The Price of Free Speech *

Questions put to me recently:

Corporations and PACS spend huge amounts on political campaigns.
A)  Should corporations and PACS be allowed to do so?
B)  Should all political contributions be from registered voters [and be limited]? **

(A)
In early 2010, the Supreme Court decided that political contributions from corporations could not be limited by law because of a corporation's right to free speech, speech apparently costing money in today's society. Thankfully, the Supreme Court decided that disclosure of a corporation's identity to the public was still necessary. By creating an intermediary presence, PACs seem to be a way around this disclosure of a corporation's identity as I do not remember many commercials saying things like "BP supports John Doe for Congress."

The question of whether corporations should have the ability to spend huge amounts of money on campaigns, and in the process speak louder than any ordinary individual with more limited resources is a tricky one. Corporations have always  been given special status under the law and are a non-human entity with limited liability for their actions. Corporations were safer places to invest money this way, they would continue through many hardships. Usually crimes that would put ordinary citizens in jail are punished with fines. (Bernard Madoff might disagree a bit being a substantial crook taking advantage of the lax regulation that has been in place for a while now. I guess a corporation which is a Ponzi scheme is different than say a tobacco company which lied about known facts about products resulting in many deaths.) While corporations may represent stockholders when they exercise their free speech rights, employees would probably not be spoken for in many cases. Perhaps an argument could be made that their speech represents customers, though I am unsure that customers really shop on the basis of political views. Even stockholders have a greater profit motive than they do a political one. Whatever laws enrich their portfolio would be to their own best interest.

So, freedom of speech? While human rights are often granted corporations, I would certainly disagree on a personal basis as to whether the right to free speech needs unlimited spending as a necessity.

One thing that often bothers me about the stereotypical classic liberal stance is the portrayal of corporations as villains. Corporations have become necessary entities in America and around the world. The concept of a corporation provides a financial way to pool money to take on big nongovernmental projects. Corporations are responsible for most of the jobs, exports, and wealth of America. Allowing corporations special privileges and rights seems justified to some extent. After all, America is competing head on with other countries who do not hamper their corporations with minimum wage laws, environmental regulations, or regulations about the safety or working conditions of their employees. It seems to me that citizens should support corporations who have these extra burdens and should allow special treatment that is not detrimental to our country or the world. The extra burdens, though morally necessary, put our companies at risk of losing the purely capitalistic battle they have to wage. When corporations lose or find it cheaper to export jobs, we all lose.

While it is true that this international problem for America has gotten completely out of control with our own determination to spread capitalism around the world, this is not to say that corporations in America should have the right to regulate themselves. And self regulation is exactly what their political contributions are aimed at getting.

After losing so many of our manufacturing jobs to other countries, the idea that floated around during the Clinton and Bush administrations seemed to be that the financial sector was the way out of our problems. Indeed the financial companies were pulling in most of the big bucks as the first increments of deregulation took place. Further deregulation appeared to be the answer to expanding our national wealth (wealth that was privately controlled and incidentally readily available for political contributions, or to do things like pay for jobs for ex-politicians.) Deregulation seemed to work well at first. Historic regulations that had been put into place to avoid a second Great Depression were being repealed one after another. Investment "banks" were becoming free to be "creative." Laws were enacted (both parties had a hand) that encouraged the lending of money to riskier and riskier people. The unregulated astronomical salaries of the top executives were dependent on profits made in the short term rather than the long term. Percentage-wise, bonuses were just so much better with higher amounts of money in play. Risk therefore was the order of the day. Should the investment company fail, well, no one would be taking away the executives' money already earned. Executives could just move on. Besides, the federal government was unlikely to allow investment companies to fail when they were "too big to fail." There was strength in expanding risk and therefore size. Unwise practices seemed to be wiser than they were in 1929.

Investment companies had a right to free speech in the form of campaign contributions (in addition to the ability to pay off good behavior of former regulators in the form of jobs after retirement from regulatory duties.) I think free speech was a currency that bought investment companies way too much but I guess the Supreme Court disagrees.

