Thursday, May 22, 2014

The Swiss Vote to Restrict Immigration: Direct Democracy in Action

On February 9, 2014, the Swiss voted in a non-binding referendum by a narrow margin (50.3%) in favor of immigration quotas and an end to “mass immigration.”[1] This result took the government by surprise; officials had been urging the people to vote no. So too had the Swiss bankers—only coincidentally of course. Just enough voters rebuffed the establishment of power and wealth for the referendum to pass. Johann Schneider-Ammane, the Swiss Economy Minister, suggested that a “culture of excess” in the pursuit of profit sometimes at the expense of the common good had discredited the political and business elite in the eyes of ordinary people.[2]

Johann Schneider-Ammane, the Swiss Economy Minister. Rarely does a prominent member of the political/business elite publicly criticize it while stressing how it differs from the people. 
(Image Source: Ruben Sprich of Reuters)

Put more abstractly, direct democracy broke from the grips of a firmly-established plutocracy (rule by wealth), even if only for a day.  This caveat is important, for the referendum’s non-binding feature means that the government is not bound to craft the majority vote into law. Put another way, the game-rules were tilted or rigged in favor of the financial sector and the government, and thus of representative over direct democracy, and, moreover, of plutocracy over democracy itself. If the check on popular passions afforded by representative democracy (e.g., terms of office) does not trump the value-added from the direct will of the people in direct democracy, the non-binding rule is sub-optimal.

As yet another drawback, E.U. government officials did not miss a beat in exploiting the non-binding feature by publicly pressuring the legislators of the independent state to resist writing the referendum’s result into law. Besides what this high-level squeeze says about the tilt toward representative democracy and even plutocracy at the expense of the people’s will having direct effect, I submit that the distinction between the nature and scale of an empire and those of polities on par with the empire’s constituent political units (i.e., states) is disregarded as well.

Martin Schultz, the president of E.U.’s parliament at the time of the referendum, immediately accused the Swiss citizens who voted yes of having succumbed to “the lowest instincts” rather than being led “by rational arguments.”[3] If the statement sounds like rhetoric designed to influence a vote already taken, the underlying intent may have been to exploit the referendum’s non-binding feature by pressuring the government of the independent state to act contrary to the will of the majority.[4] That is to say, Schultz and other E.U. government officials sought to exploit the distinction between direct and representative democracy.

The question of fairness in government officials of an empire-scale union of states pressuring legislators in an independent state largely flew under the world’s radar screen. As various E.U. officials hinted that the maintaining the free movement of workers is a requirement in the European free-trade agreement (EEA), no one bothered to recall that an empire-scale “territory of territories” consists of many cultures, whereas within a state (or even an independent state-scaled republic like Switzerland) cultural or ethnic diversity does not necessarily exist, at least not anywhere near that of an empire-scale federal union. In fact, the E.U. citizens and residents moving from one state to another are actually “quasi-immigrants”—a hybrid status that reflects the dual-sovereignty that exists in modern federalism (e.g., the E.U. and U.S.). Therefore, inter-state movement of people within the E.U. is more necessary than the free movement of immigrants in the independent state of Switzerland (whose cantons are roughly equivalent in scale to counties in some E.U. and U.S. states). 

Is it fair that a policy stemming from the nature of an empire-scale “compound” polity be pushed on an independent state? At the scale of polities that are states (in empire-scale Unions-of-states) or regions (in China), or republics (in Russia), homogeneity (e.g., a shared culture) has been the default, and indeed arguably of value in terms of solidarity (which an empire typically has trouble achieving, given the inherent interstate diversity).

To be sure, the Dutch and German states had been empires in medieval times; that Switzerland was as well can be seen in the linguistic and cultural diversity still remaining there. Yet by early modern standards, those federations were on the scale of the early-modern nations (hence then on the state-scale, rather than that of empire). The strengthening of centralized monarchs and the related military advances effectively extended the quarters of homogeneity, and thus pushed out the scale of empire (as consisting of those nations).

In conclusion, in threatening the Swiss government with exclusion from the free-trade area because a slight majority of the Swiss voting yes felt that the diversity already extant in their state-scale polity was compromising unity possible at that scale (but not at that of an empire), the E.U. officials were conflating the nature of an empire with that of the political units therein. In other words, to apply the level of inter-state “immigration” needed in the E.U. to state-scale Switzerland involves a rather fundamental political category mistake. What is necessary and fitting for one level of governance is not necessarily so at another level.  



[2] Edward Taylor, “Swiss Immigration Vote Shows Loss of Trust in Business Elite: Minister,” Reuters, February 12, 2014.
[4] Actually, the majority of 50.3% is only barely a majority. Considering that only half of the eligible voters voted, the “majority” is actually a minority of the electorate, not to mention the general population. 

Should Britain Secede from the E.U.?

