Monday, November 29, 2004
The ownership economy
I may be shunned by the economics profession for saying this but I am a closet Marxist. The academic economics profession in the US has been the only humanities/social science department to have effectively exiled their Marxists to peripheral schools. What is under appreciated, is that they have done so after adopting and fully internalizing what is in my opinion, Marx’s most important contribution, dialectical materialism.
Though Marx is often associated with notions of communist ideology, the ideological aspect of Marxism was introduced by his followers such as Gramsci, decades after Marx’s death. Marx himself, at least in his more academic and less rhetorical writing, was a strong believer that material factors – tangible things such as amount of labor or capital – determined the shape of the economy. This materialist approach is central to the mindset economists have today.
One other point of agreement between Marx and modern economists that Martin Carnoy likes to point out is that capitalism is the best system at wealth creation known to man. The crux of Marx’s argument against capitalism is not that communism would provide more wealth, only that capitalism distributes wealth unfairly. Capitalism concentrates wealth in the hands of the capitalists.
The question I always had, then, is why can’t everybody be a capitalist?
I was reminded of all this by the recent rhetoric of the Bush campaign, and his vision of an ownership economy. Bush wants to create programs that allow all Americans to have greater ownership of their homes, their healthcare savings and their retirement savings, i.e. their capital. I would argue that this is a Marxist idea.
One simple point that is taken for granted by economists and their models of the economy but is easily forgotten or ignored by everyone else is that corporations are owned by people. People seem to have a visceral distrust of corporate profits. However, corporate profits eventually go to the owners of the corporation, i.e. the shareholders, or as Marx would call them, the capitalists.
In America today, over 50% of Americans own stocks. That makes them capitalists. I see no reason why this number can’t increase. Admittedly, Marx and many others would point out that ownership of capital is very unequally distributed, and that most of these are petty bourgeois at best, fooled into thinking they have power, but just as oppressed as the rest.
Yet that could change as well. The main reason Marx’s predictions did not come to pass—he expected England to be the first communist country—is that workers started acquiring skills and education, i.e. human capital, that allowed them to start demanding higher wages. Though estimates of human capital are imprecise at best, many estimate that one third or more of any nation’s assets are in the heads of its people. Marx’s original theory was not wrong, only blind to technological developments.
By improving education, and transferring ownership of assets from the government to the people, we potentially move toward a society where everyone’s a capitalist and everyone’s equal.
I further want to disabuse people of the notion that capitalism requires inequality in order to produce incentives. Untrue. Capitalism requires only the possibility of inequality. In a society where capital is evenly distributed and everyone works equally hard, there is no economic reason why capitalism would not produce an equal society.
John Locke and the founding fathers held the belief that ownership of property was an essential component of citizenship. I am inclined to agree.
Thursday, November 18, 2004
In today's Nytimes:
"Am I the only person in the entire United States of America who likes both George W. Bush and John Kerry, who believes they're both good people, who believes they both love our country and they just see the world differently?''
Wow, Clinton stealing a line I wrote almost word for word. Scary.
Saturday, November 13, 2004
So, now I may predictions for the next four years. People tend to see the war in Iraq too simplistically. Because victory was not easy, now they assume it is unwinnable. My feeling is that the truth is in the middle. Yes, post-war Iraq has been a mess, but it is not unwinnable.
My prediction is that Iraq will resolve much nicer than expected, the elections in January will be the beginning of stability, and while a shining example of democracy will not arise, something resembling democracy will take hold, providing a shred of hope in the middle east.
This will be strengthened by the Israel-Palestine conflict. The choice of Palestinian succession will be easier than expected, and the new leader will help take the first steps that finally resolves the generations long conflict.
These two successes will leave Bush’s legacy in the middle something that will be remembered in the history books.
Sunday, November 07, 2004
"he developed a love for all things American when tanks rolled into Paris and G.I.'s rained chocolate and chewing gum on children like himself."
I always loved that image. In one of Stephenson's books (i think), an old Japanese executive is deeply loyal to the US, because as a child during WWII, after being told of the monstrosities he is told to expect, his first encounter with a GI is with a chocalate bar. The other similar image is the end of Life is Beautiful (one of my favorite movies), as the boy with such a beaming smile is pulled up onto the tank...