While I have cherry picked  an example of how regulation of companies by our government was needed in spades, most companies would like a tip of the hat from government in one form or another. Influence in the form of political contributions is extremely profitable. While it is time to listen to companies and what they need to survive, it is not time to allow them to buy off candidates to push through whatever government actions financially suit their specific company in the short term. That is just not an efficient way for them to spend their money, for one thing; nor is it particularly good when regulations beneficial to our society and the well being of our citizens are influenced by lawmakers who owe blind allegiance to the corporations which financially lifted them up the ladder of political success (and that would be loyally cash friendly for the next campaign.)

What we actually need is: http://www.bloomberg.com/news/2011-01-18/obama-orders-regulation-review-to-boost-growth-wsj-reports.html  Note this move has almost been universally panned by the liberal community. There are unnecessary regulations that stick around long after they are useful or were misguided in the first place. For the right wing, check out some of the proposals being made to take some unnecessary stuff out of recently passed health care regulation. As I see it politically, Republicans need to propose and do real things rather than making symbolic moves to "repeal" the entirety of health care reform, for instance. As usual, little work or thought is necessary to oppose something in it's entirety. Why not offer suggestions to improve on parts? I honestly don't know. This shows much less willingness to compromise than President Obama's olive branches that have been held out for almost two years with little or actually no success.

(B)
As to whether we should only allow registered voters to contribute to political campaigns, I won't question the Supreme Court's definition of our constitutional right to free speech on that one. Every citizen has the right to free speech, if political contributions equate to free speech. I would consider that any citizen of the United States, registered voter or not, would be far more relevant than foreign shareholders in our multinational companies, or foreign customers for that matter, who apparently enjoy freedom of speech to influence American elections just from the companies they associate with. If money buys free speech, American citizens all have that right, registered voters or not.

Limits on contributions are trickier. Arbitrary numbers surely must leave someone out. Lower amounts of money would not give anyone much influence, and higher amounts would give more wealthy people the most influence. And I hope we do not strive to be a plutocratic any more than we already are. This same concept of limits should apply to corporations, of course. A company can grow larger through laws favoring deregulation or favoring regulations that limit their competition's well being. So following this growth there is more money or more influence. Just as monopolies grow larger, the regulations against monopolies become more remote as the monopolies have more political influence. Again arbitrary dollar limits have been the law in the past, but no more. The interesting thing to me is the fact that the price of my corn flakes should be directly affected by the political tenacity of my corn flake provider's executives. Or think of it from the perspective of my corn flake company's ability to compete in the world wide capitalistic system, wasting tons of money to influence a government which should already be trying to help an American business. (In my own personal experience the point of pure evil was reached when my Blue Cross / Blue Shield fees, umm contributions, were used in unlimited amounts to fight the health care bill I favored, or just muss it up as much as possible. I had no voice at all in my employer's choice of health care insurance and therefore the free speeches given with my money that to me might be better used to help the sick and dying.)

Similarly, the rich could influence politicians with high political contributions. Politicians could pay them back by, say, tax cuts where the highest percentage of the money goes to those rich, perhaps enough to make giving to politicians so much easier and profitable. It is similar to the growth of monopolies in a way.

Because of the undemocratic nature of our election process, the only vote for President that I felt was significant was my monetary contributions to the Obama campaign and those of other representatives that were not in my state. Here is why: the President is elected by a state by state winner-take-all process. My vote is forever meaningless as is everyone else's in my state because we are not a "swing state." In the primaries, I very seldom have a voice because it is often decided well before my state gets to vote. In the Senate race, I have a variable influence depending on which state I live in. In Wyoming, the few people there have 2 votes in the Senate, the great many people in California have the same 2 votes as well. And to top it off, it's much easier for a company's or citizen's monetary contributions to influence Wyoming because the television commercials are far cheaper than in California. The selection of the Supreme Court depends entirely on my nonexistent vote in the Presidential elections. And the House, while the most democratically selected, uses gerrymandering of districts to keep hold of seats once they have hold of them and a make up a majority with the ability to redraw districts.