The real purpose of the E.U. is not economic, but political. It began as the ECSC, which was geared to making sure that Germany would not re-militarize by extracting iron from the Rhine region. The purpose of the E.U. is to obviate the sort of bloodshed that Britain saw in WWI and WWII. If the British people don't want to be in the E.U., then you should leave. I don't believe that even your own government should keep you from deciding such a matter as a people, directly. That said, with great power comes great responsibility, and this applies to popular sovereignty. In other words, the people taking up the mantle of direct democracy in a constitutional referendum should make an informed decision, looking beyond even the people's own immediate interests. The stakes are much, much higher than whether being in the E.U. is an economic net loss or gain to Britain on a yearly basis, or even whether the City is crimped or inconvenienced. Much more is at stake.

After watching Downton Abbey(season 2), War Horse, or Saving Private Ryan, you might want to reflect on the risks involved in secession. You might just be anticipating a future war between you and the continent. You might even be starting a chain reaction that could result in Europe itself being fractured. The Hungarian right, for instance, is urging Hungary to secede. Lest you think there is no long-term benefit in Eastern Europe being in the E.U., you might study Serbia a bit more than a century ago.

Oh, and by the way, the word from Switzerland is that the EEA is just about as restrictive as the E.U. because the EEA had to adopt most of the E.U.'s economic regulations in order to trade with the E.U.'s states. So be careful what you wish for—you might find that you have even less impact on trade regulations that bind you. You might be better off with a “multi-track” E.U. that, unlike the U.S., accommodates different preferences among the states. In other words—and I suspect this will not be lost on any of you—you can be part of something that outdoes the U.S. by improving immensely on modern federalism at the empire-level by showing the world how flexibility can be built in. Or, you can sit on the sidelines as the E.U. continues on to "ever closer union" while accommodating those states that want more room yet are nonetheless part of the union—part of the effort to obviate war in Europe for your generation and your posterity. The choice is yours.

The 2014 E.U. Presidential Debate:An Analysis

The election, or selection, of the E.U.’s chief executive in 2014 tacitly pitted democracy at the federal level against the equally legitimate prerogative of state governments to protect their turf through their direct involvement at the federal level. This tension exists institutionally in the European Council and the European Parliament, and in the problematic procedures for how the E.U. president is to be selected. In this essay, I contend that the European project has more to do in terms of how both the states and E.U. citizens both have a role in the selection.

Euroskeptics point to the democracy deficit as but one of the justifications for defending state rights against federal encroachment. So it is significant in terms of continued European integration that, in 2014, for the first time, the parties in the E.U. Parliament nominated their respective candidates for president of the European Commission, the E.U.’s executive branch. Although E.U. citizens could not vote directly for any of those candidates, the choice of representative necessarily involves a choice of party. Yet even this indirect, or parliamentary, democracy had to contend with the other major element of the E.U.—that which can be called confederal. Namely, the E.U. represents not only individuals, but also states. Whereas the European Parliament represents the former, the European Council represents the latter. In a system of modern federalism, wherein both the federal and state governments are semi-sovereign, both representatives of the people and officials of the state governments must be accommodated at the federal level. So it is fitting, though certainly not comfortable, that the European Council members—the state governments represented by their respective executives—are obliged according the 2009 Lisbon Amendment to “take into account” the choice of the European Parliament for President of the Commission “before selecting the new head.”[1] Of course, the choice of the Parliament is, in the words of The Financial Times, “the EU election result.” The implication of the Council having only to take it into account does not bode well for European democracy at the federal level.

It is no accident that in the 2014 presidential debate, Jean-Claude Juncker stressed that the state constitutions must be respected at the E.U. level even as Catalonia and Scotland bristle under two; he undoubtedly knew that the state governors would have a say on his candidacy even if the Parliament votes in his favor. Identifying this vote with the Parliament election, the five candidates were united on the stage in their firm belief that the state government officials in the European Council would be obligated to pick from among the five. Interestingly, the five did not hold as one would expect from a democratic standpoint that the Council would be obligated to select the candidate whose party does best in the election; not even parliamentary democracy is so direct, given the typical need to form coalitions.

 The state leaders sitting on the European Council are of course themselves democratically elected, and from this basis they could assert their own imprint on the decision from democratic auspices. Moreover, the governors could point to the U.S. as evidence of just how real the risk of political consolidation is at the federal level once the direct involvement of the state governments at that level is weakened or removed outright. This occurred in the U.S. in 1913, when popular election replaced appointment by state legislature as the means by which U.S. senators are selected. Mandating that the European Council accept the will of the people as judged by the Parliament by limiting consideration to the five candidates selected by the parliamentary parties entails that the state governments cede their power to see to it that the next E.U. president be a person who could be expected to protect the states' turf in the face of baleful federal encroachment.

To be sure, other ways exist for giving both states and individuals a role in the selection of a federal president. In the U.S. the Electoral College exists to give weight to both the people and the states. Technically, the voters vote for electors, who in turn meet by state to vote or the U.S. president. While this system suffers from severe flaws, so too does the procedure governing the E.U.’s presidential election in 2014.

