Patriotism and the Rule of Law

In America we have a Rule of law: no person is above the law and no one can be punished except for breach of the law. Or as John Adams put it: we are “a government of laws and not of men.” From the principles enshrined in the Declaration of Independence and the Gettysburg Address to the rights and obligations in the Constitution and the government it set up, we present ourselves as a people joined together by the law.

The true patriot, in his or her love for country, should cherish the rule of law. Adherence to the rule of law makes us American. Now though our society is in danger because the rule of law is breaking down.

The Congress, the President and the Supreme Court are all guilty of violating our most basic laws. And everyone, not just the politicians, is to blame. It is not a question of Republicans and Democrats or the right and the left. We have all watched this breakdown going on for some time and it is getting progressively worse. Law now seems to be based on politics and ideology rather than common sense and legal principle.

The deliberate violation of the law covers the full range of governmental responsibilities: economic, political and military. As an example, the Federal Reserve Act of 1913 is a blatantly unconstitutional delegation of the congressional responsibility “To Coin money [and] regulate the value thereof.” It may be politically convenient for a Congressman to hide in a crowd of 435and vote with the majority but his mother surely told him why you don't just go with the crowd.

To take a more recent case, there is the failure to prosecute the blatant fraud that brought on the financial crisis or to take any meaningful action to prevent a recurrence. Too many in the Obama administration were bankers and are still complicit.

No president since Harry Truman has bothered to declare war in what were in any commonsense definition very real wars. All the presidents chose to declare a state of emergency but only because it gave them additional power. Maybe, in a time of emergency, be it economic or military, there is an argument for something akin to “martial law” to preserve the country. But even such times and such action are certainly going to be abused and in the end weaken the political system.

The WWI emergency lasted into the 1920s and “legalized” the infamous Palmer raids, the establishment of detention camps on Long Island and the deportation of American citizens without any hearing. The 1950s Korean War emergency was in force until 1978, well past the end of the Vietnam War. The War on Global Terrorism emergency declared in 2001 by President Bush has been continually extended by Presidents Bush and Obama.

The USA Patriot Act not only authorized numerous unconstitutional invasions of privacy, it also created a context that led to what is now call the “security state.” NSA, the CIA and agencies we have deliberately never heard of now have Presidentially created rights to invade virtually anybody, anywhere, at anytime, domestic or foreign. National Security Letters are like subpoenas but they are secret and you are not allowed to discuss the letter or its contents with anyone else. Such demands sound like something Thomas Jefferson would have cited as a reason for the Declaration of Independence!

The atrocities committed in the name of the Global War on Terror cry out for prosecution. Yet, the Obama administration has instructed the Justice Department that they are not to prosecute any war crimes of the Bush Administration. Presidents Bush and Obama have both condoned waterboarding, the same crime for which we have prosecuted and hanged our enemies. We have made a mockery of our signature on the Geneva Conventions.

Much of this is cloaked in a mantle of national security secrecy. Virtually every time the courts have pierced this curtain, they have discovered that national security was not involved.

The US Supreme Court, all nine of them, made a political decision in regard to the 2000 election.They have all sworn, in obvious perjury, in their confirmation hearings that they would stand on precedent and be some kind of impartial judge.

The President refuses to enforce the law. The Congress refuses to legislate. The Supreme Court is an activist legislator. The rule of law, our most prized possession, is breaking down.

If you would be a patriot this Independence Day, stop waving the flag and object to illegal wars, to financial fraud and to the absurd personification of corporations.

Final 6-21-11 Markets Require More Government, Not Less

An anger against “government” infects our politics. Whatever government does is now wrong and whatever is wrong is now government's fault. This is strange for a people who invented the idea of popular sovereignty and who purportedly believe in a government that belongs to the people. The proposed antidote is more markets, less government spending and less regulation. But the underlying theory for these policies is wrong and the expected outcome is perverse.

Nowhere is this anger more damning than in our political campaigns. The Republican would-be presidential candidates are competing to see who can condemn most completely the government they are seeking to lead. They are rallying the Republican faithful to a visceral condemnation of government itself.

This blame-your-government attitude began with Ronald Reagan's infamous claim that "Government is not the solution to our problem, government IS the problem." Reagan's position grew overtime into the modern conservatives' popular mantra of “free markets, small government and lower taxes.”

This modern conservative dogma is based on the belief that the expansion of government over the past 80 years is, by its very nature, both an infringement of political freedom and a drag on economic efficiency. Hence the call for less government and more markets.

