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Unbalanced Priorities

Aug 04 2011 12:36pm

I just completed (but have not yet released) Common Sense episode #204 (“Looking for a left Hook”) and already I am bracing for the angry response from the segment of my audience that always pulls their hair out when I delve into my thoughts about jobs and American prosperity. As I drove home from KBANDEN, I thought about several aspects worth discussing that I didn't bring up on the show itself. That's one reason this blog exists, so I want to use this entry to build upon the thoughts I discussed in that podcast.

Let's start with some basics. I am not an economist. I do not approach the problems of jobs and prosperity from the position of one. There are many schools of economic thought (all of them disagreeing) but I do not adhere to any of them specifically. Instead, I have some priorities, and I try to work through the issues logically using those priorities as a road map. My method is Socratic, and it is a traditional approach for a non-expert to use to address a subject with which they have no expert training.

One of these priorities of mine is balance. Anyone who has studied world and U.S. History knows that the system of labor gets out of balance from time to time. There are many examples of the pendulum swinging too much towards either labor, or management/ownership throughout the eras. There were times that American workers were so powerless in the system that they were virtual wage slaves for their employers. Tales of “company towns” with the company stores where workers ended up owing their employers money at the end of every month were common at the turn of the 19^th Century for example. In this era working conditions were often criminally dangerous (by the standards of today) and the long hours laborers were expected to work were borderline inhuman. Even children could be pressed into the workforce and faced conditions no better than their elders. It took the very best efforts of the American labor movement over many decades to mitigate the disparity in power between labor and ownership.

But the imbalances could swing towards the other direction too. By the 1970s for example, the very labor unions that helped remedy the imbalances of the 19^th Century were creating imbalances of their own in the U.S. economy. Union corruption became a big problem (both within the unions themselves but also as a part of their role as a “special interest” in the political system as a whole) as did the inflexibility and inefficiencies that unions often fostered in pursuit of worker protections and benefits. It was not in the best interests of the American people to have the labor system significantly imbalanced in either direction.

Which brings me to the current state of affairs. I received an email yesterday from a libertarian listener who told me that even though he has always reflexively favored a completely “free market” with a policy of non-interference by the government, he was starting to become very nervous about how one-sided the power relationship between labor and ownership has become. The letter writer's ideology told him that one approach was superior (his libertarian model) but his eyes could see that the results of our current policies (broadly similar to what he favored) were hurting Americans and he could not see the situation self-correcting. He saw the imbalance, and it made him nervous.

Now, most of you have heard my Socratic approach used when dealing with this issue many time in past shows. I start from the obvious question of how Americans are supposed to compete for jobs with people who live in regions where the cost of living (and worker compensation) is much lower and where worker protections and benefits are less prevalent.

Now, when I was a child, this issue was slightly different than it is today. Back then the question was; “How was a U.S. company  going to compete with a foreign firm that can make products so much more cheaply than they can?” The worrier was the U.S. firm concerned over foreign imports of goods. Now the question is; “How can U.S. workers  compete with the laborers in nations that can make things so much more cheaply than we can in the U.S.?” The role of the worried party has now shifted from the company to the workers. The (formerly U.S.) company has learned how to compete with foreign firms. They just expand operations to places where they can reap the same competitive advantages that the foreign firm was formerly enjoying over them. Problem solved...for the company. For the American labor force though, this is where the problems mushroom.

By the current global competitive standards, U.S. workers are overpaid, overprotected (by things like occupational safety laws and the option to sue in court) and they receive too many other benefits (such as health care insurance). Some American political schools of thought would make the argument that in these cases, the market doesn't lie. When U.S. labor wage, protection and benefit standards fall to a point where they are similar to the nations offering the best labor “deal” for the companies, then the U.S. workforce will have found its natural level again. It will then again be competitive. Or so the thinking goes. Is this really what any of us want? To have American wage and benefits levels come down to a “global norm” more in line with a developing nation than a post-industrial one?

