Tent Revivals and Business Goals

This Weberian-ish hypothesis popped into my head the other day: the history of constant revival in American evangelicalism is paralleled in the demand for continuous improvement in capitalism. Let me explain a bit. Proto-evangelicalism in the American colonies was largely a reaction against the elitist and exclusive institutional churches with the most power at the time. Itinerant preachers like George Whitefield challenged the established churches by holding revival meetings. As it turns out, though, one revival was never enough. To this day in the rural South, revivals happen repeatedly and quite regularly. Complacency in faith amounts to a lapse in faith. In contemporary capitalism, we see a similar pattern: Stable profits and productivity might as well be loss and decline. (Note here that the point is constantly increasing profits. It's not enough to make more money than you spend; you need to make more profit this quarter than you did last quarter. It's difficult to understand mathematically how this could ever be sustainable.) I think these cultures at least have to be mutually reinforcing. I'm hesitant to draw a causal arrow, however.

Sport, Economics, and The Krug

Krugman wrote this today about Ben Bernanke's recent speech:

OK, this is...basically a Rawlsian view of the world, in which you think of life as a kind of lottery in which you draw a ticket that includes things like your genetic endowment as well as the wealth of your parents. And what you're supposed to do, ethically, is support the economic and social system you would choose if you had to enter that lottery not knowing what ticket you were going to draw — if you were making political choices behind the "veil of ignorance".

As soon as you portray the choice that way, you've introduced a strong presumption in favor of redistribution. After all, if you should happen to end up as a member of the top 1 percent, an extra dollar at the margin won’t mean a lot to you; but if you should happen to end up as a member of, say, the bottom quintile, an extra dollar could make a lot of difference. So you should, other things equal, favor a system of progressive taxation and generous aid to the poor and unlucky.

So why not favor complete leveling, America as Cuba? Because for many reasons, both economic and political, we favor a market economy in which people make decentralized decisions about working, saving, and so on. And this means that incentive effects become important; you can't levy 100 percent taxation on the rich, or completely insulate the poor from any consequences of low income, without destroying the incentives you need to make the economy work. [emphasis added]

That last sentence is telling for the implicit assumptions it makes, which are, I think, telling about both popular opinion in the U.S. and the state of economics as a discipline. First, either the world is Rawlsian or it isn't; either life is essentially a crap shoot or it's driven by incentives. One does not get to make both arguments. The base assumption of modern and contemporary economics is that, all else being equal, individuals will be incentivized to behave in ways that are in their best interest. That "all else being equal," however, is a huge caveat. In effect, it says, set aside the fact that we live in a Rawlsian world. If our starting point is to set aside reality, we can play whatever deceptive game we like with the remaining evidence. Second, the "incentives you need to make the economy work" line assumes a specific type of economy, one that creates and rewards inequalities. So, the logic goes, we cannot change the rules to the current game because the rules of the current game demand that we follow these rules; if we changed the rules, we'd be playing a different game, with different rules and different goals. I posted on this before, writing:

It's like arguing that, in (American) football, it is necessary to reward teams with six points for crossing the goal line in order to give them an incentive to drive down the field and not sit idly on the sidelines. What this neglects is that it's the game of football itself--the rules of the game that we created--that establish that driving down the field toward the opponent's end zone is the goal. Now, imagine one of the participants arguing that there are other sports that we could be playing, baseball for example, with a new set of rules. Another player might complain, "But, if we allow each player a chance in the batter's box, what motivation will he have to score a touchdown?" Just like crying, there are no touchdowns in baseball.

It's impossible for us to have a serious conversation about "the" economy until we are able to realize that we are framing the discussion about "an" economy.

