Minimum wage, again Wednesday, Jun 23 2010 

A little less than a year ago, I wrote a rather long post about the minimum wage. I explained the “textbook model” of the minimum wage, which many students just beginning to learn economics are taught. The basic neoclassical model tells us that a minimum wage set above the equilibrium wage in a market creates a surplus of labor or, in other words, unemployment. I disputed some of the assumptions on which such an argument rests, for example, elastic demand for labor, the “one-sector” model, perfectly competitive markets, equal bargaining power, etc. I also looked at empirical evidence that suggests that the minimum wage may in fact be beneficial for employment or, in the very least, may only have a modest employment effect (primarily for teenagers). Finally, I looked at some ideological or pragmatic reasons why people support the minimum wage and why it is more favorable than other redistribution policies (e.g. welfare). Rather quickly, this post became the most looked at article on this blog, and remained that way for quite some time. Today, it remains the second most-read post I’ve written.

Last month, King Banaian, a professor and chairman of the economics department of SCSU, wrote about about a study that concluded people who accept “enlightened economics” are more conservative than they are liberal. These “economically enlightened” folk were required to believe, for example, that a minimum wage necessarily decreases employment. I disputed this type “enlightened thinking.” Dr. Banaian has again made another post about the minimum wage, this time explaining why a minimum wage is bad policy (it prevents people from coming to “mutually agreed” wages below the minimum wage) and how there is a “consensus” among economists about this issue.

In the first post, I responded by saying there is quite a bit of evidence in support of a minimum wage, even if neoclassical theory provide none. One of the most famous example is research done by Card and Krueger, who found that the minimum wage had positive effects on employment. This seems quite stunning, considering the standard neoclassical model predicts just the opposite. So, quite naturally, one becomes rather suspicious of this research, but I think a careful review of the literature will show that the underlying conclusions that Card and Krueger come to are solid and are supported by additional research. Of course, one wonders how increasing wages can, in fact, increase employment levels. It seems counterintuitive. David Switzer, a professor of economics at SCSU, said it “goes against all of neoclassical economic thinking.”

Fortunately, neoclassical economics (as well as a little bit of intuition) does provide us with an answer. It isn’t, after all, beyond one’s imagination that an employer might actually pay its laborers a wage below the market clearing (i.e. equilibrium) wage. A firm seeking to maximize its profits has this incentive if it has the ability to do so. One scenario that might bring this about is one in which the labor market is oligopsonistic. Oligopsony is a fancy word to describe markets where there are few buyers and many sellers. (A related term that is perhaps more familiar is monopsony, where there is only one buyer and many sellers; this is the opposite of monopoly, which is one seller and many buyers.) In the case of oligopsony, the small number of firms can distort the wages in a market (in a similar way a monopoly can distort prices in a market), such that wages can be set below the equilibrium wage. Oligopsonistic labor markets reduce the welfare of laborers and creates deadweight loss. Under such circumstances, raising the wage that employers must pay their labor actually increases employment, reduces deadweight loss, and increases efficiency in the market. (A simplified graphical representation of monopsony can be viewed here.) So, in this case, the minimum wage has some extraordinary benefits.

The question becomes whether particular low-skilled labor markets are oligopsonistic or not. If the New Jersey fast food industry was oligopsonistic in 1992, that might explain Card and Krueger’s findings. However, as Dr. Banaian points out, the research in this area is not robust and is still “very young.” He may well be correct, in which case it would be helpful to look at empirical evidence and other areas that are more thoroughly understood. As I said earlier, a little bit of intuition might be able to help us explain why the effects of minimum wage may not be consistent with the standard model. In a 2008 study, David Metcalf explores why the minimum wage in Britain has “had little or no impact on employment.” Some of these include changes in hours, tax credits, compliance issues (part of the two sector model that Gary Fields discusses in previously noted research), productivity changes, price changes, reduced profits, and so on. He also considers the existence of “modern monopsony” (oligopsony) “very likely” in British labor markets. I defer you to Metclaf’s research for a more thorough discussion on how these variables can effect employment levels following a minimum wage hike. Suffice it to say, how these variable change does have an effect on employment, and may help explain why the minimum wage might have “minor negative effects at worst.”

In fact, that’s what most research has concluded. The conclusion that I support is that the minimum wage has a modest adverse effect on employment, primarily for teenager workers. It may even have positive employment effect for older cohorts, consistent with research by David Neumark and Olena Nizalova. (Neumark, keep in mind, is a fairly notable labor economist who opposes the minimum wage.) I think this is what a majority of the published literature out there reports (I can provide plenty of references, if needed), and the reasons explaining these findings are quite reasonable. That isn’t to say that there is a “consensus” against the minimum wage, as Dr. Banaian contends there is. He thinks I am “wrong on this point in terms of where the profession is on the literature.” A few years ago, The Economist, the main establishment journal, actually printed an interesting story on the issue. They wrote, “Overall, economists have become less worried about the job-destroying effects of a modest hike in the minimum wage. . . . Today’s consensus, insofar as there is one, seems to be that raising minimum wages has minor negative effects at worst.” There’s a wealth of research to support these views, as I stated earlier. What there is not is a consensus against the minimum wage, as Dr. Banaian contends there is.