The argument is at two levels. First, the free-market argument and then the less government argument. The short answer is: there are no free markets. It is a question of who benefits from control of the market, be it a corporation, a class or country. Second short answer: economists can no longer cite the “efficient market hypothesis” as justification for replacing regulation with “free” markets. More markets, by their nature, require more government.

The unregulated, free market that is supposed to replace government regulation is actually a fantasy, an oxymoron, an impossible contradiction. Government and markets are intimately interdependent. That is the reason we talk about a political economy. Markets do not exist unless, at a minimum, the government protects the individual's right to hold and exchange property, enforces contracts and enables the whole of commercial law. In the absence of such government protection, an exchange economy degenerates into lawless violence.

The important point is that the laws defining markets also define power in our society. That power can be organized in an infinite variety of ways and the rule of law will vary to meet the needs of the time, the place and the interest of those writing the law. Those who advocate free markets do so because the existing legal structure that we take for granted serves to protect them and their property. But they hide that behind "free" trade.

No market is static enough to be left “free.” We can and should reform patent and copyright law to meet the needs of a modern technology economy. We can and should reform corporate law to control the power exercised over our politics. We can and should change labor law to put more power in the hands of workers. And we must always acknowledge that when we legislate we are empowering some over others in the marketplace.

In effect, the rule of law, that is the government, will be defined by the size and needs of the market and those who control the law. In colonial America, when the market was the size of the local community, government could be small and unintrusive. In the 19th century, when the railroads, telegraph and canals expanded the size of markets, the government expanded to serve those needs from land grants to antitrust.

In the 20th century it was containerization, aircraft and the internet which globalized markets. This led to the WTO and its governmental functions such as the protection of intellectual property and the control of the flow of capital.

Legal structures and therefore institutions, market structures and commercial practices vary by country. Other countries admit they control their markets to their benefit. Similarly, labor Law and markets vary by country but no one advocates free trade in labor, except maybe along the Mexican border.

As markets expand in time and space, the range of government activities must expand with them and interfere ever more in our daily life. As more of our lives become subject to markets, the less free we feel. It is then that we require not less but more government.

The demand for lower taxes is a question for another time. For now, the refusal to pay our way or accept the costs and constraints of a modern political economy reflects an anger that is being stoked by incendiary politicians.

This culture of anger corrodes our belief in the goodness of American and mocks the pride in our exceptionalism. It leads us to distrust our leaders and drives good people from seeking office. It leads us to revolt against all taxes and supporting the common good. Those who fuel that anger sin against America.


Final 6-1-11 How the Middle Class Lost Its Affluence

"Mass affluence," the age of the great, American worker-consumer class, "is over." The first affluent middle class in history has been declared irrelevant by no less an authority than Advertising Age. That's bad; it means the marketers, whose job it is to know, recognize that the middle class has no money. The middle class did not lose its affluence by accident: it was taken from them. Until the workers again get their fair share of income and can buy the product of their labor, America will stay mired in recession and decline.

In the post-World War II era, America spread the wealth to the working class. Our system of market-based democracy awarded the huge productivity gains of that era proportionately to owners, managers and workers. Everyone got their share. Their share meant an "Annual Improvement Factor" based on productivity gains. The theory is called the "principle of marginal productivity" and it worked.

Competitive markets provide a reasonable distribution of income but only so long as no private or political power is manipulating them. That's the point, beginning in 1980, something happened to shift income distribution away from its long-term trend and away from the outcomes that were predicted by economic theory.

After1980, productivity and output continued to increase so wages should also have increased. After all, GDP per capita increased by 65 percent between 1980 and 2000. Unfortunately for workers, all of that increase in output, including the workers' share, went to owners and managers in the form of soaring profits and huge salary/bonuses that continue to this day.

What happened over the past 30 years is not the result of Adam Smith's invisible hand. If we look at the major changes in law and government over these years we see a strong and clear bias redistributing power from workers to management and owners. The loss of income results from that loss of bargaining power by the workers. Trade and investment patterns, political power structures and economic institutions were all reconfigured to take power away from workers and redistribute it to the rich. This was deliberate.

BusinessWeek reports, unfortunately, that: "Over the past two decades, corporate America has perfected its ability to fend off labor groups." As a consequence there is no longer any countervailing force to balance corporate power in our economy and politics. This loss of worker bargaining power is probably the most important factor holding down wages and working conditions for the entire middle-class. We just have to look at where government has been taken over by the rich and used to crush worker power.

Trade agreements and treaties such as NAFTA and WTO are explicitly intended to push down American wages in exchange for raising the return to American capital. The theory being implementing so successfully is called the "factor price equalization model." The price of labor in America is being deliberately and successfully pushed down to equal the price of labor in countries like Mexico, India and China.