The five presidential candidates at the debate held in May, 2014 at the European Parliament in Brussels. The debate went from issue to issue, more or less in line with what people were tweeting about, rather than focusing on the "big picture" of the European Union. (Image Source: Europolitics.com)

The 2014 election included the first E.U. presidential debate, which brought with it the implication that one of the five candidates would be elected as president. The five said as much. For the state governors in the European Council to protect the state-federal balance of power by “overruling” the election result would be to expose the democracy deficit as all too real. With only 43 percent of E.U. citizens voting in the last E.U. Parliament election, the number would surely be less if the message in 2014 is that the results of the voting do not matter in the selection of the federal chief executive. That much of the debate centered around banking and austerity rather than the future direction of the E.U. itself suggests that the event would not stimulate much voter interest in the E.U.

Making matters worse, Martin Schultz, president of the Parliament and one of the five candidates, claimed during the debate that the E.U. is “not a federal state. We are a union of sovereign countries.” This ceased to be the case when the E.U. gained its first competency from the states. By the year of the presidential debate, the E.U. institutions such as the Commission, Parliament, and European Court of Justice had enough governmental sovereignty to render Schultz’s claim patently absurd. Contravening his own assertion, Schultz joined with the other presidential candidates in asserting that the “sovereign” state governments represented in the Council are obliged to rubber-stamp the Parliament’s decision as per the federal election. In the words of James Madison, the European Parliament is a national institution whereas the European Council is federal; the mixture of these two types is what we know as modern federalism. So it is odd, to say the least, not to mention oxymoronic, that the sovereign states must bend to a federal-level election and subsequent confirmation by a federal-level “national” legislature. In American terms, it would be like telling the U.S. Senators that they are obliged to vote for the result obtained in the U.S. House of Representatives; the U.S. Senate being based on federal principles and the House resting on “national” principles.

In conclusion, the E.U.’s basic or constitutional law on the selection of the chief-executive is inherently unstable. The states could lose a means by which they have to protect their prerogatives against federal encroachment, and E.U. citizens could come to perceive the democracy deficit as real (and themselves marginalized as voters in federal elections). As the case of the U.S. attests, maintaining a viable federal-state balance of power is fraught with difficulties over the long term. Pretending the states are still sovereign will not help the Europeans do better. The best chance lies with forsaking neither the ability of state governments to protect their portions of governmental sovereignty nor the place of democracy distinct at the federal level. Unlike confederalism, modern federalism is a system of government in which both citizens and polities are members, and the various procedures and institutions at the federal level should be geared to enabling both of the member-types to protect themselves and enjoy a pro-active role federally.



1. James Fontalella-Khan, “Fresh Powers Add Spice to European Parliament Election Battle,” The Financial Times, 8 May, 2014.

Thursday, May 1, 2014

John Paul Stevens: Money Is Not Political Speech

In his testimony before a U.S. Senate Committee in 2014, former U.S. Supreme Court Justice John Paul Stevens addressed the need for an amendment to the U.S. Constitution giving Congress and the States the power to restrict political campaign contributions.[1] After listing leveling the playing field such that rival candidates have equal opportunity to persuade, freeing up elected officials from having to spend so much time raising campaign funds, and distinguishing constituents from non-voters (including unions, corporations, and people of other electoral jurisdictions in the U.S.), he stated his position in particularly clear terms. “Money is not speech,” he declared. “Speech is only one of the activities that are financed by campaign contributions and expenditures. Those financial activities should not receive precisely the same constitutional protection as speech itself.”[2] 

Justice John Paul Stevens looking every bit the jurisprud. 

In short, even money given directly to a political campaign does not reduce to political speech. Although Citizens United (2010) and McCutcheon (2014) were being much cited at the time as baleful cases sure to transform the American democracy into a plutocracy, or rule by wealth-interests, Stevens went back to a 1976 case as the reason why a constitutional amendment rather a mere statute would be needed to place limitations on monetary contributions to political campaigns.[3] In denying Congress the power to impose limits on campaign contributions, the Court in Buckley v. Valeo issued the infamous equivalence between money and speech. To Stevens, money is speech is the fundamental error promulgated by the Court in Buckley that has led successive majority opinions to eviscerate campaign finance limitations enacted by Congress. I submit that the ex-jurist could have drawn on the Buckley decision for support, thus undermining the resulting legal doctrine as a legal precedent for the Court. 
  
The appellants in Buckley claim that “contributions and expenditures are at the very core of political speech, and that the Act's limitations thus constitute restraints on First Amendment liberty that are both gross and direct.”[4] Being at the very core of political speech, the monetary contributions effectively constitute such speech; restricting such expenditures thus violates the First Amendment directly in abridging the freedom of speech. In the words of the appellants, “limiting the use of money for political purposes constitutes a restriction on communication violative of the First Amendment, since virtually all meaningful political communications in the modern setting involve the expenditure of money.”[5] The money-speech equivalence is thus a function of modernity, and is therefore not quite as unconditional and inherent as money is speech implies at face value. Indeed, the Court’s majority opinion itself undermines the equivalence.