In defense of his position, Dr. Banaian cites research by Neumark and William Wascher, which stated, in its abstract no less, “Our review indicates that there is a wide range of existing estimates and, accordingly, a lack of consensus about the overall effects on low-wage employment of an increase in the minimum wage.” Even more stunningly, Dr. Banaian readily confessed these facts in a post on his blog post he made in 2006, stating, “Both studies find a lack of consensus on the minimum wage, which I simply find shocking.” He finds the lack of consensus among economists “shocking,” but he at least acknowledges the fact. Today, he has shrunk from the issue and maintains that there, in fact, a consensus. He cites, for example, a 1996 survey by Robert Whaples, which suggested that there is a consensus among labor economists that the minimum wage decreases employment. That’s already been established. What Dr. Banaian conveniently does not do is refer to Whaples’ 2006 survey of PhD economists from the American Economic Association, which found that only less than 47% of them disagreed with a minimum wage policy. Though he readily mentioned it four years ago, perhaps the 2006 Whaples study is too inconvenient for the Minnesota House Representative hopeful in 2010.

The question, then, becomes less about the employment effects of the minimum wage, since there does seem to be some agreement on that issue. As one study by the U.S. Congress revealed, “Historically, defenders of the minimum wage have not disputed the disemployment effects of the minimum wage, but argued that on balance the working poor were better off.” That’s always been at the heart of the issue. Richard Freeman, one of the foremost labor economists and a professor at Harvard, writes in a 1994 study, “The question is not whether the minimum distorts market outcomes, but how its distortionary effects compare with those of other modes of redistribution, or with the benefits of redistribution.” He concludes that the minimum wage is a decent redistribution tool for four primary reasons that are typically ignored in the textbook models. I think his conclusion is consistent with what a majority of Americans believe. An overwhelming majority, usually over 80%, support the minimum wage. People support policies that help those who work (you need to work to earn the minimum wage), compared to those that help non-workers (e.g. welfare). They also are comfortable with redistributing their income via higher prices to help the most disadvantaged of workers. As Gary Fields keenly points out in a 1994 study, “One’s views about the desirability of a minimum wage ought to depend on more than the size of the unemployment effect alone.” I think he’s correct.

First Amendment Forum, again Friday, Apr 16 2010 

Today I was able to attend one of the presentations that was a part of the First Amendment Forum on campus, put together by the SCSU Society of Professional Journalists, the Department of Mass Communications, the St. Cloud Times, and others. The topic of the presentation that I attended was “Protecting Journalism in the Era of Dying Newspapers and Social Networking.” Though the topic was about the death of newspapers and the rise of online content and social networking, most of the panelists discussed how they were using or had used social media to complement their writings as journalists, reporters, or editors. However, once the discussion was opened to those in attendance, the issue of the death of traditional media was brought up.

Namely, the issue of charging for online content was brought up. This issue is the same issue that I had addressed in an earlier blog post and letter to the University Chronicle. I didn’t bring it up, but I believe the person who did was the same person I wrote my post in response to (that is, Kyle Stevens). The person asked the panel what they thought about the media charging for online content.

A salient point that one of the panelists (Ramla Bile) brought up was that charging for the news online introduces some problems in that doing so bars certain people (namely the poor) from accessing the news. Bob Collins, who works for Minnesota Public Radio (MPR), said he really wished the Star Tribune would start charging people to read online content, because he believed doing so would drive more people to MPR. Adam Hammer of the St. Cloud Times likened it to the music industry, and the challenges they faced with the digitization of music and the piracy of said music. He explained how people became accustomed to listening to music through digital media, and it was Apple who recognized this and created iTunes to provide a legal channel through which people could access this digital music.

Of course, there’s the other side of this issue. The content wasn’t produced without a cost. How are the media supposed to make money if they can’t charge people to view their content? Both views are valid. We need to balance the ability to make a profit through producing important news and the necessity of not pricing people out of the market for this important news. In other words, we want people to get paid for doing good journalism, but we don’t want to bar people from accessing this journalism simply because they can’t afford it.

Some people might just respond that if people can’t afford something, they don’t deserve it. If you can’t pay for it, why should I give it to you? The problem with this argument, however, is that important news is not just another commodity to be bought and sold. The news, as I have always said, is a cornerstone of democracy. (In economics, it might be called a public good.) Scholars and political theorists have long recognized that a free and vibrant press is the foundation of civic society and liberal democracy. This is what differentiates online news from, say, online music in Hammer’s example. Music is important, yes, but not necessarily a requisite for a functioning democracy.

The question, thus, becomes whether we want to limit the dispersion of knowledge and important news or if we want to make it as free and vibrant as possible. This is where I disagree with Stevens. He believed we should charge for online content, which would have the effect of pricing people out of the market for important news. As I said, though, we need to consider the fact that the content was not produced for free and there is a certain necessity to generate a revenue to at least cover the costs of making such important news available. The suggestion I made, basing my argument off the work of Robert McChesney and John Nichols in their book The Death and Life of American Journalism, was that there be a public subsidy for independent journalism. Both McChesney and Nichols present several convincing arguments in support of their case. A public subsidy for independent (that is, not corporate) news would solve the aforementioned balancing issue; the cost of producing important news would be paid for, and accessing this content would be kept free, allowing for the greatest number of people to access vital information.