I suppose it was fantasies about this image that led to misexpectations in Iraq, but it is a nice image nevertheless.
Wednesday, November 03, 2004
(For the record, I called Bush's victory over a year ago. I thought I had put in on my website somewhere, but appraently I forgot. The economy would recover, Iraq would be indeterminate and Bush would win. Not that this means anything.)
Why Democracy Sucks.
In just three days, Americans, at least half of them anyway, are going to exercise their inalienable right to vote, so I thought I would take this time to assert that Americans are too stupid to decide who gets to be president. Actually, not so much stupid as ignorant. I freely place myself in that category.
The useless presidential debates consisted of two politicians repeating oft-heard sound bites, containing little substance. But who can blame them. My friends watching were mostly commenting about facial tics, vocal inflection, and accidental misspeaks. No one cared about policy questions or substantive issues. Who could be bothered?
I was further disheartened listening to NPR’s coverage of California’s ballot propositions. I was horrified by how ill-informed the experts were, much more so the callers, and could only assume the listeners were worse. As for the vast majority of voters who don’t even pay this much attention, I shudder.
I find it disturbing how people who devote just a few minutes of their days to these issues feel qualified to second-guess policy makers who devote their lives. This is exacerbated by campaigns such as Rock the Vote which encourage the attitude that your opinion, no matter how uninformed, should count.
Two weeks ago, Jon Stewart self-righteously showed up on CNN’s Crossfire, lambasting the show’s hosts for reducing complicated issues to partisan spin. Yet CNN, like Stewart, is merely providing what viewers want. No one watches PBS’s News Hour.
Yet I believe the people too are blameless. I used to think education was the answer to all of today’s pressing problems. Like Bush, the answer I used to have for poverty, inequality, affirmative action, democracy, etc., was better education.
Recently, somebody asked me which candidate I favored. I equivocated because incredible as it may seem, I honestly like both. Yet she pressed: if the election were a tie how would I vote? I admitted I don’t know. I am not nearly qualified to make such a decision. I—product of arguably the best education in the world—was insufficiently informed to answer.
The dirty little secret of rational choice political theory is that it is basically irrational for people to vote. The chance of one vote affecting the outcome of an election is so miniscule that it makes no sense for people to bother, much less expend the effort to properly learn the issues to make an educated decision. We’ve known this since Plato.
Philosopher John Dewey had a beautiful thought though. He argued that since musicians and poets can convey incredibly complex ideas to a broad audience, social scientists would one day learn to convey complex policy questions in a way that could be broadly understood. However, unless the Daily Show is the beginning of a revolution in social science communication (just crazy enough to be true), we are a long ways off.
So do I have a solution? Well no, though I’d first abolish the Californian proposition system, pernicious legacy of the progressive movement. However, I might argue that maybe the spittle and facial tics during the debate really matter. Maybe since voters are ill-equipped to judge the policies of the candidates, the best they can do is to assess their character.
Better still, I propose a radical new system of elections with a rule that you can only vote for somebody you’ve personally met. Hanging out in Singapore, I was surprised to find that despite the essential absence of political competition, Singapore seems reasonably well governed. The secret, a senior minister told me, is that members of parliament are able to meet their constituents personally. He holds open houses every Wednesday, and spends one day every weekend going door to door.
The personal contact rule takes advantage of the millions of years of evolution that have left humans with social and cognitive tools extremely well adapted to interpersonal interactions. Judgments are aided by networks of social connections. Candidates should be friends or friends of friends. Bad candidates are quickly identified and removed from office. Then, the candidates, one for each community, collectively choose a new executive. Essentially, the electoral college as originally envisioned.
Of course this system has many problems and is mostly just a pipe dream. But it’s a thought.
Not that it even matters. Psychologists know well that we attribute too much credit to the person, and not enough to the situation. The character traits of the person in office matters a lot less than we think. In a recent cross country analysis, two economists, Jones and Olken, find that the policies of democratically elected leaders have no detectable impact on economic growth. Incidentally, they do find that the policies of autocratic leaders significantly retard development.
Monday, November 01, 2004
The old posts can still be found at http://www.benho.org/memes.html