Seemingly cementing the equivalence yet rendering less than unconditional (and thus tacitly undermining it, strictly speaking), Court’s majority opinion accepts the appellants’ “modernity” argument. “A restriction on the amount of money a person or group can spend on political communication during a campaign necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of their exploration, and the size of the audience reached. This is because virtually every means of communicating ideas in today's mass society requires the expenditure of money. The distribution of the humblest handbill or leaflet entails printing, paper, and circulation costs. Speeches and rallies generally necessitate hiring a hall and publicizing the event. The electorate's increasing dependence on television, radio, and other mass media for news and information has made these expensive modes of communication indispensable instruments of effective political speech.”[6] The necessity of expenditures for a person (or persons, in associations) to have political speech makes the instrument political speech itself. That is, the necessity of the means essentially collapses the means-end dichotomy into a fusion as money is speech.

Yet the Court does acknowledge that “in contrast with a limitation upon expenditures for political expression, a limitation upon the amount that any one person or group may contribute to a candidate or political committee entails only a marginal restriction upon the contributor's ability to engage in free communication. . . . A limitation on the amount of money a person may give to a candidate or campaign organization thus involves little direct restraint on his political communication, for it permits the symbolic expression of support evidenced by a contribution but does not in any way infringe the contributor's freedom to discuss candidates and issues. While contributions may result in political expression if spent by a candidate or an association to present views to the voters, the transformation of contributions into political debate involves speech by someone other than the contributor.”[7] That is, the expenditure of money on political campaigns, as distinct from what Stevens called “general issues” in his testimony, enables someone else’s political speech. The money-speech equivalence being interpersonal (i.e., my money is equivalent to your political speech), restricting my contributions to a campaign violates the candidate’s right of free political speech.

Although it could be argued following the reasoning of the appellants in Buckley that technology and the contribution-levels enabled by the judicial doctrine of money-speech equivalence make a candidate’s right of political speech contingent on unencumbered political contributions, the interpersonal separation between the spender and speaker renders the money-speech equivalence as something less than a full, or fused, identity; restrictions on a person’s campaign contributions do not violate his or her first amendment rights. Therefore, Stevens could have cited the Buckley case in support of his argument that “money is not speech,” hence undermining the equivalence as a judicial doctrine from within the bloated whale itself.

[1] John Paul Stevens, Campaign Finance Disclosure, U.S. Senate Committee on Rules and Administration, April 30, 2014.
[2] Ibid.
[3] Even though Stevens distinguished such contributions bearing directly on an election from money spent on general issues, I am not sure this distinction can hold up in practice, especially given the increasingly elongated “campaign season” (which comes at the expense of governing).
[4] Buckley v. Valeo, 424 U.S. 1 (1976).
[5] Ibid.
[6] Ibid.
[7] Ibid.

Wednesday, April 30, 2014

NBA Team-Owner Faces Wrath of the Mob For Racist Conversation

As the justices of the U.S. Supreme Court were looking at two cases involving cellphone privacy from the standpoint of police access, NBC Commissioner Adam Silver announced that he had banned Los Angeles Clippers owner Donald Sterling from attending any NBA team practice or game for life and was being fined $2.5 million. Interestingly, given the tenor of the public discourse, the Clippers’ owner had not made a public pronouncement regarding his negative view of black people; rather, a tabloid had taped and broadcast a private cellphone conversation. That is to say, Sterling would have to pay a multi-million dollar fine for what he had said in a private conversation with his girlfriend. I contend there is reason to pause at this news, lest such public pressure establish the precedent wherein the passions of the mob is effectively given such reign as to render property ownership and the rule of law as so contingent that might makes right. 

Had the NSA rather than a Hollywood tabloid outfit recorded the conversation and made it public, the absolutist tone in the media’s non-debate would doubtlessly have been muted. Even so, the judgment on Sterling’s less-than-sterling moral turpitude would probably have been just as swift. Interestingly, a judge in Egypt had just announced his sentencing of over 600 defendants to death after what had been a ten-minute trial (with the vast majority of the defendants tried in abstentia). Although no one was publically calling for Sterling’s head literally, the air of la fait accompli would be difficult to miss throughout the American media. The sheer absolutist tone rings particularly shrill in a democratic republic that enshrines the rule of law rather than that of garden-variety dislike (whether that of Sterling or his many detractors).

As one pundit said on CNN, “You can’t fall on the other side of this issue.”[1] He added that the same applies to childhood obesity. Presumably a NBA team owner cannot denigrate fat kids and expect to be able to continue to attend the team’s practices and games. Saying “that player’s kid is a real fattie” on a private phone call thus risks the kid’s big brother coming back with public condemnations and a demand that the team owner be banned and even forced to sell his or her property.  In other words, property ownership can be contingent what a person says in private conversations that can be construed by other people as immoral or out of sync with contemporary societal norms.

Overwhelmed by the lashing out of anger at the octogenarian who had grown up in a very different era—indeed, in another century, when Nazi doctors were measuring facial features to extract impure races from Europe—the media barely mentioned the lack of any precedent in the NBA for removing an owner, and that moral turpitude is not listed in the bylaws as justifying the remove of an owner’s property-interest in a team.[2] Although a provision allows for “the interests of any owner” to be terminated if he or she “wilfully violates” any other provisions of the NBA “constitution,” The Wall Street Journal reports, “Many of the behaviors that constitute a justification for a forced sale involve financial issues, like failing to make payments on time or gambling on NBA games.”[3] If what is said in a private conversation between a man and his girlfriend can constitute a wilful violation of virtually anything stated or implied in the “constitution,” then why even bother with parchment?