Buying the Yellow Brick Road One Paver at a Time

My post yesterday about Chick-fil-A reminded me of this video from the Story of Stuff Project:



Last summer, many of us progressive boycotted Chick-fil-A (here is a related post) after their president and COO, Dan Cathy, spouted off against homogamy and after the extent of the corporation's "charitable" arm's funding of anti-gay causes was widely reported. In reaction, conservatives held a "Chick-fil-A Appreciation Day." These were parallel attempts at economic protest. Both are problematic. "Voting with our dollars" or "consumer activism" only makes sense if we admit that capitalism has radically undermined the democratic process. The way to fight breast cancer is to buy things that companies have painted pink, we are told. The way to save the environment is to buy things that companies box in recycled packaging. They way to fight for workers' rights is to shop anywhere but Walmart. The way to fight for same-sex marriage is to eat anywhere but Chick-fil-A. We are taught to consume our way to utopia. Tony Benn famously said, "...from the wallet to the ballot." Voting with one's dollars is a sign that she has given up on the ballot and that capitalism is vanquishing democracy.

If Businesses Behaved Like Colleges

What would the world be like if businesses were run like colleges? In the wake of the University of Virginia scandal, there has been a lot of talk--including from me--that colleges should not be run as if they were businesses. But, what if we flipped the scenario? What if we lived in a world that held business and financial institutions to the same standards as institutions of higher learning? Let's start with a list of what both sets of institutions do:

Business firms/corporations:

1. earn profit for owners/stockholders, full stop.

Colleges/universities:

1. create human capital by educating the citizenry
2. create knowledge through research, both pure and applied
3. provide services to the community in line with faculty expertise

Colleges are only (or at least should only be) compelled to grow inasmuch as is necessary to further the three goals listed above. Public universities answer ultimately to the residents of the their respective states via the democratic institutions; colleges are essentially about producing public goods. Businesses answer ultimately (as required by law!) to the profit interest of their stockholders; businesses are foundationally about private goods. In other words, colleges do for everyone (even those who don't go to college), but businesses do for only a few.

What if businesses worked not for the benefit of a few but for the many? Instead of making a decision, for example, to close a factory in a Rust Belt town and move it to Mexico or China where labor is cheaper (i.e. more easily legally exploited) because it would increase shareholder's dividends, what if they considered the local implications of increased unemployment and stress to the social safety net programs? What if instead of whining about the lack of qualified workers available (during high unemployment, no less) they invested in training new hires for the work they needed done--even if it cut into profit margins? What if...?

This should not just be an academic exercise. We should demand this kind of ethical--not even calculus, just arithmetic from the businesses we work for and buy from. If we are going to pretend that corporations are people, we should at least demand they be morally upstanding.

--
h/t to this tweet that got me thinking.

Musical Chairs

If you haven't heard yet, SCotUS upheld the core of Obamacare. Now, on to other things.

Jay Livingston has this cool post at Montclair SocioBlog about educated people forced into jobs by the recession for which they are overly qualified. Go there now and read the entire post. Sandwiched between some cool photographs and data is this gem of an analogy:

If this were a round of musical chairs with ten players, the nine people who fought their way to a seat might well be attributing their seated status to their own abilities. The tenth, looking at the whole scene from his standing position,  might see lack of success as having something to do with the ratio of chairs to people. "Nonsense,” say the seated ones. "I got my chair thanks to my own efforts, so stop complaining." 

This would make a great teaching exercise! I'm wondering if it is a little juvenile for even college frosh, but I'm going to give it a try this fall in my introductory-level soc class.

A Firm League of Friendship

I've heard some comparisons made between the Eurozone and the Articles of Confederation (AC) in the United States (US), and they make sense to me. The Eurozone V.1, like the US under the AC, has a fragmented economy and political system. The implication has been that the Eurozone is failing and will either need to dissolve or be replaced. We shall see. Indulge me while I follow this down the rabbit hole, though.

If the comparison is extended, there is that big Civil War-thing hanging out on the horizon. The U.S. Constitution rectified the issue of a fragmented political system in the early-US; however, by failing to unify the northern and southern economies, it sowed the seeds for what would erupt in the Civil War. Without whitewashing the human rights issue of slavery out of the history, the Civil War was between an industrial North and an agrarian South. In Europe, there is a "principled" industrial/financial north and a "corrupt" service periphery. While I'm hesitant to write this as it seems hyperbolic, wars are fought over such divisions. Could the European project, which started as a way to ensure democracy and to eliminate open, violent conflict, ironically push the continent to the brink?