Apathy kills Wednesday, Mar 31 2010 

WikiLeaks has just released a rather disturbing document. The leaked document comes from the CIA, and it details how the manipulation of public opinion should be used to bolster support for our war in Afghanistan. The CIA is apparently concerned with the possibility of a “Dutch-style debate” in other NATO countries, “notably France and Germany.” The Dutch, of course, made news last month after their government collapsed amid debates as to whether the country should keep its troops in Afghanistan or not. The Dutch will pull their troops out by August.

Naturally, the U.S. government is very concerned about this. If a “Dutch-style debate” spreads to other countries, the mission in Afghanistan could be jeopardized. They know this because they know their war in Afghanistan is overwhelmingly opposed by the public. (You can read my post on why I think the Afghanistan War is fundamentally wrong here.) The CIA acknowledges, “Berlin and Paris currently maintain the third and fourth highest ISAF troop levels, despite the opposition of 80 percent of German and French respondents to increased ISAF deployments, according to INR polling in fall 2009.”

I believe this has something to do with one of the conclusions I came to in a post about the way democracy in the United States functions: the public is supposed to be marginalized and its opinion ignored. I don’t pretend this is limited to the United States. The CIA readily admits “French and German leaders” have been able to “disregard popular opposition and steadily increase their troop contributions to the International Security Assistance Force (ISAF).” The CIA notes that Germany and France “have counted on public apathy about Afghanistan to increase their contributions to the mission.” But if a “Dutch-style debate” spreads to these countries, they may not be able to rely on apathy any longer to continue their involvement in Afghanistan. Apathy could quickly “turn into active and politically potent hostility,” and worsening conditions “could become a tipping point in converting passive opposition into active calls for immediate withdrawal.” This is bad news because the CIA fears “politicians elsewhere might cite a precedent for ‘listening to the voters.'” We can’t have politicians listening to voters…

Thus, the report recommends the United States government be involved in a campaign to alter the public’s opinion, or what has been referred to as “the manufacture of consent.” In normal parlance we might refer to this as propaganda. The report mentions, “Western European publics might be better prepared to tolerate a spring and summer of greater military and civilian casualties if they perceive clear connections between outcomes in Afghanistan and their own priorities.” Therefore, there is a need for “A consistent and iterative strategic communication program” that would give “tailored messages” to the public, in order to get them “to support a good and necessary cause despite casualties.” The report suggests the U.S. government “could leverage French (and other European) guilt.” If we monger fear, particularly about “the Taliban rolling back hard-won progress” and “a refugee crisis,” we could “provoke French indignation.”

One of the key resources we have in doing this is President Obama. It’s fairly hard for anyone to ignore how muted the subject of war has become, particularly in left and Democratic circles, after the election of President Obama. Him being a Democrat has helped the hawks in calming the anti-war movement, which has a strong core of Democrats and leftists (though there are also many right-libertarians as well). The CIA recognizes this fact. The CIA is quick to boast about the “confidence of the French and German publics in President Obama’s ability to handle foreign affairs in general and Afghanistan in particular.” They suggest there is a “significant sensitivity to disappointing a president seen as broadly in sync with European concerns.” Therefore, President Obama is a wonderful asset for the U.S. government to sell the war.

If our government being involved in the manipulation of opinion in other countries doesn’t unsettle you in the slightest, perhaps it would be even harder to not be disturbed by how it is actively going after Web sites like WikiLeaks that expose secrets of corrupt governments and corporations. WikiLeaks.org has been described as a “controversial but essential example of what the web does best,” that “takes power away from the powerful and hands it to citizens.” This is precisely what has the U.S. government concerned. Writes The New York Times, “To the list of the enemies threatening the security of the United States, the Pentagon has added WikiLeaks.org, a tiny online source of information and documents that governments and corporations around the world would prefer to keep secret.” This is following WikiLeak’s release of a document prepared by the U.S. Army Counterintelligence Center that discusses how it sees WikiLeaks as being a threat to the national government.

I think little else need be said.

Are most economists against government intervention? Monday, Mar 15 2010 

Do most economists think government being involved in markets is a bad thing? The answer to that probably depends on the market. If markets are efficient, there’s probably no need for government to get involved. If markets are inefficient, there’s probably a good reason for government to interfere to attempt to increase efficiency and so there could be an economic argument in favor of government intervention. So the question now is whether markets are efficient or not.

The reason I bring up the topic is because of something professor Komai of the economics department brought up in my managerial economics class today. (Dr. Komai is definitely one of the best professors I have had at this university.) She said only a small amount of economists are totally against government intervention, but they seem like a majority (because they make a lot of noise). The reason, she says, is that most economists do agree that government probably should not be involved in perfectly competitive markets, because perfectly competitive markets are efficient. At the same time, however, perfectly competitive markets exist virtually nowhere. Thus, when markets are not perfectly competitive, there is market inefficiency and perhaps a good reason for government to get involved to try to increase the efficiency of the market.

Most markets are oligopolies and a small amount are monopolies (which are even more inefficient). Therefore, there are compelling economic reasons for government to get involved to try to increase competition or otherwise reduce inefficient behavior. This is one argument in favor of government involvement in markets—there are others as well—but this one is particularly convincing.