Suffice it to say a better solution can be found here: http://en.wikipedia.org/wiki/Campaign_finance_reform_in_the_United_States#Voting_with_dollars
"Voting with dollars," is a truly terrible name under which to market a a very good idea that gives everyone equal influence. The best part of this plan isn't the public financing part, although this would insure everyone had an equal vote. The dynamic game changer is that corporations would have to donate their money without quid pro quo for donations. No politician could be sure where the money was coming from because of the anonymity in respect to politicians, rather than to citizens. Ingenious, I think. What do you think?

*for Dianne and Randy

**Specific examples of limits also  posed in this paragraph: "Suppose item B is true, and everyone has a $1000 political limit. A registered voter could spend $500 for candidate #1 (say for President), $250 for candidate #2 (say a Senator), $200 for candidate #3 (say a Representative), and that would be ALL that a person could donate for that election."

[The extra $50? Pocket it for coffee money for staying up all night to watch the election coverage from actual deciders in Florida where I'm personally sending my first $500 .] -Mike :)

As far as history goes... Part 2

"The decadent international but individualistic capitalism, in the hands of which we found ourselves after the war, [WWI] is not a success. It is not intelligent, it is not beautiful, it is not just, it is not virtuous - and it does not deliver the goods. In short we dislike it and are beginning to despise it. But when we wonder what to put in it's place we are extremely perplexed."  - John Maynard Keynes, 1933

Once, long ago, without relying on unborn future historians to do the work, I believe John Maynard Keynes had it right. The fact that in very recent times we have moved so much closer to this "international" (now termed as globalism) "individualistic" (now unabashedly and often even fondly termed as greed and self interest) capitalism would be astounding to those in 1933's bleak world. My parents often talked of the Great Depression and what it was like to live through it. More and more people do not have parents to impart this wisdom to them, that our system failed even the virtuous. Our Bush Depression doesn't resemble the Great Depression only because of the safeguards left standing after years of deregulation. Can you begin to imagine how bad the outcome had the Social Security money been folded into the stock market like many tried to do in the name of deregulation? Perhaps it would have taken longer for deregulation's inevitable bubbles to burst, but the consequences would have made the panic so very much worse. Not only would we have been in danger of losing our 401k's but also Social Security. Thank the heavens no one thought of deregulating unemployment insurance as well.

The last part of the Keynes quote took me by surprise. Nothing has changed. Even the great Keynes could think of nothing better than tweaking the system we have. Was Keynes "perplexed" because he couldn't figure out a better system? Was he hogtied by the values of capitalism he knew would never go down no matter how deep our suffering was? I don't know. But I still have not grown up enough to lose my ideals that anything can be made better, that anything is possible. If tweaking the system is the way, then by all means let's tweak it. But we all need to be clear about why we are tweaking it, and teach our children some other economic values than greed and self interest, leading them to the inevitable non humanistic unchristian "animal deals" * that eventually hurt virtuous people who haven't played the game ruthlessly enough, or were just unlucky.

*Thick as a Brick - Ian Anderson (Jethro Tull)  I listened to this on my walk this morning. Somehow I made sense of this economic/political song when I was in my early teens. Anything was possible as a teen... From the song: "See there, a child is born, and we pronounce him fit to fight. ... We'll make a man of him put him to a trade. Teach him to play monopoly and how to sing in the rain."  "So you ride yourself over the fields, and you make all your animal deals..."  Very rebellious, but you get the point. The unspoken wisdom gained is that there must be a better way than playing monopoly and singing in the rain as a distraction when we inevitably lose to those wth the least humanistic values, who play by the animal rules.

As far as history goes...