Incentives, Risks, and Innovation

As I mentioned before, I'm in the midst of another free trial-month of Netflix. I just finished Ken Burns' The Shakers yesterday. It's not a perfect film nor is it of the caliber of Jazz or Baseball--two of my favorites--but it's worth watching, especially for fans of history or religion. I was fairly ignorant to the Shaker movement, and I learned quite a bit. One interesting tidbit that caught my attention were the number of inventions that the Shakers amassed. Among the most notable are the circular saw, the flat broom, and the clothespin.

As Anabaptists emerging from the Radical Reformation movement, Shakers demonstrated a strong work ethic, which is nicely summarized in Mother Ann's famous imperative to "Put your hands to work, and your heart to God." Perfection in work was paramount, but it did not require toil per se. Thus, Shakers had a strong incentive to reduce the onerousness of their chores, hence such inventions as listed above.

Many business writers and economists today would have us believe that inequality is necessary as an incentive to overcome the risks that are required for innovation. Why would a pharmaceutical company spend money on research and development for a cure for a deadly disease if not for the promise of enormous profit? Why would people have developed the personal computer or social media networks if not for ludicrous futures filled with IPO's and wealth? It turns out that these are all counterexamples to this assumption. Mark Zuckerberg was an awkward teenager trying to be popular when he developed what would become Facebook. Only years later did he tack on a profit model. Steve Wozniak was having fun, doing what he loved when he developed his personal computer. He had to be convinced that it would be profitable. Jonas Salk was simply trying to help people when he developed the polio vaccine. He famously wouldn't patent it for personal profit.

Profit and greed are not the only motivations for innovation, particularly for pro-social advances. Religion, for example, can motivate in powerful ways and entail unintended beneficial consequences, as we see in the history of the Shakers. According to Weber, we have Protestantism to thank for the modern spirit of capitalism itself. Religion, in part, also drove the advancement of the printing press. Religion, however, can temper motivation in a way that laissez-faire capitalism cannot. (As I am wont to say, "There is no invisible head attached to the invisible hand.") The Hebraic religion gave us prohibitions on usury and a day of rest after every six days of work. It needn't be religion that does this, though. Reason is equally capable.

"Irrational Choice Theory"

Read this article now. It's an interview with economic sociologist Neil Fligstein. Here's a snarky selection:

But economics has remained by and large impervious to most sociological ideas. Every so often economists pick one up – they picked up social capital and they’ve picked up network analysis a little bit. What they do is usually separate it from its roots and fail to cite its original source....When they do pick up and deploy ideas they use their own grammar and act as if they made the ideas up.
...
And as for the dismal science of economics, I think reality undermines it every day without this assistance of sociologists.

Behold, Mighty Oceanus!

The economy, more than anything, is just about moving resources around. When the economy is up, there is a lot of movement. When it is down, there is less movement. Paul Krugman has a neat metaphor to explain this using a babysitting co-op. I have a new one.

Think about the economy as an ocean. We tend to think of oceans as being static, but they actual move water around quite a bit. There are naturally occurring streams, tides, and currents that constantly churn. Part of what this movement of water does is to distribute heat around the globe. Because of the axial tilt of the earth, some places get warmer than others. The streams, tides, and currents distribute that heat around. Without it, waters would stagnate; some places would get too hot, others too cold.

Just like that mythical ocean, today, as the economy fails to move, some places are heating up (e.g. the growing coffers of most corporations and the pockets of the wealthiest of the wealthy) while others are growing cold (e.g. everyone else). If we follow this, than we have to get the water flowing again, and any arbitrary agitation will do the trick. That is why government stimulus (in sufficient quantities) works. Artificial influxes of money turn on the faucet (to strain the metaphor). Movement is good for everyone.