In the back of my head, I can hear the arguments of the classical economics theorists. They would probably ask me what I expected...was I really saying that workers should be paid more than their economic worth? Once upon a time, the idea of the iron law of supply and demand for wages made sense. That economic dictum stipulated that labor made gains in wages and compensation in times of scare surplus labor, and lost gains in eras of plentiful labor. The fluctuating amount of labor competition created periods where both labor and management could derive advantage. The globalization of the world labor force has destroyed the iron law because it eliminates the potential for labor to ever be scarce. A particular field, job or discipline might see a temporary shortage of qualified people (such as a nursing shortage for example) but the general global labor pool will always be flush.

Now, many of these same economic theorists will point out that technological change made such changes in the labor market inevitable. What they ignore when they say this is that there were (and are) many opportunities to, like is done with a Bonsai tree, trim and prune and shape the framework for this new emerging system (in fact such “trimming” is done every day.). The virtual shrinking of our planet due to things like the Internet and other communication and technological innovations was going to happen (and was happening) anyway. Nothing would have prevented that reality from occurring , and no one favoring a free and open society would ever wish such a thing to happen. But the WAY this transformation known now as “globalization” was handled...how it was molded...the rules and parameters that were laid down...all that stuff was a result of those who lobbied the people in decision-making roles over a decade or more. The corporate influence in Washington D.C. played a huge role in determining which path (out of many potential approaches) this globalization transformation took. The forces of labor played virtually no role in this process. That's how imbalances in the system are created.

I remember the debate over this new emerging era well. I was upset about this issue at the time and was debating the question in interviews with legislators and on the radio day in and day out as the actual votes affecting such things were held in Washington. It was clear at the time that big financial interests saw the opportunity to outflank First World standards (in everything from worker wages and benefits, to safety and environmental standards). “Globalization” became an easy way for companies that never liked things like minimum wage laws, worker protections and a litigious society to simply opt out of that “First World” system with few if any downsides. In fact, things are set up to maximize the benefits for the company. There are even tax incentives offered by the U.S. Government that encourage American companies to move operations outside the U.S.. Even a diehard champion of allowing the “invisible hand of capitalism” to solve all problems by itself might well have disagreements with a tax code that makes an already uncompetitive situation for American workers even worse.

I have endured the criticism for many years now about my position on this issue. I can't help but notice though, that everything I predicted and all the things I worried might happen 15 years ago have come to pass. I said “How will First World workers compete? How will this not be a race to the bottom hurting workers everywhere eventually?” I was assured that I didn't know what I was talking about (I wasn't alone though. A lone ally 15 years ago was U.S. Congressman Peter Defazio who joined me time and again on the radio to discuss the issue while my uncaring audience collectively yawned). I was given excuse after excuse about why my concerns were scare mongering, why First World workers would dominate the creative and innovative fields, why education would transform our old manufacturing -based system (based on working with our hands) into a 21^stcentury one where Westerners worked with their minds. We would, I was repeatedly (and condescendingly) told, design the products, poorer, lower paid work forces would make them. Democrats and Republicans told me this at the time. Many of these people were accepting money from the entities that stood to benefit from anything that provided access to cheaper labor costs. Here we are, 15 years later, and the corporate world is thrilled with the system of global labor that we have, and whole classes of people in First World nations (especially the U.S.) are shell-shocked and reeling. The individual loss of personal prosperity has had a “trickle-down” effect on the government's tax coffers making our debt problems that much harder to deal with. The loss of individual prosperity has become the loss of national prosperity. And not only does no one seem to have a feasible way out of this mess, no one is really even talking much about it at the governmental level. As I said in the show, “Jobs” will soon become the only word you hear out of our legislator's talking-point repeating mouths...but they will not be addressing the question of what those jobs pay.

So what can be done? The subsidiary effects on our society from Americans not making enough money are affecting everything from tax revenues to consumer spending. And while this problem would be difficult to solve under the best of conditions, the companies currently benefiting from being able to compensate and protect their workers at a level far less than American workers pour tons of money into our political system to see that these advantages remain in place. The Supreme Court keeps ruling that more participation (money) injected into our political system by corporations, far from being a corrupting influence, is in fact a good thing. Our political leaders have strong financial disincentives to deal with this question of American wages.