One example, which was brought up in class, is the Clayton Antitrust Act of 1914. It is one of the many antitrust laws passed throughout American history and is specifically aimed at preventing the rise of corporate power. The late nineteenth century and early twentieth century were interesting times. This was the time of when the Republican Party was still a fairly young party (it was formed in the middle of the nineteenth century). At some level, Republicans of this era represented the true ideals of Republicanism. William H. Taft and Theodore Roosevelt, for example, were completely against big corporations. The history of these presidents, particularly their domestic economic policy, is quite fascinating, and there is great literature and documentaries on this topic. These early Republicans are what were called “trust busters.” They saw government power as one counterweight to corporate power, which they found subversive. So they busted trusts, so to speak, and they increased regulations. Roosevelt’s Square Deal endorsed these principles and was totally supportive of progressivism. Those were the ideals of early Republicanism. And I believe many of these ideals have been lost in today’s Republican Party.

Update (3/31/2010): I just want to clarify that I do not mean to misconstrue the position of Dr. Komai. She has made it clear to me in class that she prefers to stay in the center or the middle of issues. It’s not my intention to brandish her as a leftist of some sort who is automatically in favor of government intervention in markets. That’s not my position either.

The point that I think ought to be taken here is that market fundamentalism is misguided. We often here that governments are inefficient and that we should “just let the markets work.” It might certainly be true that governments are inefficient, but less heard is the fact that markets can also be inefficient. I personally do not think this message is conveyed a lot—certainly not as much as the message of government inefficiency is. So my point isn’t to say governments are great, that we should have intervention everywhere, and so on and so forth; instead, I am pointing out that markets are not as great as they are lauded by some on the right, particularly market fundamentalists and Austrian economists. It’s simply my feeling that when people are taught about markets, especially in courses that introduce the principles of economics, they usually are not hearing the complete side of both stories. What’s being projected, I think, is skewed a bit. That’s the part I take issue with. We can, of course, always quibble about the right balance of things—but that’s not quite my objective here.

Unfree news Saturday, Feb 27 2010 

Note: This a much longer version of a letter I submitted to the University Chronicle in response to Kyle Stevens. It did not appear in this week’s edition, but perhaps it will next week’s in the edition following spring break (darn!). I’ll update this post with a link if it is.

Update: I was expecting my letter to be published in this Monday’s edition of the University Chronicle. It seems the opinions editor is unaware of any reason why it was not published in this edition and promised to publish in next week’s edition and upload it online as soon as possible. I’ll post another update with a link as soon as there is one.

Update 2: The letter was published in this week’s edition of the University Chronicle. You can read it online here.

In an opinion published in the February 22 edition of the University Chronicle, Kyle Stevens argues that The New York Times charging readers to see articles on their Web site is “good news.” People who do not subscribe to the newspaper will have to pay a fee to get unlimited access to NYT online articles sometimes in early 2011, according to Stevens. Though Stevens admits “this does not qualify as ‘good’ news” for the general public, he says “this is ‘great’ news” for the media industry. The reason, he argues, is that when The New York Times began to provide free news on their Web site in 2007, small papers like the St. Cloud Times had “to play the same game.” In other words, other newspapers also had to provide free content in order to effectively compete in the market. Apparently, the news industry couldn’t survive off of this model, and now with this change “maybe the news industry can be saved,” says Stevens. This “fee-to-see format,” says Stevens, “makes so much sense that I cannot believe it has happened.”

Does it make so much sense?

We know that a free and vibrant press is a cornerstone of civic society and liberal democracy. The spread of information, knowledge, discussion is essential for any healthy society. The question is whether we want to limit this dispersion or if we want to make it as free and vibrant as possible.

Knowledge is what economists call a “public good” in the technical literature. Thomas Jefferson wrote that ideas have a “peculiar character” in that “no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening mine.” In economics, that is the idea of a non-rivalrous good. Your possession of knowledge does not hamper or diminish mine. Therefore, we ought to spread knowledge and ideas as widely as possible. Yet, setting up fees to read the news does not accomplish this goal. Hampering the spread of knowledge creates an economic inefficiency. There is a better outcome, which is to make the news as dispersed as much as possible, to share it freely. Therefore, making the news more expensive does not generate a favorable outcome, and Stevens acknowledges this when he states “this does not qualify as ‘good’ news” for the general public. Yes, it might help a handful of private corporations maximize their profit (as Stevens correctly points out), but it does not benefit the whole of society.

Helping large corporations maximize their profits often does not produce the most economically efficient or socially desirable outcome. As many media critics are quick to point out, the interests of large corporate media are not aligned with the interests of a vibrant and democratic society.

In this sense, the ownership of the media has a substantial influence on the output of the media. This is a core thesis of the propaganda model developed by Herman and Chomsky in their 1988 book, Manufacturing Consent, as I’ve discussed in an earlier post. Our dominant source of information is increasingly being controlled by fewer and fewer large multinational corporations. That has an effect on the output, and we experience it on a daily basis. The propaganda model has strong explanatory power.

Explains John Nichols, “The primary one is that the people who own most of the newspapers are not interested in civic or democratic values. They’re interested in commercial and entertainment values, and primarily to make a lot of money.” And it these large oligopolistic corporations that are being subsided and supported by government, through copyrights, Communications Act of 1934, and so on. Furthermore, according to Robert McChesney, this is “encouraged by the corruption of the U.S. political system, in which politicians tend to be comfortable with the status quo and not inclined to upset powerful commercial media owners and potential campaign contributors. The dominant media firms enjoy the power to control news coverage of debates over media policies; this is a power they have used shamelessly to trivialize, marginalize, and distort opposition to the status quo.”

