Saturday, May 29, 2010

The Awkward Confluence of Capitalism and Democracy

California's Proposition 16, on the ballot for the June 8 election, provides an interesting case in point for a discussion of the merits of unfettered capitalism in a democratic nation that values free speech and extends that right to corporations.

Basically, this proposed "initiative constitutional amendment" would require, with a few exceptions, a 2/3 approval from voters in a selected geographical area before a governmental entity could start offering electric service to its constituents. It is being bankrolled primarily by PG&E, one of the largest investor-owned utilities in the state, which (so far, according to the LA Times 5/28/10, page AA3) has sunk $46 million into the "Yes on 16" campaign. The money is being used to purchase a mind-numbing number of TV ads, plus home mailers.

Aside from the veracity of the "Yes on 16" effort (see below), let's look first at the initiative itself. If a requirement were being imposed that mandated a vote of the people by a simple majority, I wouldn't be writing this post. But imposing a 2/3 requirement makes the motivation for the effort transparent, because everyone knows that a supermajority of that magnitude is almost impossible to achieve. For example, a presidential election is considered a "landslide" if one candidate gets about 55% or more of the vote. President Obama received about 53% of the popular vote in 2008. He won 28 states, not even close to 2/3 of them. Look how difficult it is for the U.S. Senate even to get 60 votes on controversial issues, much less the 67 that would be required to achieve 2/3 of 100.

Personally, I don't think that PG&E (plus a host of supporting Chambers of Commerce) is supporting Prop 16 to advance democratic principles (although that's what their commercials would lead you to believe). No, they are using their right to spend enormous amounts of money (from consumers of their product, of course) to advance public policy that will simply give them more control over their ability to take more money out of those same consumers' pockets (by reducing competition). Students of democracy, tell me where it says that people should be obligated to finance -- without a shareholder vote, of course!! -- the activities of corporations that are diametrically opposed to the best long-term interests of the people footing the bill!

If PG&E believes so strongly in democracy, shouldn't it let its shareholders vote on whether to support a campaign like this? Don't hold your breath. If capitalism thrives because it promotes market efficiency, what's wrong with letting governments operate utilities if they can do it better than private enterprise? (I don't know whether they can or not; it probably depends on individual circumstances. But throwing up insurmountable barriers is not an appropriate way to find out.) What's next -- shall we have a 2/3 vote before we can operate a publicly supported fire department?

Now look at the mailer I received at my house. Does it mention the 2/3 vote requirement? Is a triple fudge sundae good for you? What it says is that "Politicians throughout the state want to spend over $2.5 billion in public funds for government-run electricity -- and they don't want to let you vote on it." The graphic design experts put a big check on this mailer, payable to "local politicians," for "Gov't-run electricity," signed by the "California Taxpayer." Brilliant marketing -- it hits all the usual "hot buttons." Just unfortunately, it seems to omit one vital detail.

Here's the bottom line: most of us believe, to a greater or lesser degree, in the benefits of both democracy and capitalism. What do we do when one tries to destroy the other?

Sunday, May 16, 2010

How Many is "Too Many"?

I've always loved numbers. As a boy, I was well aware that a batting average of .400 (4 hits in every 10 official at-bats) was almost unattainable, even by the best major league stars. The incredible Hank Aaron never ended a season with anything higher than .355.

Following are a few other statistics. Should we be worried, or is this the best our economic and political systems can do? (In other words, how proud should we be of our collective batting average?)

In Los Angeles County, child abuse hotline tips flow in at a rapid clip. Responsibility for investigating them falls to the Department of Children and Family Services. The Los Angeles Times (5/16/10, page A37) reports that more than 18,000 cases are unresolved within the mandated time limit of 30 days, at least in part because there are simply not enough social workers.

Meg Whitman, GOP candidate for governor in the State of California, has donated (so far) $64 million of her personal funds to the campaign (LA Times, 5/16/10, page A43). At an estimated cost per social worker of $75,000 per year, $64 million would supply Los Angeles County with 853 social workers for an entire year.

A careful anonymous reader challenged a statistic I used in my previous post. I claimed that "millions of Americans were dying prematurely because they didn't have access to quality medical care." (Note: I didn't claim that every such case was the fault of insurance companies.) A more accurate number, my reader states, would be more in the range of 18,000 to 45,000 per year. Let's use the higher number, on the assumption that many such cases probably go unreported or undocumented. At that rate, the phenomenon would need to be repeated for slightly more than 44 years to make my statement true.

Well, on November 19, 1945, Harry S Truman sent a Presidential message to the US Congress proposing a new national health care program. In his message, Truman argued that "The health of American children, like their education, should be recognized as a definite public responsibility...About 1,200 counties, 40% of the total in the country, with some 15,000,000 people, have either no local hospital, or none that meets even the minimum standards of national professional associations."