“As far as history goes and all of these quotes about people trying to guess what the history of the Bush administration is going to be, you know, I take great comfort in knowing that they don’t know what they are talking about, because history takes a long time for us to reach.”— President George W. Bush, Fox News Sunday, 2/10/2008

I think the President meant "by people" or "from people" rather than "about people." But in the uncertainty of the moment, I certainly must say he was right, I think. It is decidedly uncertain at any given moment of exactly what is happening around us. In school I remember learning about Heisenberg's uncertainty principle. In computers and psychology we had the "observer effect." All point to some kind of effect that we have on our surroundings to the point that we cannot ever be sure what our surroundings specifically or scientifically are.

I have spent a lifetime noticing the causes and effects of my actions, with moderate levels of observational success. I can say that I developed some skills in positioning myself away from bad things and influences. However, the bad things that happened to me in my life were the ones that gave me the most experience. Paradoxes are plentiful in life.

When I studied eastern religions for quite some time, I learned of many of these paradoxes. One of the things that has always bothered me is the insistence of some people that they are absolutely correct, when there are so many facets of any given argument. In playing the devil's advocate, I can too sound like I feel I am absolutely correct. When proven wrong, I shrink though, and admit a good argument when I hear it.

Politicians by nature never admit their mistakes. I think the main reason is that everything they say is on record for all time as if it was said yesterday. It is to their best interest to allow others to reveal mistakes while never revealing that they too know they made mistakes. An admission would be on record for all time, while accusations tend to fade.

Ideologies never let politicians down. They can always explain their decisions in terms of the reason's why they were made. Regardless of whether something turned out terribly, history may well prove them right if they follow an ideology that remains through time. The why can make up for almost any mistake.

I too have relied on some principles in my understanding of life, if ideologies can be equated with principles. I think I have always had a bad memory, from early days, and had to rely on unifying concepts more than others. Things had to be organized up there or all this knowledge I was learning and forgetting would be useless. It makes sense, from a librarian's perspective as well. However, a librarian doesn't have much of a need to distinguish between the worth or importance of information. The unifying principle is simply in how to find it. The Internet has turned us all into librarians to a certain degree. But the question still remains as to what is important enough to focus on.

Some time after President Bush started relying on future, possibly yet to be born, historians to come to his defence, there was some study that quantified that 61 percent of historians thought that the Bush presidency was the worst of all time. As I have said, I'm not finished with President Bush's book so I can't really make a judgement yet. :)   But there is a reason I rely on this humorous backpedaling. I'm always uncertain.

The reason I have become fascinated with economics is that I still don't have a unifying principle or ideology that answers the questions in a coherent way that I can fully understand. I know a bunch of things I dislike about our system, but I'm not sure what the next step is. No one asks this question. Even in the midst of a massive system failure that must have shaken every one's core beliefs just a little, we still adhere to old ideas that seem completely unworkable except when we step in and take serious and massive governmental action to get back to our core ideology, which will inevitably fail yet again.

Capitalism has destroyed our manufacturing companies and export figures. Other countries do this capitalism thing much better and in a much more ruthlessly pure form than we are now capable of. Worse, we seem to have little hope of catching them.We have exported our capitalistic ideas quite successfully but exported none of the underpinnings that make it a gentleman's game. None of our morals or highly paid skilled labor or environmental laws seem to be catching on in the internationally pure form of capitalism. These aren't capitalistic concepts and we will continue living with them no matter who we elect to office. Why are we so surprised that outsourcing of jobs and cheap labor, and environmental catastrophes are a clear result of the capitalistic development coupled with a lack of economic morals?

What I keep hearing is how we need to get back to a pure form of this capitalistic system to cure all our ills. But what we have done in the past, has affected what we can do in the future. Like the uncertainty principle, we have observed the problems, changed the system to correct them, then thought we were observing the same system as before. We describe the system today as if we have made no changes to moderate it. When we loosen the regulations of the system we put into place, we see the original system in all its glory.