The pre-capitalist Framers of our nation readily understood that the media are to function as a prevailing counterbalance to corporate and state power. In other words, the media are meant to give the people an independent voice. Now, however, we cannot speak of corporate influence on the media, because the media are the huge corporations. They are one and the same. And when you think of the media as agenda setters, which they are, the result is what’s been referred to as a “democratic deficit,” namely because “it was understood that if you just let wealthy people run the media system, it would serve only wealthy people, not viable democratic self-government.”

Well, now there is a crisis that is widely recognized, especially by people like Stevens and those in the media businesses, particularly in the printed press. It’s been referred to as the “death of newspapers.” Small, independent newspapers, local papers, and even some of the big dailies, are closing down or firing thousands of journalists each month. The problem is real and it’s a threat to a healthy democratic process. The reasons for it are numerous and fairly apparent. The real question is what we should do about it. Stevens offers one solution, which is to make the big newspapers like The New York Times less accessible to the general public so that smaller papers like the St. Cloud Times can have a chance. I don’t think this is the optimal solutions for the reasons I’ve already laid out. But there remains a definite problem where the printed news media are struggling to stay alive. It seems reasonable to make people charge more for good journalistic news, because it’s not free to produce. You have to balance the budget somehow.

There are alternatives to increasing charges (which is not likely to save the printed press), and two leading media scholars offer some in their book, The Death and Life of American Journalism. The subject of their book deals with the problems of the current state of affairs in the media and journalism, and how we can overcome the current crisis that the media face. This was also the subject of a fascinating interview the two authors had that aired on PBS last month. Had I not watched that interview last month, I probably would have thought nothing of Stevens’ letter. But Nichols and McChesney offer an alternative to Stevens’ argument, which I think is both sensible and pragmatic. What they suggest is subsidizing independent journalism. I can’t do their proposal much justice here, so I implore you to listen to the interview or buy their book (both of which I linked to above).

Obviously, the idea of a government subsidy makes a lot of people uneasy, and not just right-wingers who want to see the government disappear. There are concerns by people who think the government getting involved in the media would be akin to something like state media or, at the very least, government meddling in the generation of opinions and ideas. This, too, would be very unhealthy for a democracy. These concerns are addressed by Nichols and McChesney and they offer solutions to prevent any of this from happening. And the reason they urge a government subsidy for journalism is for the same reason that the Founding Fathers were very aware of. A free press is meaningless without a vibrant press. This was instantly recognized by the key Framers of the United States. So, for example, there were debates in early American history about how to subsidize the press, to ensure the democratic process flourished. And the government offered many subsidies to the press, one of the primary ones being postal subsidies. Congress debated how little presses should be charged for postal services. James Madison, the Father of the Constitution, thought the debate was nonsense. He thought there should be no charge, that it should be completely subsidized by the government, because anything less would interfere with the free flow of ideas and opinions, which, again, was recognized as the cornerstone of liberal democracy. Madison wrote, “Whatever facilitates a general intercourse of sentiments, as good roads, domestic commerce, a free press, and particularly a circulation of newspapers through the entire body of the people … is favorable to liberty.”

In order for there to be liberty, there needs to be a free press in addition to a vibrant press that offers a whole range of ideas. Madison and other key Framers understood this well. It’s the only way that independent voices could actually challenge, for example, state power. It’s how the abolitionist press stayed alive even during the years Congress banned any debate about slavery. Journalism and democracy are intimately linked, and so it is our imperative that we support it to its fullest. If one role of government is to protect and ensure democracy, as some libertarians might agree it is, then there exists an obligation on its part to protect and ensure independent journalism, in the same way it ensured it during the early years of the republic. One idea that Nichols and McChesney offer is vouchers or tax write-offs for citizens to give money to independent news sources. Again, you can read their book or listen to their interview for a more in-depth discussion. When you look at the subsidies the early republic offered to the press as a percent of the GDP, it would translate into roughly $30 billion in today’s money. Moreover, when you look at the places recognized as the freest and most open democracies in the world, where the press is rated as the most independent and freest, it’s places like Finland, Norway, Sweden, and so on, where they also offer roughly $30 billion in subsidies. It is in this way that vibrant, healthy, and independent news is ensured and maintained. Writing for the CATO Unbound blog, Paul Starr says, “we should be open to the idea” of public subsidies for journalism. I also think we should be open to the idea as a viable and pragmatic alternative to Stevens’ solution, to ensure that independent journalism can survive, that it is vibrant and healthy, and that it can continue to challenge corporate and political power.

A comment on the recent Supreme Court decision Saturday, Jan 23 2010 

Recently, the Supreme Court ruled in Citizens United v. Federal Election Commission that corporations (and labor unions) can spend unlimited amounts of their money on elections. Essentially, the Supreme Court ruled that corporations can run campaigns. Many have lauded the decision as a great defense of First Amendment rights.