According to Longman and Boshara ("The Next Progressive Era: A Blueprint for Broad Prosperity," p. 118), the New England Journal of Medicine estimates that "uninsured patients receive only 53.7% of the care experts believe they should get." The same book indicates that the journal "Health Affairs" concluded that 10% of the premature deaths in this country are attributable to shortfalls in medical care (p. 105).

A few global warming skeptics have stated that we have nothing to fear from increasing levels of carbon dioxide in the atmosphere because it is a naturally occurring compound (proving once again that a fifth grade education is not sufficient to produce informed public policy). In fact, the atmosphere is about 78.09% nitrogen, 20.95% oxygen, 0.93% argon, 0.038% carbon dioxide, plus other trace elements and water vapor. At concentrations of 1%, carbon dioxide causes pronounced dizziness; at 2%, we experience reduced hearing and increased blood pressure; 5% causes confusion, headaches, and shortness of breath. According to the Intergovernmental Panel on Climate Change, the atmosphere has experienced a 39% increase in carbon dioxide levels since 1800. While plants do use carbon dioxide in photosynthesis to produce sugars, extremely high concentrations actually inhibit the process, and food may eventually become poorer in quality and nutritional value as a result (LA Times, 5/15/10, p. A22).

Speaking of the stratosphere, in 2009 Greg Maffei, CEO of Liberty Media Corporation, earned $87.5 million, from TOTAL company revenue of $10.16 billion (LA Times, 5/9/10). According to its website, Liberty Media Corporation "owns interests in a broad range of electronic retailing, media communications, and entertainment businesses." I was unable to locate information on the total number of people employed by the company; presumably, there must be thousands. However, the CEO alone -- ONE PERSON -- pocketed 0.86% (nearly one of every 100 dollars) of the company's TOTAL REVENUE in 2009.

Had enough numbers for one day? Oh, permit me just one more; you have just read more than 800 words! Thanks for your persistence!

Sunday, May 2, 2010

ALERT! George Will Speaks the Truth (Sometimes)

Read carefully between the lines of the typical conservative invective, and you find that George Will (Inland Valley Daily Bulletin, 4/18/10) actually believes a few things that are accurate.

First, he believes that a Value Added Tax (VAT) has merit, at least under certain conditions. (He doesn't mention that all members of the European Union -- including (gasp!) France!! -- have a VAT. There's only so much truth the average Will reader can bear in a single column.)

Secondly, he admits that the "Great Recession" resulted in a fiscal shambles. (He doesn't mention, of course, that the Great Recession was caused primarily by lack of regulation and capitalists pursuing the American Dream, both legally and illegally. See rationale for this omission in previous paragraph.)

Thirdly (hold onto your keyboards, my friends), George Will admits that "some taxation is necessary." OMG!

Alas, these kernels of truth are sandwiched between the usual poisonous slices of egregious eyesores of expedient and excruciatingly erroneous evasions of rational thought.

Without eliminating the income tax, Will says, "a VAT would be just a gargantuan instrument for further subjugating Americans to government" (emphasis added). In other words, we poor freedom-deprived Americans have already submitted to the giant altar of government control and interference in our lives -- lives that should instead be full of liberty. Yes, every time I drive on a taxpayer-financed road and obey the regulations imposed by traffic signals, I get sick to my stomach.

Manipulating the concept espoused by President Obama's Chief of Staff Rahm Emmanuel that "you never want a serious crisis to go to waste" (Wall Street Journal, 11/2/08), Will recklessly charges that the Obama administration believes that "a crisis is a useful thing to create." But I will sleep well tonight, knowing that intelligent conservatives will easily see the difference between taking advantage of a crisis created by someone else and deliberately creating your own.

Democrats pushed health care reform, according to Will, because of liberals' tendency to "lunge to maximize government growth." Presumably, it was irrelevant that insurance companies were acting like bandits, taking policy-holders' money and then withholding services when people got sick, and that millions of Americans were dying prematurely because they didn't have access to quality medical care.

Will refers several times to the "political class" without defining it, but obviously, from the context, he considers it less desirable than, say, the club that backdates stock options. Members of this class "delight" in the "stealthiness" of incremental tax increases, show favoritism (by exempting "green" goods from VAT taxation, for example), and engage in "bossy" behavior by using the government code to regulate social behavior (e.g. taxing cigarettes and outlawing murder).

Finally, catastrophizing beyond the scope of any disorder described in the DSM (that's the Diagnostic and Statistical Manual of Mental Disorders, for you non-psychologists), Will claims that introducing a VAT without repealing the income tax "would be the obituary for the Founders' vision of limited government." Presumably he means the government that was created to "establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity." Correct me if I'm wrong, but that sounds like a pretty tall order -- one that requires people who want it to be successful to be willing to help foot some of the bill.

By the way, it is possible to write an article about the VAT that is informative and balanced. Witness "Much To Love, And Hate, In a VAT," by N. Gregory Mankiw, in the business section of today's New York Times.