet with 100 folks, or the 25 who show up, your major problem in getting elected at the grass roots level would be to generate interest in those who do not normally attend the meetings! This would be good, not bad, and you should be able to bear an expense like that with minimal fund raising.
Political parties might remain. They would still work for the executive branch, and they could rally people around ideas and movements -- but they would have no power to dictate candidates.
Elected officials might work together. They no longer need to play to the masses -- just to the 100 people that they meet with monthly. They might work with their "colleagues" to come up with truly creative ideas to resolve our differences, instead of waging war.
Copyright Carl Scheider, 2013, 2019 - changes to CEO election process.
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