Monday, May 15, 2017

Capitalism the game we play; Goverment the referee Part II



"The best government is that which governs least"*
John L. O'Sullivan editor of The Democratic Review

“The best government is that which governs best.”
                        Geoffrey Berg editor of the Food for Thought Blog


The first question that arises in this framework from the previous posts is how close do you want the game to be called. Do you want to “Just let them play.” or do want instant replay on every call?  That is do you want a minimal regulatory environment where it is up to the individual “player” to look out for his or her own interest (freedom to) or do you want a strict regulatory environment where each play is scrutinized to make sure that the game is scrupulously fair (freedom from).

Again, from the previous posts, how you feel about this, generally, starts with your emotional predisposition.  If you are a libertarian your response is “Let ‘em play!” If you are liberal you want to make sure no one is cheating so you want plenty of oversight of the action. Some level of oversight is needed so that the game doesn’t deteriorate into anarchy. On the other hand instant replay on every play would bring the action to a grinding halt.


“Given that you play by the rules, the object of the game is to win.”
                                                                                                            Joel Truman

However, since we are all players, we want to win the game. And since we choose democracy we all have a say in what rules we want, how and by whom we want them made and how we want them enforced. And, while we may be predisposed to one particular end of this continuum, when we are engaged in the game, which we are daily, the specific interaction may move us to a different place on that continuum.


Since we are in the game and we want to win, that can’t help but influence how we want the game to be called.  We may say we want them to call them the way they see them but what we really want is to call them the way we need them. The strike zone is always too small for our pitcher and too big for theirs. They are always charging on offense and blocking on defense. It was the temperature not the ball boy who deflated the footballs (or vice versa depending on who you are rooting for).

When we don’t have much skin in a particular part of the game we are somewhat agnostic if not mildly favorable toward a well-regulated industry.

For instance, most of us are quite comfortable with our highly regulated drug industry. Except for a few die-hard libertarians like Ron Paul, nobody wants to abolish the FDA and leave it to the good intentions of the pharmaceutical industry to give us safe effective medication. We don’t have the time knowledge or expertise to make rational judgments about the safety and effectiveness of medicine. 

On the other hand a pharmaceutical executive will want to loosen the regulatory framework that everyone else is comfortable with because it is impeding his ability to maximize his profits. His argument is that this over regulation is the moral equivalent of too much instant replay. He takes this position not because he is conservative but because it is in his immediate interest.

One can imagine that the “natural” herbalist would chafe at being subjected to the same regulatory environment that the pharmaceutical industry faces. In his game it is “Let us play!” On this particular issue the new age liberal is probably on the same point of the freedom from/freedom to continuum as the buttoned down Republican pharmaceutical executive.

"The best government is that which governs least" is really no government at all and otherwise known as anarchy (A position espoused, I would say somewhat disingenuously, by Thoreau). However, for the rest of us “The best government is that which governs best,” where best is in the eye of the beholder. We all have different views of what is best and what shapes our vision of best are our predispositions and our self-interest.

However, what we all have in common is that we want the game to be fair (Another concept that is in the eye of the beholder) because that is in our self-interest.

So when it comes to our relationship to government I am suggesting we take a look at how our predispositions and self-interest or lack thereof shape our views or blind us to the views of others.

Now we all have opinions on what the rules should be and how they should be enforced. However, we don’t make the rules or enforce them. It would be too cumbersome for us to have direct democracy in anything beyond the size of a small town, ** so we select people to represent us. (Perhaps another form of salutary servitude.)  Selecting the people who represent us is yet another game within the game.  We may select people who see things the way we do or even call them the way we need them.  However, since this is such a crucial part of the game this above all else is where the game should be fair.  It my next post I will take a look at that.
   

* This was paraphrased by Henry David Thoreau in the opening of “Civil Disobedience” as "That government is best which governs least."

** One of my favorite quotes is on this subject.  In Federalist Paper 55, a discussion on the size of the legislature, Hamilton or Madison say, “In all very numerous assemblies, of whatever character composed, passion never fails to wrest the sceptre from reason. Had every Athenian citizen been a Socrates, every Athenian assembly would still have been a mob.”