A perfect example would be the most egregious of the perverse incentives the tax code provides for these corporations. Who could argue that U.S. taxpayers should continue to subsidize the move of corporate operations from the U.S. to elsewhere? It is a given that such a subsidy would be opposed by the vast majority of American voters if they had any say in the matter. But the fact that such policies exist and continue is evidence that they do not.

Which brings us to a related point, an idea that far left liberals have been shouting about for years; the question of corporate power. Now, usually when I talk about the forces that have significant influence on our legislators I say “corporations and special interests” to denote that there are many other groups that have power in Washington that don't fall into the typical corporation category. The gun lobby, the senior citizens organizations the trial lawyer's association are examples of these. But the power of corporations has collectively grown to a point where they can resist all efforts by voters to change government policy affecting themselves in any meaningful way. If Americans decided they wanted to tweak the economic system we have to help American workers make more money (and we could elect people who would push through such actions) could it be done over the opposition of the corporate entities (and their many intellectual surrogates in the Media and think tanks) that prefer the current status quo? Is the nation-state still more powerful than the combined power of our largest businesses? I don't know the answer to that.

But perhaps even caring about such a question is a function of my world view. I have never bought into the idea that corporations are what the constitutional framers of the United States meant to include in their designation of “The People”. The late 19^thcentury Supreme Court ruling that created that reality has always seemed an absurd leap of logic to me. To me, the people of the United States have the right to alter the “carrots and sticks' in the economy to “promote the General Welfare”. Lord knows, our leaders have done this constantly since our founding and still do it now. But who they do it for  is the key question in this day and age. If the plight of America's workers were foremost in their minds, the choices they make and the legislation they craft would be very different than what it would (will) be if the interests of the corporations are their priority.

All I am asking for is the former.

What legislator in their right mind would get up publicly and openly and argue against that?

HH #39...the Audio Book

May 30 2011 3:02pm

I can always tell by the volume of email on the subject just when listeners are reaching the limits of their patience when it comes to the release of the next Hardcore History episode. Usually this point is reached at about the 60 day mark (and this is because our release schedule is about every 60 days...so it is no surprise).

Well, we are at about the 60 day point right now, so it's probably a good time for an update, eh?

As many of you know, we struggle in normal times to hit our 60 day deadline. I know that some listeners must think we sit around for 55 or so days and then decide to “get serious” about an HH show in the last week before the due date. Of course, nothing could be further from the truth. We work from the moment an episode is done, right to the release of the next. In between, we find the time for four Common Sense episodes, all the reading and research for both shows, plus all the biz stuff required to keep “KBANDEN” running. So the “bon bons between episodes” theory is not true...no matter what you may have heard (haha).

Well, this last episode of Death Throes of the Republic is by far the longest episode we have ever done. The desire to be finished with the series (for good business reasons) mandated a very long show and we are looking at (by best estimate from here) a good 3 hours of content. That's the equivalent of 2 normal HH episodes. Just the extra amount of time required to re-listen to an episode that is that long eats up more work hours. I mean, if we have to listen to the episode 2 times in one day, that's 6 hours burned right there.

In addition, our normal assumptions and style/approach we use for a normal length HH show had to be thrown out the window for this very long piece. The pacing had to be changed, the rhythm, the structure. It all had to be crafted more like an audio book than an episodic “show”. We have taken to calling it an “audio book” around here so that people will judge the end product by the right criteria. We expect this to be the only HH show of its kind...because I don't plan on getting in the position where we need to do such an extra long show again. They are murderous for us.

As I have said before, from a business standpoint the decision to do this “Fall of the Roman Republic” story was probably not a good one. It locked us into the same subject matter for too long a period of time. I misjudged how long it would take to tell the story (not the first time this has happened) and we are paying the price for that with this unusual, extra long “audio book”. I will try not to make that mistake again. Hopefully when you hear it, you will enjoy it. But it won't sound the same as one of our normal HH episodes. The pacing and drama build-up and the like required some tweaking to work in the long form. The good news is that everyone should be pleased regardless. For those who enjoy as much Rome as I can dish out, there's a very long show heading your way. For those who are suffering from “Rome overdose”, this will be the last Rome stuff for a long while.