"Capitalism Is Killing Our Economy"

On Saturday, Philip N. Cohen tweeted from @familyunequal:

"Capitalism Is Killing Our Economy" <-- a little like, "Keep your gov't hands off my Medicare" bit.ly/qbNCqu #OWS

Initially, this simile caught me off guard. After some thought, though, I see that he is wrong. Medicare cannot exist without the government as it is an entitlement program; however, there are other ways to organize an economy besides just capitalism. I think what the 99%ers mean is that socialism might offer a more favorable alternative to the mixed economy that seems to be too easily exploited by the 1%.

Who Is Responsible for the 14th Amendment?

There's been a lot of discussion lately about how the president should deal with the possible failure of Congress to act on the too-low debt limit. Some have suggested that the 14th Amendment grants the president the authority to simply up the debt limit himself. Here is the actual text of the amendment:

The validity of the public debt of the United States...shall not be questioned.

President Obama has made it clear that he does not agree that the Constitution grants him this authority, and as a former professor of Constitutional Law, I would have to bow to his judgment on that one. One thing that I haven't heard anyone mention, though, is that if the nation does default (fully, partially, or technically) who bears the fault? If the president isn't responsible, then the Congress would clearly be in breech of the Constitution. Wouldn't that set the entire Congress up for impeachment or even punishment?

A Further Thought on Benton Harbor

There is a causal problem with the notion that communities like Benton Harbor are in such bad shape economically and otherwise because of a lack of pride. The arrow actually points the other way: civic pride is the result of political-economic wellbeing.

Using Rachel

I've made the decision a while back to refrain from posting contentious stuff on Facebook and instead to funnel all of that thought- argument-provoking stuff here to my blog. I strayed from my own guidelines this week and re-posted a clip from The Rachel Maddow Show on my FB wall that was related to my hometown. I posted it to FB because I know that few people keep up with this blog, and I thought that some friends who either used to or still do live in my hometown would be interested. Anyway, I feel compelled to write some about it here, especially since there have been several comments to the FB post.

I don't like Rachel Maddow. As I've written before, I generally find Ms. Maddow to be unnecessarily divisive. In this case, her characterization of the troubles besetting Benton Harbor, Michigan, was rather glib and in many cases uninformed. That said, I appreciate that a national figure is calling attention to a situation that is too readily accepted as unproblematic by those who live in the region (or at least not problematic enough to elicit action).

The overarching problem is one of perspective. We typically think about our lives and our social world in individualistic terms. For example, why is St. Joe relatively prosperous? Well, it is full of "good people that work hard," who have "pride" and are "sensible." Why is Benton Harbor so worse off? Well, the implication is that "they" are bad people who are lazy, who lack pride and are irresponsible. By reasoning individualistically, we severely limit the scope of our responses.

A sociological perspective--one that takes larger level consideration into account--would point to institutional problems like race and the economy. Benton Harbor's troubles go back a very long way, but they start to get appreciably bad during deindustrialization. Beginning in the 1960s, Midwestern factories began relocating to the South where labor costs were cheaper (i.e. there were more poor people willing to work for lower wages). This devastated many Northern industrial cities, resulting in the so-called Rust Belt. Once thriving cities such as Gary, Indiana, Detroit, and Benton Harbor, Michigan, saw record unemployment. Many of these recently unemployed were Southern blacks who were part of the Great Migration of the early-1900s. With a lack of social networks and constraints to labor mobility, these places quickly devolved into demilitarized zones. Those who were able to escape, did. These privileged folks had larger social networks from which to draw and fewer constraints to their mobility--oh, and they were disproportionately white, giving rise to the term White Flight. If we look to Benton Harbor, we have almost the perfect example of this. A once racially-diverse, thriving community loses much of its factory jobs and with them the relatively affluent whites to now-greener pastures across the river, leaving behind the poor black unemployed to fend for themselves.