One commentator even decried the owners for not having acted immediately to divest Sterling of his ownership, as if the owners would be justified in ignoring the NBA’s board of governors’ bylaws that give Sterling a period to reply and plead his case to his peers.[4] The sudden invisibility of the NBA’s own rules was itself largely off the media’s radar screen, conveniently dwarfed by the cavalcade of calls for Sterling’s head on a silver plate. John Locke, who had penned on the natural rights to life, liberty, and property, would doubtless be more than a bit uneasy at the demands that Sterling be forced to sell his property in such a way. Put another way, if owning a NBA team is so contingent, does ownership even apply?

(Image Source: favimages.net)

We are so human, all too human in fact, in our wilful summary judgments and infallible sentencing—both presumptions being based on the human instinct of dislike and even hatred stemming from an unrequited injury from the past—that we hardly realize collectively (i.e., in our public discourse as a society) that we have all sailed right past the rule of law as though it were some relic from an ancient saint. The irony here is of course that lynching used to be associated with Caucasian racists rather than their foes. 

One of Sterling’s attackers, one of many pundits referred to the need for healing following the “conversation on race.” Yet it fell on Chuck Todd as if to remind both his colleagues and the public at large that “there was no debate; no one defended [Sterling].”[5] This point ought to give us all at least some pause, regardless of which view we hold on this case, presuming we as a civilized society still believe in the rule of law rather than the passions of the mob, and still value the true diversity that is necessary for truly free and open public discourse.



[1] The Situation Room, CNN, April 29, 2014.
[2] One exception was Chuck Todd of NBC News, as evinced on The Daily Rundown, MSNBC, April 30, 2014.
[3] Ashley Jones, “NBA’s Decision Against Clippers’ Owner: Is It Legal?” The Wall Street Journal, April 30, 2014.
[4] Christine Brennan, “Owners Drop Ball,” USA Today, April 29, 2014.
[5] Chuck Todd, The Daily Rundown, MSNBC, April 30, 2014.

Tuesday, April 22, 2014

The Internet Eclipsing Television Networks: Toto, We’re not in Kansas Anymore

Internet start-ups can be said to profit, at least potentially sometime in the future, by leveraging the commons, or public space, even enlarging it in the process. Companies founded on the scarcity paradigm of privateness and even public policy based on a de facto privatized tenet have accordingly gone on the defensive. Although Thomas Kuhn’s The Structure of Scientific Revolutions would suggest that the old guard must die off before the new paradigm can come into its own, the internet revolution has shown a remarkable yet subtle persistence in “seeping through the cracks” into the “light of day.” 


Faced with a burgeoning digital landscape, traditional commercial-television networks had already established a “rear-guard” mentality wetted to the status quo by the time the Aereo case hit the U.S. Supreme Court in 2014. At the time, rather than paying a cable fee, that company picked up television signals on the public airwaves and sent customers the signals over the internet (charging for use of the receptors).[1] Before the advent of cable television, “television” was free, being paid for by the same kind of television commercials that many networks still profited from as the Court heard the case’s oral argument; and yet, the default assumption had (conveniently) morphed into the tenet that viewers should pay for television (including the commercials!), which implies that the public airwaves had somehow been privatized. "You can't take our signal. You just can't," said Les Moonvies, CEO of CBS, as if he were some rejected child-actor.[2] Imagine if a network CEO had made a similar exclamation in the 1960s. "They're my airwaves, Mine!" Although copyright law deserves protection, the networks’ use of the law to protect a “transformed” privatized ethos of what are still public airwaves even as those companies continue to sell and run commercial ads evinces a slight of hand that just does not meet the smell test. Perhaps trying to get away with having something both ways goes along with leaning too much on the status quo for support.

Also associated with the rear-guard mentality is the lobbying strategy of erecting legislation as an artificial bulwark that can buy some additional years of profit. For instance, the ad- and cable-based television networks could seek to “fortify” copyright law based on the assumption of de facto privatized air-waves. Indeed, this assumption has kept the American people from questioning the requirement that political campaign ads must be purchased. If the airwaves are public and broadcasters enjoy licenses to use the commons at a profit, then the notion of purchased political ads could be the outlier; the licensees could legitimately be required to run the ads gratis. Already, when the U.S. president wants to speak to the nation, he does not pay for airtime.

Ironically, the U.S. president who had run on the banner of “real change” (and refused public financing, which, by the way, presumes privatized airwaves) backed the old guard in the case, American Broadcasting Companies v. Aereo. The forces with a vested interest in the status quo are without doubt formidable. However, the internet was already transforming the entertainment industry even before Aereo came along. So, the significance of the case should not be overstated. On the day of oral arguments, David Frederick, the attorney for Aereo, observed, “The cloud-computing industry is freaked out about this case.”[3] Regardless, the cloud industry could still anticipate a promising future. Stepping back from the particular firms party to a dispute takes some of the airs out of the old tires of the tired default.