When you will actually GET the show is still unknown at this point.

The U.N. Foreign Legion

Mar 18 2011 6:23pm

The Pope! How many divisions has he got?

-Joseph Stalin

Leave it to a brutal realist like Stalin to lay everything out in the most stark terms. A Pope with no military was not something worth paying attention to. The same applies to the United Nations.

In the recent Common Sense show we did (“Arming the Independents”) we waxed nostalgically for a UN that existed only in the minds of the dreamers who created it (and maybe not even there). A UN that could actually do what it was designed to do. A UN, for example, that could prevent genocide.

It was Winston Churchill who first suggested early in its development that the UN “should forthwith be equipped with an international armed force”. In fact, the UN charter signed by all member states obligates them to provide both armed forces, and the facilities to maintain them for UN use in maintaining peace and security around the world.

The lack of such a real force was one of the “defects” Churchill felt might make the fledgling UN as unequipped to handle reality as had been the UN's idealistic predecessor The League of Nations. And so it has. The UN faces two huge obstacles to its ability to prevent things like genocide. The first is a force capable of resisting force, the other is the willingness to use it.

The time of the Rwandan genocide is the best example I can think of when an even basic, vanilla version of Churchill's UN idea should have been able to justify its existence. During the three months of genocidal killings there, between half a million and 1.5 million Rwandans lost their lives in a conflict that could have been halted with a few thousand first-rate troops. Former U.S. President Bill Clinton said he believed that with 5,000 U.S. soldiers he could have saved 500,000 lives. American casualties in Rwanda would almost certainly have been negligible. A lightly equipped French force of just over 2,000 was in Rwanda near the time of the genocide, and was virtually unassailable by any indigenous armed forces. So why weren't such forces deployed?

The reasons are complex and varied. The self-interest of individual nations often comes into play. This is precisely why if we want to have any ability to mitigate future Rwandas, we need to think of a force that is an international force, not a bunch of elements drawn from member nations simply fighting under a U.N. Flag (see Korea, 1950). The organization also needs structural reform to address the pervasive problems in its design that hamstring its ability (and willingness) to take action when the need arises. What the U.N. needs is their own equivalent of the fabled French Foreign Legion.

The Foreign Legion is a famous French elite force that takes recruits from all over the world into its ranks and turns them into superior soldiers. Historically, the Foreign Legion was often used in the past to uphold France's control of colonial areas. The UN version of such an outfit would instead be tasked with aiding desperate people who need help in situations where guns are required. There is an obvious need for this in the world.

The United Nations currently employees the troops of member nations in so-called “peacekeeper” roles. But the familiar blue-helmeted soldiers are deployed by the UN only to maintain an already existing agreement between hostile parties. The UN has no force that can be put into situations where the lives of hundreds of thousands of civilians (or even millions in some cases) could be saved by the employment of a few thousand actual soldiers. In other words, UN peacekeepers are there to prevent a currently peaceful situation from turning violent, not to protect innocents in situations that currently are  violent. What this means is that the UN can maintain a peace agreed to after a genocide has occurred, but they have no force that can do anything about it while it is going on. This undercuts one of the primary missions of the organization.

So, how much would be needed by the UN to carry out such a role? Well, the obvious counter-question is to ask what such a force would be asked to do. A modern military land division usually has in the neighborhood of 15,000 to 20,000 or so troops. It is considered to be the smallest sized force that contains all that's needed within it for basic operations. A division usually has units attached to it to provide for other needs (a contingent of aircraft or armor might be a good example) and includes supporting logistical forces. The UN with even one operational division of its own capable of offensive operations is an immensely different organization than the one we have now. In answer to Stalin's question, the UN would then have one more division than the Pope.