Is it? “Freedom is awaking from its coma today,” declares conservative Rush Limbaugh. Dr. Spagnoli, writing on his blog, states, “there’s no reason to deny corporations [free speech].” This is because “free speech [is a human right],” he says. I agree with Dr. Spagnoli, free speech is a human right. But are corporations humans?

As it happens, corporations are not people. They are social constructs, entities created to carry out specific functions. However, as I discussed in a earlier blog post, Are corporations individuals?, corporations slowly became considered “persons” through a series of judicial rulings. There is no law that says corporations are humans. It’s not anywhere in the Constitution. The Fourteenth Amendment was passed after the Civil War to give rights to people, specifically the newly freed slaves. It declared, “No State shall … deprive any person of life, liberty, or property, without due process of law.” It affirmed the rights of people. It was there to protect blacks from the evils they had endured under the brutal regime of slavery that had oppressed them for centuries.

Well, corporate lawyers were very savvy, and they began to say, “look, corporations are persons.” Corporations deserve the protection that was meant for freed slaves. In fact, when you look at the history of it, it’s very perverse. According to work done by Doug Hammerstrom, of the 150 cases involving the Fourteenth Amendment heard by the Supreme Court up to Plessy v. Ferguson, only 15 involved blacks. The other 135 were brought by corporations. This is the exact opposite of what we would expect to happen. However, through a series of activist decisions by judges, which has no basis in law, corporations gained personhood. Richard Grossman proclaims, “600,000 people were killed to get rights for people, and then with strokes of the pen over the next 30 years, judges applied those rights to capital and property, while stripping them from people.”

So now they can say corporations deserve the rights of flesh-and-blood persons, like the right to free speech; the ability to sue others; the right to “life, liberty, or property”; the right to own other businesses; the right to run campaigns; and so on. But there’s nothing inherent to a corporation that says its a person and deserves the rights of flesh-and-blood people. That’s only come about through very perverse judicial activism (e.g. Santa Clara County v. Southern Pacific Railroad). Moreover, there’s nothing in economic theory that says corporations ought to be treated as persons. That corporations should run campaigns has got nothing to do with capitalism. There’s nothing about efficiency that says corporations should be allowed to do this. In a free and competitive market, it wouldn’t happen.

Anyone who argues that corporations should be treated as persons and have the same rights would also have to accept that corporations should also then be allowed to run for office, hold office, to vote in elections, and so on. But no one agrees with that and for obvious reasons. Moreover, Dr. Spagnoli does not say that only corporations should have the rights of persons. He also says, “corporations, trade unions etc.” should not be denied the right to free speech. Well, what does “etc.” constitute? If a corporation is a person, why not a sports team? Can a townhome association be considered a person under the Fourteenth Amendment? Why not?

What happened before corporations were granted the rights of persons? They were chartered by the state to carry out some function that was meant to serve the public good. They had a specific charter, their shareholders were accountable, they had limited rights, they were regulated, and so on. That they should be running campaigns was completely unfathomable, particularly to the Founding Fathers, who were vary wary of corporate power. Within this framework, corporations had moral obligations to the communities they served. With judges granting corporations personhood, however, the moral obligations we ascribe to flesh-and-blood persons was not ascribed to corporations. The moral obligations and social responsibility that corporations have, according to people like Milton Friedman and Ayn Rand, is to serve their own interests. The only obligation corporations are to have is to maximize profits. These are not the same type of moral obligations we think flesh-and-blood people have. Most decent people, ignoring extreme ethical egoists, believe we ought to consider what happens to other people, that we have an obligation not to harm others, that we should not rape the environment, that we should not ignore grave injustices, that we should treat flesh-and-blood people as ends rather than means, and so on. Even those who support corporate personhood do not ascribe these moral obligations to corporations. These are very special types of “persons” indeed.

Should people have the right to free speech in a democracy? Yes. Are corporations people? No.

Democracy vs. libertarianism Monday, Jan 11 2010 

One of the problems that ideologues of any persuasion probably run into is the problem of democracy. What do I mean by “the problem of democracy”? What I mean by this is that the democratic majority often does not adhere or conform perfectly to the ideology that a person or group may have. This can be a problem for the ideologue if he or she professes to be a democrat (a supporter of democracy). So, for example, the libertarian may decry the government’s role in society, despite the democratic majority wanting social programs or government regulation. Thus, any claim that we should wipe out social spending is inherently anti-democratic in this sense. My previous post on government involvement touches on this issue. Of course, the ideologue can bypass this “problem” if they do not profess to be democrats. Instead, we should simply implement the policies of our ideology, no matter how much the public is opposed to it. That is, we become authoritarians. For the libertarian or the anarchist, this is inherently paradoxical. We cannot claim to be libertarians and authoritarians at the same time—the ideas are necessarily opposed to each other. It is not possible to authoritatively implement our policies in the name of libertarianism, for example. That isn’t to say no one has tried; for example, Augusto Pinochet, in his brutal dictatorship over Chile, enacted free-market reforms in the name of “liberating.” We know that’s hypocritical, and we understand the perversity in his understanding of “liberty.” Here, “liberty” means liberty for the corporation, not for the people. Thus, the ideas of libertarianism and anti-democratic measures are incompatible.