Indeed, just as the stolid broadcasters were doing battle with the fresh upstart from another era—that of the twenty-first century—Netflix announced plans to increase prices for new subscribers. Citing a “burgeoning roster of paying customers and profits that exceeded expectations,” the managers of the internet-based provider of shows and movies had decided to take their sleek operation out for a spin to see what it could really do.[4] Even without the new content, such as the award-winning series, House of Cards, the managers were well within their proper purview in raising prices out of a sense that the “burgeoning” market would bear it. That is to say, the company legitimately stood to gain from having essentially formed a new industry, with all the risks one would expect. Antithetically, the defense being playing at CBS and other television networks has the distinct odor of weakness befitting an old antiquarian who refuses to retire.

In short, industries could not but change dramatically given all of the computer-based change unleased from the 1990s and well into the next century. The fate of one company (i.e., Aereo, or Napster before it) pales in comparison to the sea-change would all-but-certainly make the second half of the new century very, very different from even its first two decades. Admittedly, placing bets on the commercial winners and losers is fraught with ambiguity; even so, we ought to know which team not to root for—and, even more pathetically, to be on.


[1] Michael Wolff, “The Battle Over Aereo Will Shape TV’s Future,” USA Today, April 21, 2014.
[2] Christopher Stewart and Merissa Marr, "High Noon for Diller's Aereo," The Wall Street Journal, May 24, 2012.
[3] Richard Wolf, “Aereo, Broadcast TV Collide in High Court,” April 23, 2014.
[4] Mike Snider, “Pumped-Up Netflix Raises Its Fees,” USA Today, April 22, 2014.

Saturday, April 19, 2014

Is Money Speech?

Dan Backer represented Shaun McCutcheon before the U.S. Supreme Court in McCutcheon v. Federal Election Commission—a case in 2014 that further relaxed campaign-contribution limits beyond the openings created in the Citizens United decision in 2010.  Backer argued before the Court that any restriction of political contributions is a violation of the First Amendment's right of free speech. In an interview after the Court handed down its McCutcheon decision, Backer said, "I don't understand why anyone should have their free speech limited to help somebody else feel like they can speak more. The Constitution does not envision the idea of, as the court said, 'weakening the rights of some and the speech of some in order to enhance or promote the speech of others.'"[1]
A week after Backer’s interview, when $57 million had already been spent by outside groups on the 2014 midterm elections, David Keating, an advocate of the deregulation of campaign finance, put it simply as “money means speech.”[2] Interestingly, Backer backed off such a stark equivalence. "The court did not say, and really neither does any serious commentator, that money is speech. Money is not speech. Money is a necessary tool to engage in political speech and political association.”[3] Money is not speech; rather, money is a necessary prerequisite. Hence Backer treated the right to spend money (on political campaigns) as essentially the right of free speech applied to politics. In other words, the assumed necessity of money for political speech means that the right of free speech in electoral politics is essentially violated if the right to spend money is severed or even truncated.
However, is spending money really necessary for a person to be able to “speak” politically? Is it necessary to purchase a television ad-slot to be able to make a political speech? Surely more political discourse occurs than what is broadcast as political advertisements. I suspect that spending money can amplify one’s political speech in that the audience is made much larger; this is not to say that achieving such a scale is necessary for one to be able to speak on political matters.
For that matter, is a campaign contributor seeking to influence public policy (directly or via the election of a particular candidate) by spending money on a campaign even speaking? Keating would doubtlessly say yes. Money means speech. Pivoting off Backer’s (common sense?) point that money is not speech, however, we might say that the spending is necessary for one’s own speech to be accomplished through the agency of another party, such as a political campaign or an outside group; spending money on political campaigns essentially “hires” someone else to “do” one’s speech. Is such a “hiring” included in the right of free speech?
Moreover, is the right of free speech—meaning that a person’s political speech cannot be prohibited by the state—the same as the right to speak (not to mention through another party via a commercial transaction)? Similar to how procedural due process somehow got enlarged include substantive due process, I suspect that the right of free speech has inadvertently come to include the right to have one’s political views aired directly and even the right to essentially hire another party to broadcast them (assuming such hiring is necessary to one’s views “getting out there”).
The sheer expansiveness in judicial doctrines such as the commerce clause, establishment of religion, due process and free speech may be similar to the tendency of “weak states” to spend more on consumption than investment due to democratic pressures for instant gratification. In short, people want more and more, and are all too willing to contort prime facie meanings and tolerate absurdities such as “money is speech.” I submit that much daylight exists between government being prohibited from outlawing certain political speech and a right to spend money on political campaigns.

1. Ryan Grim, “Now He Tells Us: McCutcheon Attorney Admits Money Is Not Speech,” The Huffington Post, April 7, 2014.
3. Grim, “Now He Tells Us.”

Sunday, April 13, 2014

Is Natural Selection Enabling Global Warming and Economic Inequality?

