Friday, November 28, 2014

Wales Compromising Scotland: Should Britain Keep Its Promise?

A few months after residents in the Scottish region of the E.U. state of Britain voted not to secede from the state by a margin of 55 to 45 percent, a state commission announced proposals for the regional assembly to have more authority. David Cameron had promised on behalf of the state government that the Scottish region would be given more power provided the residents reject secession. To be sure, replying on such a promise in political matters is hazardous at best, as changing political winds can easily erode such sand castles. At the very least, political players with their own agendas can succeed in obfuscating the understood validity of such a promise.

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

Tuesday, November 25, 2014

Political Theater Undermining American Democracy

To be viable, a representative democracy needs a virtuous and educated citizenry. Thomas Jefferson and John Adams agreed on this point in their exchange of letters in retirement. Their assumption was that an electorate would be able to apply judgment informed by virtue and a broad knowledge to not only matters of public policy, but also the candidates and incumbent office-holders themselves. To the extent that the people in power use it to present a false image, the judgment by the popular sovereign is unavoidably marred. The democratic system itself falters even if it is being portrayed as strong by those at its helm. I contend that the extent of political theater being orchestrated by U.S. office-holders compromises the democratic legitimacy of public power at the federal level.

In 2010, U.S. Sen. Carl Levin’s Investigations subcommittee questioned Goldman Sachs managers on the mortgage-based securities sold the even the bank’s best clients without mentioning that the subprime-mortgage-based bonds were “crap.” Lloyd Blankfein, Goldman’s CEO at the time, calmly told Levin that the bankers were under no obligation to share their view of their product on account of the risk-return tradeoff. In other words, a client might want a lot of risk, and such bonds may be of value in that case. However, it could also be argued that crap is crap, regardless of risk. Furthermore, simply in putting their derivative securities up for sale, Goldman Sachs was saying, implicitly, that they have value. In short, it is reasonable to have expected the U.S. Justice Department to make use of the evidence that Levin’s subcommittee amassed to charge Goldman Sachs with fraud. Yet no such action emerged after the dramatic hearing; it was sheer political theater. After all, the bank had contributed $1 million to Barak Obama’s 2008 presidential campaign—its largest single contribution. No wonder Blankfein was so calm; he undoubtedly knew that in spite of the political theater, he had nothing to fear from the feds.

In 2014, Chuck Hegel resigned as U.S. Defense Secretary. In announcing Hegel’s departure, Barak Obama said he was sorry to see the man go. Throughout the prepared remarks of both men, nothing suggested that the secretary had been shown the door. Meanwhile, the media was claiming that sources in the administration had disclosed that Hegel had been pushed out. In an article the next day, The New York Times refers to Hegel’s ouster, quoting David Rothkopf, an expert on the National Security Council, as referring to “the Hegel ouster.”[1] Tension between Hegel and the White House had begun with differences on the administration’s policy on Syria, according to the Times. If the president even just gave Hegel a hint that the secretary should resign, then the scripted announcement was sheer political theater—that is to say, a lie.

If it is so easy for government officials to lie on such a scale, then how can an electorate possibly make informed judgments when voting on candidates? Put another way, if politicians’ respective brands are marketed for effect rather than being based on facts on the ground, then voters actually vote for or against something that does not exist. Were the elaborately orchestrated lies exposed as such beyond a shadow of a doubt, perhaps voters would vote against the offenders simply for having lied so egregiously. Such lying befits a squalid character—certainly not one that can be trusted in positions of power.

Moreover, the basis of representative democracy in the popular sovereign—the People—is severely compromised if much of what is presented through the media is an act designed to manipulate rather than inform the general public. In The Federalist Papers, the idea emerges that the larger the electoral district—meaning more constituents per representative and more distance involved—the less familiar the voters tend to be with candidates and office-holders. This argument bolstered the point that most of the domestic power should remain with the States rather than be transferred to the proposed General (i.e., Federal) Government. Back in 1787, the entire U.S. population was about 7 million. By 2014, that population had grown to over 310 million, with twelve States having more than 7 million. Logic alone would seem to dictate that each of those States should be federal systems. California, for example, could devolve some of its sovereignty to States covering the central valley, the north, the Bay area, and southern California. The particular preferences in these regions would be better reflected in public policy—instead of a one-size-fits-all approach that tends to go to the lowest common denominator.

The U.S. itself is essentially an empire made up of fifty republics (i.e., representative democracies) and one federal republic. Regarding the latter, regulating interstate commerce and providing a common defense have traditionally been imperial-level governmental functions. With the political consolidation at the imperial level has come greater distance, both interpersonal and geographical, between the power and the people. A person in Kentucky, for instance, is more likely to know his or her representatives in Kentucky’s legislature than in Congress. What percentage of Americans have spoken with Barak Obama? The vast majority ely on the managed image through the media, and it is natural to assume veracity without evidence to the contrary. In short, the imbalance in the federal system, along with the growth in population, creates a climate in which egregious lies can thrive at the expense of representative democracy in America.




1. Mark Landler “White House Shake-Up That May Have Stopped at Just One Departure,” The New York Times, November 25, 2014.

Monday, November 24, 2014

Banks Too Big To Jail: A Systemic Conflict of Interest

When a blatant conflict of interest is ensconced in a regulatory system, the public can expect to be insufficiently protected from being harmed. Such a people is probably too tolerant of such conflicts, or else too weak to effectively counter the concentrated power of the vested interests benefitting from the sordid design. I submit that the relationship between U.S. banks and the Federal Reserve is plagued by a clear conflict of interest, and furthermore that the refusal of the Fed and the U.S. Justice Department to go after fraud committed at the big banks is a direct result.



The full essay is at Institutional Conflicts of Interest, available in print and as an ebook at Amazon.