Now, one division does not count for much in a real war. It has limited uses. In any sustained contact with hostile forces it will get worn down quickly (which is why the UN should have one reserve division as well). But in a sense, that limits its usefulness to those situations of immediate humanitarian need. It simply isn't good for much else besides going into destabilized areas and helping to protect large numbers of threatened civilians from extermination. But in Rwanda, it would have saved a million or so people from being hacked to death by a rival ethnic group.

Now, building such a force would be ludicrously easy. An advertisement on Craigslist will probably get you enough applicants to fill out the ranks (and these days they would be veteran  applicants. There's so many ex-soldiers out there capable of serving in an international force that we might as well be living in the post-Peloponnesian war era or during the wars of Alexander the Great's successors). The cost for equipment and support elements would also be ridiculously low by the average standards of military expenditures. Cost is really no factor. Will IS though.

As originally conceived the UN was a far more robust group than it actually turned out to be. What good would providing a military force to a UN suffering from the current (and long-standing) pox of inertia be? Could it ever agree to use it? And if it did, might it decide to use it in a situation where the USA (or another major nation) didn't want it to? Could one actually envision such a disagreement leading to war between the UN and a major nation?

Well, let us not forget that the 1950-1951 war in Korea was fought under the UN flag. Eventually China would fight on the side of the North Koreans in that conflict (and the USSR had been very involved from the start of it, even flying air missions for the North Korean side), so that's already an example where the UN found itself at odds with another major power (or two).

But in the 1950s, as now, the UN had no true independent military force of its own. It required others to pledge to fight for it. If they would not, the UN had no power at all. Even when the troops could be rounded up, the nations providing the military forces also had total veto power over operations. Had the U.S. not wanted to fight in Korea, there would have been no Korean War, regardless of what the UN wanted. Even if the UN been in possession of an army division or two of their own, they still wouldn't have been able to intervene in Korea. That's too small a force for an endeavor like that (The Chinese alone were said to be using a million men in the fighting).

But that's what should keep anyone from becoming too worried about a UN with troops being a danger to the vast majority of sovereign states. A division or two of top-flight, 1^stclass troops (on the French Foreign Legion model) is a great tool to have to deal with minor-sized problems that could kill large numbers of people (Rwanda for example). It won't be useful in wars of any consequential size between nation states. It would instead be the equivalent of an armed international police force. Unlike the blue-helmeted peacekeepers the UN uses now though, they would truly be UN troops, and they wouldn't be at all squeamish about using force if the shooting started...or to get it to stop if it is directed at large numbers of helpless civilians.

It would be intriguing to see how the major world powers reacted to the idea of an independent UN military force capable of offensive action. It seems logical to assume that if they had favored something like that, it would already be a reality. An independent UN military force hints at the idea of a more independent UN in general, which also likely wouldn't be favored by the major powers. Many countries would have to show their true cards when it comes to whether they really favor the idea of a UN, or if they only favor it when they get to be part of a special class of nations within it (such as members of the UN Security Council) that can thwart, all by themselves, whatever the world body decides to do.

Let's not pretend that's not a thorny issue for other reasons as well. National sovereignty is the direct opposite of what the UN offers the world if the idea behind it is taken to its natural limits. “World Government” is a pervasive fear in the USA, and I confess to having that fear myself sometimes. But the answer is not to say that sovereignty mandates that governments be allowed to exterminate their own people if they want to (uninterrupted by foreign military meddling), but that a UN that is going to be acceptable to major nations is going to be one with finely drawn mandates. Preventing genocide is a nice narrow mandate and I would trade everything the UN does now (UNICEF included) in exchange for the organization having the willingness and ability to stop an immanent or currently occurring genocide. In fact, I think such a move gets you closer to the original mission of the organization as it was conceived.