Discerning the same pattern in two distinct (yet related) domains likely points to a more fundamental dynamic having its roots in human nature itself—that is, in our species as formed through 1.8 million years of natural selection. Critically, the overwhelming majority of the incremental adaptations to better fit with the environment occurred while homo sapiens individuals lived in small hunter-gatherer “bands.” Our nature, as in our genes and bodies, is a result of a myriad of such “fine-tunings” that occurred in and for a way of life, or “world,” that differs appreciably from that of modern man. We may therefore be hampered internally from being able to cope even with our own messes, and even survive them. In fact, because it will take natural selection a long time to “catch up” with our large and complex living (and working) arrangements, we may actually be unwittingly inclined to make matters worse even to the point that we as a species lose out—meaning go extinct. In this essay, I raise two problems—global warming and economic inequality—as demonstrative of this self-destructive element in our very nature.

In its Climate Change 2014 report, the Intergovernmental Panel on Climate Change (IPCC) asserts that the world, “in many cases, is ill-prepared for risks from a changing climate.”[1] This point bears on adaptation to the changes taken as a given, which as a strategy can be distinguished from prevention, which seeks to obviate or avoid the changes themselves.  According to the U.N.’s expert panel behind the report, without “additional measures to contain emissions,” global temperatures would rise about 3 or 4 degrees Celsius (5 to 7 degrees Fahrenheit) by 2100 on top of the 0.8 degree Celsius (1.4 F)increase already “on the books” from when record keeping began in the nineteenth century.[2]  Cuts in emissions of 40 to 70 percent by 2050 would be necessary to keep the rise to 1.2 degrees Celsius (2.2 F), which would be necessary to avert the worst.[3]

Lest government officials around the world conclude that continuing to “kick the political football down field” given the number of years between 2014 and 2050, IPCC chairman Rajendra Pachauri adds an important economic and political factor: “The longer we delay the higher will be the cost.”[4] Even so, by the sheer gravity of the status quo (and the vested interests behind it), we might expect the de facto choice of going with the higher costs anyway, with current carbon emissions held more or less constant. So it might come as a surprise to learn that the global carbon emissions set a record high in 2012. They rose by 2.2 percent (1 gigaton) a year during the first decade of the twenty-first century—a rate of increasing exceeding those in the previous decades.[5] Meanwhile, the global population continued to increase unabated, ironically making it decreasingly likely that the innately schizogenic[6] species would survive in the “brave new world” of a warmer, more volatile clime.

Globally, we are going in the wrong direction, which is particularly astonishing given the science that was coming in. Even before the evidence of the human (homeogenic) contribution, why exascerbate the problem by adding record amounts of CO2 emissions? The human brain seems to have a (genetic?) blind spot that operates at the expense of its very genes. 
That is to say, not only was the world as a whole not making a dent in the existing emissions level; governments taken as a whole were allowing the problem to worsen. “There is a clear message from science,” Ottmar Edenhofer of the IPCC said. “To avoid dangerous interference with the climate system, we need to move away from business as usual.”[7]  Astonishingly, even with reasonable forewarning of danger to the species and the “relatively modest” cost of “keeping global warming in check” if and only if “the world acts quickly to reverse the buildup of heat-trapping gases in the atmosphere,” humanity seems stuck to its “business as usual” mantra as if the species were oblivious to tomorrow, or at least conveniently content living for today with a minimum of obstacles getting the way of our selfish pleasure.[8]

It is as though humanity had been bitten by some insect infected with a virus that renders its victims totally oblivious to their own self-defeating actions and even prompts the creatures to, as it were, smoke even more. I suspect that no virus is necessary—that this pattern exists societally in at least one other major domain, suggesting that something in human nature itself not only dismisses warnings, but also cheers us on to make matters even worse.

The other domain I have in mind is that of income and wealth inequality. As reported in USA Today, American CEOs saw their total compensation—including salary, bonuses, perks, and realized stock and options gains—increase 13 percent to a median level of $10.5 million in 2013, even as the 105 million full-time workers saw their wages go up just 1.4 percent to a median level of $40,872.[9] In other words, for all the warnings of destabilizing levels of economic inequality among Americans, the gap was actually widening.

Both with regard to global climate and American democracy (as distinct as a type from plutocracy, the rule of wealth), two degrees of separation are in play. Not only have efforts not been forthcoming to reduce the imbalances of carbon and income, respectively—this is bad enough—but we are also making the problems worse.  

To be sure, arguments can indeed be, and have been, tendered on behalf of economic liberty and even employment security against hampering business production and capping incomes via progressive taxation. Such objections typically focus on the business and individual levels and more or less assume that the system, whether an ecosystem, society, or government are simply aggregates that do best when the individual units, or parts, perform optimally. Systemic constraints on the latter for the good of the system are thus counter-productive, even unfair, in this line of reasoning.

Antithetically, the “systemists” point to the systemic risk of a unit piercing through the constraints of an ecosystem or the umbrella-like stability of a political economy—Gregory Bateson describes this danger as a schizogenic variable breaching an otherwise homeostatic equilibrium.[10] Even as Mark Zuckerberg of Facebook claims his total compensation in 2013 of $3.3 billion is not too much, and Larry Ellison of Oracle does likely regarding his own $229.8 million and Howard Schultz again for his $163 million at Starbucks, the economic and political power latent in such extraordinary gains in wealth (not to mention the prior years’ incomes accumulated by these three men alone) act as “black holes” both with respect to representative democracy and (relatedly) the interests of the business sector relative to broader interests in long-term human survival on a hotter Earth.