Monday, May 1, 2017

Capitalism, the game we play; Democracy, the referee



“My job is to try to make it so that every year every team has an equal chance to win the Super Bowl.  The job of every team is quite the opposite.”
 An approximation of a quote attributed to Paul Tagliabue, then commissioner of the NFL

To summarize up to this point:

Economies arise out of the division of labor. The division of labor creates a much more productive economy. It also presents us with make/buy choices.  The more it divides, the more specialized we become, and the more we end up selecting buy over make choices.

Government arises among groups of people with the purpose of protecting property, broadly defined.  Initially, it was intended to protect one’s property from individuals out side one’s own group.  However, with the division of labor threats to property can arise within one’s own group and so rules are set up in the group to protect property in the course of economic transactions. As labor divides and people become more specialized more regulation is required.

As a framework for the relationship of the economy and the government we participate in, I would propose that the economy is the game we play and government makes and enforces the rules.  So what kind of game do we want to play and why do we want to play that particular game?

What should distinguish a democracy from any other form of government is that the object in making and enforcing the rules is, as much as possible, to make the game fair. By fair I mean that that there is equality of opportunity. Fair is certainly in the eye of the beholder and how far we should go to create equality of opportunity varies across the political spectrum but the principle is the same for all of us who accept democracy as the form of government we wish to live under. There are a lot of reasons for this.

To begin with it speaks to our most foundational beliefs. It is why we hold sacred the words that this nation was dedicated to this proposition seven score and 14 years ago.

Democracy by definition is participatory. When people don’t feel the game is fair they are far less likely to participate and more likely to act outside the “rules.” Locke would say they are completely justified to overthrow the state entirely  and then we no longer have a game.

When the game isn’t fair it weakens democracy but it also weakens capitalism.


Capitalism depends on its inherent creative destruction to be self-correcting.  But that creative destruction can be thwarted when one team gets to stay on top. When one team stays on top, we lose the innovation of the rest of the market and the team at the top loses its competitive edge because there is no opposition with which to compete – an opposition which Walter Lippman would define as indispensible.

Moreover, de Tocqueville concerns us with the possibility of creating an aristocracy of the manufacturing class. “ . . . there are every day more men of great opulence and education who devote their wealth and knowledge to manufactures and who seek, by opening large establishments and by a strict division of labor, to meet the fresh demands which are made on all sides. Thus, in proportion as the mass of the nation turns to democracy, that particular class which is engaged in manufactures becomes more aristocratic.”

He ominously notes that, “The territorial aristocracy of former ages was either bound by law, or thought itself bound by usage, to come to the relief of its serving-men and to relieve their distress. But the manufacturing aristocracy of our age first impoverishes and debases the men who serve it and then abandons them to be supported by the charity of the public.”
He finishes by warning, “I am of the opinion, on the whole, that the manufacturing aristocracy which is growing up under our eyes is one of the harshest that ever existed in the world . . .  the friends of democracy should keep their eyes anxiously fixed in this direction; for if ever a permanent inequality of conditions and aristocracy again penetrates into the world, it may be predicted that this is the gate by which they will enter.” 
When an aristocracy is created and we systematically exclude classes of people we diminish the talent pool from which we can derive new and better products and ideas.  Just imagine how impoverished our country would be today if we persisted in the white male dominated culture that was the norm little more than 60 years ago.


Everybody wants to beat the competition, drive the other team from the field, win the Super Bowl every year. It is not in our hearts as capitalists (and we all have that germ of capitalism in our hearts) to want otherwise. But it is toxic to the system, the losers and the winners, if the same team wins year after year.  Just like the NFL needs a commissioner, capitalism needs government to save it from itself, to maintain a level playing field, to optimize the process we call capitalism.

And no form of government is more suited to do this than democracy because equality of opportunity is precisely the object of democracy’s game. And while the relationship between capitalism and democracy isn’t perfect it is at least “more perfect”, and that, at least in this country, was our stated purpose from the outset.

Next time I will start to take a look at why that relationship is less than perfect.