Booms and busts did not begin with capitalism. But capitalism does nothing at all to moderate them, in fact it makes them much more liable to happen due to the emphasis on self interest as a value. In fact any extra freedom capitalism gives us is most often used to organize people to act in concert. Competition being an important part of capitalism, seems to be antithetical to the value of self interest. It is seldom in my best interest to go against people who can help me. Both ideas of competition and self interest are necessary to success in terms of the sole measurement of success, profit. But competition is undermined by self interest. If you and I buy the same stock, we both profit. If we don't act in concert, we don't gain as much. If you sell yours, I had better sell mine, too, because the price will be going down.

All is uncertain when we consider how it might look through history's perspective, but we act as if all is very certain in the now. If we look back into history at the certainty of the financial experts before 1929 and those before our more recent panic, we will see that certainty has nothing to do with reality. We effect the reality by expressing our certainty about it. We influence others to think the same way en masse, and we doom ourselves to the booms and busts that are inevitably the result. All would be well if booms and busts efficiently used resources by some magical invisible hand, but alas, there is a human toll to our expressions of certainty.

Likely

The impact on the broader economy and the financial markets of the problems in the subprime markets seems likely to be contained.  - Ben Bernanke, Fed Chairman, March 2007 [emphasis mine]

Was Bernanke expressing incompetent truthful optimism or competently untruthful optimism? What our system really hinges on is how people perceive events and vote with their money and ballet. The moderating "invisible hand" of the markets portrayed as some kind of supernatural force* is really a myth.

I caught a few segments of a public radio show as I did errands this morning. The show was on what the Fed really does. It was interesting to note how much of the economy is based on perception. Our whole economic system rests on the peoples trust in our money supply. Invisible hand or not, people are the ones who vote with their money. They decide whether or not to buy the latest slicing gadget on the boardwalk. They also decide whether to take their money out of the stock market and banks based on what might be whispered in their ears by the media.

Oddly, after missing most of this radio show, which I would have enjoyed very much had I not wanted to finish all my errands, the next show was on the biggest media fiascoes of the decade. Blame President George W. Bush all you want for the "mission accomplished" banner, but it seems as if he was sort of duped by the press like we all were. While I don't believe his generals were duped, I think, the president may have just wanted to bask in the glory the press had created. I don't know, I haven't gotten to that part of his book yet. :)  (I have so many books to read and Perry Mason is quite a draw over Decision Points.)

This second public radio show began with an account of the biggest press mistake the show's creators could think of and that was the sensationalistic coverage of the toppling of the statue of Saddam Hussein. Apparently, the square with the famous statue was very close to the reporters' hotel.  The reporters gathered here in this square because the American military was containing this small area and it seemed much safer than their hotel which had been bombed the night before. Most were just going to a safe place. Some very good reporters were calling in to argue that there was a bigger overall picture to see and they were heading that way. After CNN's coverage of the square with the statue these veteran reporters were told from their home offices that they were just not "getting it." The journalists were citing their years of experience in covering wars and trying to show they knew what they were doing in trying to cover the overall picture. However, they were told by the guys in the suits that the story was in that square; the money shot, so to speak.

And the story? It went something like this: when the military vehicles started arriving, a soldier radioed in that we ought to pull down that statue. His commanding officer thought he was not concentrating on the main objective of securing the area and denied the request. Soon some Iraqis started climbing the statue. Noticing this, and the fact that the square seemed secure, a soldier radioed and asked if he could at least give them some rope and a sledge hammer. Yes, the answer came, go ahead, but DON'T use military vehicles to assist. As the small number of Iraqis started to hit the statue, it became obvious that they could not bring it down. And soon it became obvious to the commanding officer that with CNN covering this one shot wall to wall, if that statue did not come down it would symbolize failure. Soon the military helped pull the statue down, symbolizing and portrayed by the press as a microcosm of our total victory. A wider shot of the square would have shown basically an empty square except for a few Iraqis and a bunch of journalists filming and standing around in an outer circle. In no way did this small secured area symbolize anything important.