How can the ideologue cope with “the problem of democracy”? How can we accept certain principles that the majority rejects, yet still call ourselves “champions of democracy”? I have two suggestions, and others are welcome. First, be what could be called a philosophical ideologue (cf. philosophical anarchism). That is to say, you keep your beliefs in whatever ideology you choose, but you accept the majority’s opinion as the opinion that should be adhered to. So, for example, if you’re against social spending, but the majority supports it, you continue to believe that social spending is wrong but accept the majority’s choice as the will of the people. For some, this might seem like an unpleasing solution, which I accept. It does seem contradictory to accept the choice but at the same time to not accept the choice. It would seem as if we are not truly adhering to our ideologies (that’s a common argument against anarchists who do not support the overthrow of the state—they’re not real anarchists). Do we or do we not accept that argument? The other thing I suggest is that we teach or advocate our ideology in a way that is not anti-democratic. We explain our philosophies (non-coercively) to others in the hopes that they will accept them. In this way, we can influence the outcome of the democratic choice without resorting to authoritarianism.

I accept that others may not accept this. They may say we have to cling to our ideologies, no matter what. We must reject the democratic majority. They may not say it in this way, but it is what they’re saying. I reject this argument and find it to be dangerous. Over ideology, I am a democrat.

P.S. This is a further exploration of a concept that Dr. Spagnoli explores on his blog in a post titled “What is Democracy?” In it, he explains, “Napoleon Bonaparte propelled his armies across Europe on behalf of the universal principles of liberty, equality and fraternity . . . Napoleon’s armies occupied Europe because they wanted to export French principles and French civilization. . . . France was the advance guard of the struggle of humanity for freedom and against old-style authoritarianism.” The parallels to contemporary foreign affairs are obvious enough. Claims Dr. Spagnoli, “Attacking, conquering and occupying other countries, even with the purpose of liberating these countries from oppression and archaic authoritarian forms of government, seems to be highly illogical and self-contradictory. It’s incompatible with the very principles of democracy (democracy is self-determination).” The question being raised is, “are we allowed to impose or enforce democracy in an authoritarian way?” Likewise, I raise the question if libertarians are allowed to impose or enforce libertarianism in an authoritarian way. I say no.

United States vs. the world Saturday, Dec 26 2009 

It wasn’t very long ago that I saying President Obama would probably be a centrist president. (Maybe not on this blog, but my comments are elsewhere on the Web.) The wild claims about socialism and radical shifts in policy were just that—wild claims. Most of the Republicans are scared out of their boots and most Democrats seem dissatisfied. He’s continued Bush’s Patriot Act, FISA, illegal spying, destruction of the Fourth Amendment, and so on. He’s continued the unwise bailouts of those responsible for our current financial crisis. And perhaps worst of all, he has kept the hawkish policy of his predecessor, now recently expanding the war in Afghanistan and has continued the illegal policy of extraordinary rendition, black sites (including the black jail), and ignoring Israeli crimes. All of this was expected, of course. Putting aside all the wonderful rhetoric (“Hope!” and “Change!”), Obama’s policies were recognized as nothing more than underwhelming. He’s a centrist president. (Here I am keeping myself, of course, to the American political lexicon. In American politics—where Democrats represent the “left” and Republicans represent the “right”—he is “centrist.” To the rest of the world, he remains a rightist.)


(Click for larger image. Author unknown.)

On a more specific level, Obama has continued his racist and imperial policies as they relate to Latin America. I wish to specifically talk about Honduras and the recent military coup that occurred there. For those unaware (which would be unsurprising, given the American educational culture), there was an illegal coup d’état in June of 2009 that ousted the democratically-elected president of Honduras, Manuel “Mel” Zelaya. After the military coup had removed Zelaya from the country, the Honduran congress voted to put Roberto Micheletti in power, with no other government in the world recognizing his presidency.

Naturally, of course, the neoconservative right hailed this military coup as a “defense of democracy,” a “democratic coup,” and so on. Janet from SCSU Scholars acclaimed it as a “legal election.” The rest of the world had no illusions and harshly condemned the illegal takeover of the country. This shouldn’t come as a surprise, as the historical role of scholars has been to acquiesce to power, authority, state doctrine, and so on.

The rest of the world, that is, with the exception of the United States. While Obama certainly mimicked what the OAS and the UN were saying regarding the illegal coup, he was the only one to keep his ambassador, Hugo Llorens, in the country. This is the same Llorens who called the elections under the illegal coup as “a great celebration of democracy.” Meanwhile, the U.S. Ambassador to the OAS at the time declared Zelaya’s return to his country “foolish and irresponsible.” The British scholar Gordon Connell-Smith aptly points out, “While paying lip-service to the encouragement of representative democracy in Latin America, the United States has a strong interest in just the reverse,” apart from “procedural democracy, especially the holding of elections—which only too often have proved farcical.” While it’s certainly true there were procedural elections, which the U.S. supported in contrast to much of the rest of the world, the U.S. continued to refuse to demand Zelaya’s return to power and still refuses to speak even one word about the human rights abuses occurring under Micheletti.

This isn’t to say the precedent isn’t there. The countless Latin Americans murdered, tortured, or disappeared speaks volumes to the U.S.’s long and historic role in intervening in the region for its own (read: business’s) interests through dismantling left-wing democracies and installing right-wing dictatorships. The history is clear enough that it does not bear repeating here. Thus, it comes as no surprise that the Obama administration has opted to support (and played an important role in) the illegal overthrow of the left-wing Zelaya, ignore the atrocities of the current government, and support the right-wing “election” occurring just recently.