Taxes have been slashed with the express purpose of "starving the beast." The intent being to close down ever more programs for lack of revenue and to make our government look inefficient and incompetent. As a result, government provided public goods such as the air we breathe, the water we drink, our safety in the workplace or on the road, and our use of the entire infrastructure now costs increasingly more for the worker to use. The rich can afford an exponentially increasing cost of education and health care. The middle class cannot.

This privatization of the commons and of functions such as the student loan program and home mortgages or the sell off of utilities and resources such as natural gas, highways and schools are really intended to take control away from the people, put it in the hands of the rich and then blame government.

The Bush tax cuts for the wealthy are the major cause of the present and projected budget deficits which are the reason given to make the workers pay higher taxes. The tax burden is also being pushed further down the economic chain so that more of the school and local needs must be provided by increases in property and consumption taxes.

Where workers have remained strong, as among service workers, a union maid in New York can stand up against one of the most powerful men in the financial world. Her union contract guaranteed her that right. Bargaining rights really matter. That's why the service workers and public employees are under attack.

The Great Recession and the end of middle-class affluence are a direct result of the middle-class loss of power and income. It all goes back to a loss of worker bargaining power, taken away by a bought and paid for government. Little wonder that there is a revolt against government.


Final 5-24-11 Faith Calls the Workers to Sin, Suffer and Repent

The world did not end this past weekend. The people who thought the end times were coming put their faith above common sense. This kind of mistaken faith is not all that rare. It happens to us all the time when we let our economic and political ideology crowd out plain facts.

This is happening now to the Republican Party, and especially the Tea Partiers. The Republicans seem to be, if you'll pardon the phrase, hell-bent on clinging to their religious call for workers to sin, suffer and repent, the facts be damned.

The Republicans and their conservative allies believe the financial crisis and Great Recession occurred because the poor were induced to buy houses and the government taxed and spent wastefully. The American workers and especially union members are called to repent and suffer through a period of fiscal restraint, diminished expectations and less of a government safety net. America will return to a state of grace only when the government stops meddling and markets are allowed to do their magic. It takes a lot of faith to believe all that.

The Democrats have their own narrative. But they lack a shared orthodoxy and follow Will Rogers with his claim: "I am not a member of an organized political party. I am a Democrat." Democrats believe that inequality among individuals and government deregulation of markets starved the economy for purchasing power and caused the crisis. Democrats celebrate government and community.

The present political turmoil arises from these incompatible visions that the parties have watched play out over the past 80 years and both are still clinging to as a matter of faith.

The story starts in the excesses of the 1920s. Growing inequality and deregulation led to the bubble economy that brought on the 1930s and the Great Depression. The New Deal, which was conceived in the 1930s, was implemented in the 1940s, 50s and 60s. The New Deal brought the Great Moderation and with it riches, stability and growth to the American middle class. Individualism was out; government was in and we got everything from the EPA to the Clean Air Act, the Americans with Disabilities Act and even Medicare.

Starting about 1980, memories of the depression faded. When Republicans took over, government became the problem rather than the solution. They resurrected the austerity gospel and removed the protections and controls that curtailed the abuses of the 1920s.

The decade 2000-10 replayed the 1920s with the financial crisis and Great Recession the natural consequences. This time the government had the tools, a whopping big stimulus package and a Federal Reserve ready to pump trillions of dollars into the financial sector. These actions prevented another 1930s type depression. Republicans and Democrats together did well to implement this rescue even when it did not fit the orthodoxy of either party.

This bold and effective avoidance of a depression had a strange political response. The emergence of the Tea Party calling for the Republican solution of sin, suffer and repent seems weird even perverse. The Tea Party agenda of smaller government, less taxes and less regulation is what caused the disaster. The Tea Partiers are angry at the actions that prevented a depression. They are calling for austerity when they are the people who have the most to lose. But they are faithful to the Republican creed.

Rep. Paul Ryan laid out a proposal that the Republicans claimed would achieve the necessary budget cuts and solve the fiscal problems. In a cynical move, the Ryan proposal would leave Medicare in place for those over 55 years of age. For the next generation, however, Medicare would become a voucher-based, underfunded shadow of its former self. The Republicans passed a resolution advocating this plan 235 to 4. They kept the faith.

In addition, the 11 newly elected Republican governors have aggressively adopted the Republican austerity program that would abolish Medicare and slash Medicaid, education, healthcare and infrastructure investment. One Republican governor dismissed complaints stating that the people were now  "more willing to accept pain and difficulty." The governors' attack on public service employee bargaining rights seems gratuitous and coordinated. These unpopular but bold moves were responsive to a shared faith.