In short, the system being out of balance both globally and in the American context goes beyond the tension between individual rights and the security of the overarching systems; the status quo itself has too much power over our species. Indeed, given that almost all of our species’ existence has involved the pressing survival need to guard against the threat of immediate dangers, such as that of a tiger or lion lurking in a nearby bush, our very nature is oriented to today over tomorrow. The oceans of time necessary for natural selection to adapt our very nature to our complex economic, governmental, and social arrangements means that our species and its even its best form of government yet may succumb to our own misguided devises that are oriented to extending “the party” today (for in the long run we are dead, right?).


2. Ibid.
3. Gary Strauss, Matt Krantz, and Barbara Hansen, “The $100 Million Club: CEOs Get Richer; Workers Get Left Behind,” USA Today, April 4-6, 2014.
6. Ritter, "U.N. Climate."
7. Ibid.
8. Ibid.
9. Ibid.
10. That is, acting as a variable maximizing its value at the expense of the system, such as an ecosystem.








Friday, April 11, 2014

Alan Greenspan: How to Break the Back of a Market-Bubble

While being interviewed on CNBC on March 7, 2014, Alan Greenspan spoke a bit on the problem of irrational exuberance in a market. Pointing to the failure of the Federal Reserve under his chairmanship to innocuously dissolve the “dot.com” bubble in the 1990s, Greenspan said he had come to the conclusion that asset-appreciation bubbles cannot be “defused” (for reasons he says are in his new book) “unless you break the back of the actual euphoria that generates the bubbles.”[1] Alas, piercing that wave would involve nothing short of unplugging a basic instinct in human nature; both monetary and fiscal policy would doubtless come up short. However, I suspect that the field of rhetoric may have something to say about how we can deflate societal exuberance, but only on the condition that greater clarity will have been achieved in identifying whether a given market is overvalued due to emotional excess (i.e.g, emotive greed having reached a critical mass) circumventing normal risk-aversion.

Greenspan’s prescription may have more to do with social psychology than economic theory. Even though the former central banker’s expertise or ken does not extend to psychology or sociology, the advice darts right to the central question to be researched. I am not suggesting that the claim be swallowed whole; back in 2008 after Lehman Brothers’s financial collapse and the subsequent  portent of a tsunami so powerful it could take the entire global financial system “by Monday,” Greenspan admitted in Congressional testimony that his mental model of financial economics suffers a fatal flaw he had had not seen coming.

Having held a free market, or laissez faire (let it make or do), theory firmly ensconced in his head, Greenspan suddenly realized that the market mechanism may not “price additional risk” once the market volatility reaches a certain point. Instead of asset-prices plummeting until enough buyers return to the market after having been spooked, the financial markets themselves freeze up. This is why Greenspan’s successor, Ben Bernanke, told Congressional leaders in September 2008 that without a bailout “we might not have an economy by next Monday.”


In other words, Greenspan’s paradigm or theory, which had insisted that markets can always self-correct could not account for the credit-freeze that began in the commercial paper market (over-night inter-bank loans). High volatility in a system combines with the high risk (from anticipations of system risk being actualized) shuts down the market mechanism itself. When he ran the Federal Reserve, Greenspan had been very wrong about the impact of the systemic risk on the ability of markets to keep operating.

As if Greenspan's admission had been part of some nightmare or some figment of the imagination, Andy Sorkin, a financial markets host at CNBC, welcomed Greenspan on the air five years later with such vaunted praise that viewers could be forgiven for not having remembered that Sorkin had pointed to Greenspan’s fatal flaw as one factor among several in the near collapse of the housing market in the wake of Lehman's bankruptcy. Surely Sorkin was hardly oblivious to the ex-central-banker's grave error. Why then did the journalist act as if Greenspan were one of the priests at the Greek oracle? 

Even after admitting the fatal flaw he had held at the Fed, Alan Greenspan still enjoyed considerable respect. (Image Source: The Guardian)

The short answer may be that Sorkin did not want to lose any of the rich and powerful friends on Wall Street he had interviewed in 2008 for his book. For a person to admit the existence of a fatal flaw in his or her ideology and therefore in any supporting theoretical models as well, and then be treated as though infallible on another body of knowledge (i.e., international relations) stretches the mind's capacity for holding a logical contraction (i.e., cognitive dissidence). Rather than being limited to Sorkin, I suspect that the refusal or inability to put a person's present statements in the context of his or her past track-record is by now "hard-wired" into American society. The over-valuing of the new at the expense of the past probably enables the denial. 

Regarding Sorkin, his fawning before his notable interviewee, including exclaiming "wow" as Greenspan went on bragging at the beginning of the interview, strikes me as blatant enough to be misleading. Especially in having written a non-fiction book about the financial crisis of 2008, Sorkin should have prepped the television viewers up front, so they would not find themselves back to swallowing wholesale what Greenspan says as the Gospel truth. In fact, Sorkin may have inadvertently opened the door to another systemic bubble hitting us as a complete surprise. 



1. “Greenspan Revisits ‘Irrational Exuberance,” CNBC, March 7, 2014 (accessed same date).
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