So, what in the way of solutions? The State of Michigan has taken over Benton Harbor's democratically elected government. Given the city's history of failures and corruption, it seems like a completely reasonable solution, but what might be the unintended consequences of such an intrusive action? If we look to the Arab world right now, we see several examples of what happens when people don't feel that they have a voice in their government: they tend to rise up in defiance. Now, it is unlikely that the people of Benton Harbor will become guerrilla fighters, attempting to win back independence from the state, but it is entirely possible that crime rates--already fairly high--will get even worse. What is needed instead are jobs. If Whirlpool really wants to make a lasting difference in the community, it should bring back its factories instead of throwing money at well-meaning but inconsequential civic improvement projects; it should pay for school children to go to college, and it should encourage them to return to their hometown, to make it a better place instead of encouraging gentrification.

To the people of St. Joe: if you don't want authors, academics, and commentators "intruding" on your affairs, then get your goddamn house in order! For too long, we dismissed the black/white, stable/poor dichotomous status quo of the Twin Cities. Everything is not OK.

--
UPDATE: the New York Times has a piece on Benton Harbor's emergency management.

Why, yes, I Would Like a 'Free' Golf Retreat to the Bahamas!

Paul Krugman wants medical doctors to decide what Medicare will cover and what it will not because insurance companies have a perverse incentive to allow unnecessary stuff to be covered so they can profit and Congress is in the pockets of many of those insurance companies and can't be trusted to make decisions that are in their constituents' best interests. I think he is right about Congress and the insurance companies, but he gives doctors a lot of undue credit. If we've learned anything from the explosive growth of Big Pharma over the last few decades it is that doctors--as much as our elected officials--are beholden to corporate interest.

The solution is simple: eliminate corporate financial influence at all levels of the government and in all sectors of the medical field.

Hegemony and False Consciousness in Multiple Race Identification

I read a thought-provoking piece in the NYTimes today. Here is my response.

Unwittingly, self-identifying as being of more than one race could diminish one's identification with any meaningful group with which s/he might have a shared interest; moreover, the hegemonic push that paints multiracial identification as somehow more accurate and even socially desirable has the effect of driving a wedge between people who erstwhile would have been compatriots in a shared cause. Imagine someone who would have been forced to identify as black in the past but who is now black/Hispanic. In practice, this means the person is no longer black or Hispanic but of some newfound hybrid which is its own thing. The result is that all identities become fragmented to the point of becoming ineffectual.

We've been doing the same thing with class identity in the US for quite some time. What class are you? lower? working? middle? upper? Here's what people tell us:


Most people want to be middle class. But, are they? Here is what their income distribution looks like:

By encouraging people to view themselves as "middle," we give them a false consciousness. I worry that the same process is happening with race now.

The Radicalization of P. Krugman

Has this economic crisis finally radicalized Paul Krugman?

But watching the failure of policy over the past three years, I find myself believing, more and more, that this failure has deep roots--that we were in some sense doomed to go through this. Specifically, I now suspect that the kind of moderate economic policy regime...I...support--a regime that by and large lets markets work, but in which the government is ready both to rein in excesses and fight slumps--is inherently unstable. It’s something that can last for a generation or so, but not much longer.

Finally! Now what, Paul?

Further Evidence that Capitalism Is Irrational

Courtesy of the New Yorker via Dr. Krugman:

Krugman: "The Perils Of Government By Poll, 30s Edition"

Paul Krugman today:

In light of the way we actually got out of the Great Depression, it’s instructive — and depressing — to look at polling from that era. Two results from Gallup, in March 1938:

Do you think government spending should be increased to help get business out of its present slump?
Gallup Poll, Mar, 1938

37% Yes

63% No

In your opinion which will do more to get us out of the depression: increase government spending, or reduce taxes on business?
Gallup Poll
(AIPO), Mar, 1938

15% Increase government spending

63% Reduce
taxes on business

21% No opinion

Immigration Links

"Raising the Floor for American Workers" from Center for American Progress
http://bit.ly/6BSQEC
[see especially chart on page 13 of full report (PDF link)]

"Headless Bodies and Other Immigration Tall Tales in Arizona" from The Washington Post
http://bit.ly/bC5VXa