In this process, Republican sloganeering became the Ryan proposal and the political scene tipped. The town meetings in Republican-led congressional districts erupted in angry denunciation. The Republican governors found newspaper headlines talking of "buyer remorse." And to cap it all, Democrat Kathy Hochul defended Medicare in the Republican heartland and won. The electorate appears to have awakened to the fact that the end of Medicare would be the end of the world for many of them.

But the Republicans are keeping the faith, whatever it costs the working class.


Final 5-10-11 After bin Laden: An American Renaissance

The American political and economic trajectory just tipped. Osama bin Laden's execution marks the end of our national funk and the opportunity to reach for a new birth of freedom. An American renaissance is in the offing.

For a long time, most Americans have feared our country was headed in the wrong direction. We felt a sense of decline and saw a future less than our past. Nothing seemed to be going right. Our "victory" in the Cold War proved to be empty, without any peace dividend. The Clinton impeachment was an embarrassment to everyone. The 2000 election left half the American people angry, frustrated and in doubt about our democracy. Our economy was faltering, going deeper and deeper into debt to our foreign competitors. Out-sourcing and off-shoring were gutting our manufacturing base. The pay of the middle and working class stagnated.

Then came 9/11. A clever group of fanatics armed only with box cutters brought down the topless towers of New York and breached the walls of the Pentagon. Freedom and our confidence took a hit.

The ensuing Global War on Terror turned out to be a costly and inept meddling in regime change across the Middle East. This obsession with Arabic-Islam led us to neglect the rise of Southeast Asia, the buying up of Africa by China and the anti-American drift of Latin America. Domestically, the Patriot Act frayed the freedoms that define who we are. We lost trust in our fractious politics.

Finally, in the midst of a presidential campaign, the financial system went into near collapse and the economy went into a Great Recession. It was then that we chose, mostly by default, a young, eloquent and black President. Our doubts about ourselves grew even stronger when, almost immediately, he met with a deep and disturbing hatred.

Then in this political turmoil, a political awakening began. Early on, disaffected conservatives coalesced into a cyberspace-like cloud called the Tea Party. Its members, rejecting the New Deal, advocated the economics of President Hoover: cut the size of government, deregulate and balance the budget.

Congressional Republicans tried to produce a workable program using this Tea Party agenda. It meant downsizing or eliminating Medicare and Social Security and drastic cuts or even elimination of spending on food stamps, Head Start, Pell grants and the EPA. The Republican Party bought into all this. Newly elected Republican governors cut business taxes and blamed the ensuing deficits on public employee bargaining rights. All this became a hopeful sign when more people began to care about politics.

Politics and turmoil flared up across the world. The Arab Spring erupted in Tunisia and spilled over into Egypt, Syria, Yemen, Bahrain and Libya. The terrorism and violence that some claimed to be at the core of Islam turned out to be illusory. Libyan youths brandishing AK-47s showed their willing to die for representative democracy, not radical Islam.

The resurgence of political activism was accompanied by an economic steadying. The economy began to turn around. A falling dollar may have raised gas prices but it also encouraged exports, cut energy and other imports and even lessened world trade imbalances.

Then, much like 9/11, we were startled with the news of the execution of Osama bin Laden. That gutsy, well-completed piece of business is, again much like 9/11, more symbol than cause or effect. Yet it can be as important as 9/11 for it re-engendered confidence in our government and our military. It marks, I think, the end of our era of doubt and rancor. Hopefully, we will grasp this opportunity for a new agenda and put aside our fear of terrorism.

The future is bright, economically as well as politically.. The whole world is in the midst of a technological revolution that America is still leading. It isn't just information and computers; it is chemistry, biology, transportation and natural resources. It is the Green Revolution writ large. Rather than increasing costs as some fear, that revolution will cut costs everywhere and so leave room to pay our debts, open investment opportunities and create jobs for coming generations.

The necessary openings are appearing. President Obama, the Tea Partiers and congressional Republicans all agree that our tax system is ridden with hidden tax expenditures, special-interest subsidies and disincentives of the worst sort. They also agree it is ripe for reform. They even agree it is the place to begin. Another promising sign, weapons systems are for the first time in generations on the agenda for cutting. We might finally get that peace dividend. We can stop scape-goating entitlements as the cause of all our woes.

With the execution of bin Laden, America's latest boogiemen, radical Islam, evaporated like the Soviet Union. We can again harness our optimism, our native ingenuity and our freedom to lead a new birth of freedom in the world that is emerging around us.