The people speak Sunday, Dec 13 2009 

Sorry for the relative inactivity as of late. I’ve been busy with finals, and still am, so this will be a short post. I just got finished watching The People Speak shown on the History channel. If you have a chance to watch it, I suggest you do. It was a very moving show of what real and ordinary people have said throughout American history. It wasn’t about what politicians, the elites, or the business class have thought. It was what people who were being affected by the nation’s policies spoke about. And I think it shows just how much Americans have been anti-war, for participatory democracy, social change, equality, and solidarity. It has always been this way and it runs deep in American life, outside of the perverse culture of Washington and Wall Street.

It shows how much American history has been built on the backs of ordinary people who strove for nothing more than a better life. It shows that opposition to state violence and oppression has a long and strong history, and the struggles of people like Frederick Douglass, Susan B. Anthony, Eugene Debs, Martin Luther King Jr., J. W. Loguen, Bartolomeo Vanzetti, Emma Goldman, and others to fight against it. American history is a history of dissent and resistance and activism. Society has become more civilized due to their contributions. What liberty we have is because of these people who rose up. That is to say, democracy and liberty comes from the bottom up, from the people. When you look at the activist history of the sixties, the seventies, and the eighties, you see that it has a civilizing effect on society. And it continues straight through today, and we see it in the opposition to our fundamentally wrong wars, in the fight to give rights to gays, in the advancement of environmental protection, in the anti-sweatshop movements, and the solidarity with the suppressed in Palestine. That is the source of social progress. That is message I think Howard Zinn is trying to put out in The People Speak (and his A People’s History of the United States). So when we talk about what lies ahead, well, it’s largely up to us.

Obama evinces the truth: the crisis of democracy Tuesday, Oct 6 2009 

Today, President Obama announced that what I and others have been saying about democracy is true. Namely, it doesn’t function in the United States. As I point out in my post about democracy in the United States, it functions just as Dana Perino explains it: You get your say every four years, and you’re supposed to shutup in between those years. That is, you’re supposed to be relegated to be spectators in this “democracy,” not participants.

So when Obama declares he won’t listen to the public or Congress in how to handle the Afghanistan War, a war that is fundamentally wrong, he is implicitly agreeing with Perino and others who argue that the public should have no input on how the country is run.

These ideas are not new by any means either. This is essentially how it was designed by the Framers. This is what Madison meant when he said government’s role was “to protect the minority of the opulent against the majority.” The public was not to interfere with what he called the “Wealth of the nation.” Therefore, government is to be comprised of the “more capable set of men,” which “ought to come from, & represent, the Wealth of the nation.” That’s Obama’s role. Obama (and Congress) is there to represent elite opinion and interests (against the interests of the majority, i.e. the public). That’s how it was designed by the Framers.

One of the biggest supporters of this idea has been Walter Lippmann, the Pulitzer Prize-winning journalist who was renowned by the progressives of his era. The public, what he called the “ignorant and meddlesome outsiders,” should occasionally “lend their weight” to a small choice of the “responsible men” (what we call elections), but should, for the most part, be spectators rather than active participants in democracy. That’s because he considered public involvement in governing a “false ideal.” This idea was supported quite widely, even among the liberals. Take Harold Lasswell, for example — “a leading American political scientist and communications theorist.” He argued that we should ignore “democratic dogmatisms about men being the best judges of their own interests” because “men are often poor judges of their own interests” and because the “masses are still captive to ignorance and superstition.” These views are consistent with Lippmann’s, who argued for an elite class of men to rule (a vanguard of sorts) because, as Lasswell points out, men are not good judges of their own interests but “we are” (the “we” being elitists). So “we” have to stave off “the trampling and the roar of a bewildered herd” (that is, the public).

So, yes, Obama takes the elitist view when he declares that the public does not know what’s best for them. That’s what the “more capable set of men” are there to do. (And it should be no surprise that these “responsible men” “represent the Wealth of the nation” and not the public.) The public has no illusions either. They know it. Some 80% of Americans recognize that government is “run by a few big interests looking out for themselves,” and not “for the benefit of all the people.” That’s why 94% say government should “pay attention to the views of the people” more than every four years. But that’s now how the system is set up. Obama knows this.

But I think it also highlights another important subject, which is taxes. Michael Moore brings up a good point about them in a question and answer at a university regarding his new film on capitalism. People in America are upset about taxes. We’ve all seen the protests as of late. But if we look at places like France, which is no stranger to protests, we don’t see the public enraged over taxes, which are substantially higher there than here. Why the difference? Perhaps it’s because the lack of involvement by the public in deciding how their taxes are used here in America. Half of every tax dollar collected goes to the military, when a large majority of the population supports decreasing the radical spending on the military, for example. Our tax dollars aren’t really going where we want them to go (e.g. a majority of people support a public health care option). It’s not happening. There is (and has been) a huge gap between public opinion and elite opinion. Public opinion is ignored, as Obama proves to us. So I’m not surprised at all that tax day is so dreaded in America. In a functioning democracy, everybody would say “great, today is the day I get to contribute to the common decision that I was able to participate in.” It just doesn’t happen.

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