Again, we can blame President Bush for the banner or we can blame the media for the coverage of "victory."  Honestly, it doesn't matter why the people were misinformed about the extent of the problems we were facing in Iraq, nor how they would soon be compounded. What the press wanted was to put things in terms of something simple that Americans were familiar with.  They totally lost me as lawlessness and looters reigned. I remember the ideas expressed that Iraqis were now free, as if that freedom was an answer to all their problems. and as a consequence the resources needed here in Iraq compounded the problems in Afghanistan and eventually in our economy. The important thing to me is that most of us were wrong minded. Where I am now once more lost is the result of recent elections showing we cannot remember back just two years. Certainly we have no clue about the 1930's when the same kind of panic caused problems that decades could not fix. Without the trillions the Fed and the Federal government has used to moderate the Bush Depression, we certainly would be a lot more knowledgeable about the problems we are facing. Things would look much more like a free and open capitalistic system. So, why not trust the invisible hand a little more than we have?

God may be perfect, but we are not. And He doesn't make up the "invisible hand" as the phrase subtly implies; we the people, make up the "invisible hand" that coordinates markets and government policy. And often guided by greed and not God or real values, we, like even financial geniuses like Ben Bernanke, are often sadly ignorant at many key junctures in history, likely as not.

* In my mind, the "invisible hand" concept is the basic underlying principle of our way of life and economics. It has an almost religious significance. I'm sorry to keep repeating the phrase, but much of my later arguments will be in regard to how this simple phrase and the man who inadvertently created such a powerful phrase have led us into a simplistic way of thinking that does not take into account many factors that that are extremely important but might be harder to understand.

Evergreening

The empty and interminably unsold lots next to our house have been empty long enough that pine trees are starting to grow to a considerable size. Soon we won't be able to see many neighboring houses. Evergreening the neighborhood is what I like to call it... no wait a minute.  Evergreening....

In the drug industry if a drug is about to go generic, the company making the drug will make a small change to it. Like.... add vitamin D to a bone strengthening drug. That way, when the generic drug drops in price the drug company will have a new nongeneric drug ready to go and they can charge the insurance companies and unwitting consumers a higher nongeneric price for the same thing plus the inconsequential addition. All this for just the cost of a few well dressed reps armed with free lunches for the doctor and staff.  They call this "evergreening." linky   I wonder if it's called the same thing in the college textbook field when they add inconsequential stuff to keep the textbooks "fresh" and keep the reselling of old ones at bay on Ebay...

Actually, I just read the term used in yet another context and that is what I was going to write about. Evergreening, in finance, is when a loan is continually renewed rather than repaid. Apparently, according to Financial Times: linky or linky evergreening is the way banks have been handling Commercial Real Estate problems. As Financial Times puts it: Commercial Real Estate "has not generally grabbed attention" because this was not as "dramatic" as subprime and sovereign debt problems (sovereign debt was problematic in the EU this last year.).

Again, apparently, if I am understanding this, the banks decided that Commercial Real Estate loans could be extended when their borrowers encountered problems but the "drama" of the sub-prime loans needed a whole bunch of what has been described as "robosigners" to foreclose on homeowners fast enough. And Financial Times thinks that rising interest rates will cause this whole structure a bit of trouble; more problematic subprime loans added to the amounts the banks have extended to businesses who just couldn't make their payments. The rising interest rates mean more foreclosures on homeowners and more defaults on the evergreened loans which tend to need the evergreen treatment just about now coincidentally as interest rates rise. George W. Bush can rest a little easier as historians focus more and more attention on Greenspan and his easy credit of days gone by so those terrorists would not win.

Thankfully the trees growing around my house are generically cheap and not very dramatic just yet although they may be quite tall next year. The way that banks are handling our future, those trees may be enjoyable for a long time. Hopefully, my evergreened drugs will keep me alive long enough to enjoy them at tremendous heights.