But what if one Security Council member vetoes the UN resolution authorizing the use of force in a genocidal situation? What about the will necessary to make such troops effective? Isn't this an institutional problem the UN has? Yes, it is institutional. But I think it is institutional because it is structural. The Security Council has always been the rigged part of the UN. Everyone knows this. Even while hoping through idealistic eyes that the UN would halt things like genocide, the Great Powers were not willing to lower themselves to the status of just one among many nations. Hence any of the permanent members of the UN Security Council can veto anything passed by the UN that they don't like. Those nations also, not coincidentally, happen to be the victorious major nations from the Second World War. They are “Grandfathered” in to positions of special power. Every other country is limited to a temporary turn on the Security Council in revolving fashion. Because the structure of the organization is rigged, the vetoes from Security Council members usually act to stop the UN from moving decisively in any direction on the big issues of the day. If we want a UN that works, this needs to be reformed. Imagine if today, in the interest of fairness, the veto power of permanent members of the UN Security Council nations were removed. How do you think the U.S. or Russia or China would react to that? Again, it sure would force the large nations to show their real feelings about the idea behind the UN.

Abolishing the permanent Security Council membership would pose some issues. Churchill made a comment once defending the idea of the unfair Security Council design by saying something to the effect that the UN should not become a body where the weak nations dictate to the strong. Though he was trying to defend the UK's self-interest in that case, in fact he does have a broad point. Should two tiny nations really be able to outvote a very large one? It seems to me that if this is about representation, that this could be done proportionally by population as it is in many parliaments (including the U.S. Congress). Perhaps you get one vote per a certain number of citizens. To allay fears of an intervention-happy UN it could be mandated that a 2/3 vote be needed to use UN troops (or some such safeguard). The Security Council would either have to be done away with, or all positions on it would need to be on a rotational basis. There's just no good moral justification in the 21^stcentury for the special treatment the nations that dominated the world in 1945 get in the world body.

Few will defend the UN today in terms of their ability to get their core  mission accomplished. Yet I hear few people talking about helping that flawed organization evolve into something that CAN do what it was formed to do. There's no question that the need is there. Genocide hasn't vanished from the face of the Earth. Many in the U.S. are also leery of more foreign involvement. I heard from many of them after the last Common Sense show (I am one of them myself). A functioning UN with a modern division or two of independently raised and operated troops would go a long way towards doing these sorts of humanitarian dirty jobs so that the major nations of the world don't have to.

After all, you certainly can't count on the Pope to fix things. I mean, how many division has he got?

Your dollars for their democracy

Feb 25 2011 3:53pm

How much is OTHER PEOPLE'S freedom worth to us (in dollars and cents at the gas pump)? That's a question that popped into my head after a news story I heard the other day on FOX News.

I had the radio on to a sports station that I listen to, and they have a FOX News update every hour. Earlier this week they had a reporter talking to people filling up their cars with gasoline, and the reporter was subtly trying to tie dissatisfaction with gas prices at the pump to the anti-dictatorship unrest in the Arab world. I kept wanting the reporter to take the next logical step in the questioning. Instead of INFERRING a connection to the radio listener, how about asking the gas station customers themselves the question that was being hinted at? Ask that guy at the gas pump “How high would gas have to go per gallon for you to decide that an Arab world ruled by dictators was preferable to one ruled by the Arab people themselves?”

At that point we have put the American people in the position of many of our leaders for the last 60 years. How much is the freedom of others worth if it comes out of our paychecks? How much is tyranny worth if it saves us money? I wonder how they answer.

A few corrections in advance

Feb 23 2011 4:13pm

Okay, we haven't released the latest Common Sense episode yet, but I have caught some errors during playback. They aren't anything that affects the conclusions drawn, or the points we made, but we like to make corrections when we find the errors.

First, during my fast-talking discussion about the U.S. Defense budget, I said that some of the expenditures of the nuclear weapons program are part of the Agricultural department. It is, of course, the Energy  department.

Second, In our rundown of global military expenditures the placement of nations is not correct by today's numbers. We said we were quoting 2009, but it might be more like 2008. The latest numbers (which change, it seems, depending on the source) is the USA at #1, China at #2, the UK at #3 and France at #4 (followed by the Russian Federation at #5). As I said, it doesn't alter the point we made, but I wish I had gotten it right while I was recording.

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