Greedy Grocers: Exploiting Customers and Workers with Impunity

Adam Smith theorized that price competition on products and labor would allow the self-interests of the buyers and sellers to result in unintended beneficial consequences. For one thing, price gouging would not happen because, assuming low barriers to enter the market to sell, competitors would quickly drop their prices and gain market share. That grocery prices did not fall after the supply-shocks, including in shipping and hiring workers, ended with the end of the coronavirus pandemic in early 2023 is a pretty good indication that the grocery (and meat producer) industry was not competitive. Oligarchic markets—those in which just a few, often times very large, sellers exist—are devoid of the competitive mechanism that would otherwise maintain prices that are fair to buyers. That is, not only do competitive markets efficiently allocate goods and services at prices that connect supply to demand; such markets can also satisfy the ethical virtue of justice as fairness. Smith was not shy in admitted that a government willing to stand up to big companies is necessary to keep a market from slipping into the decadence of an oligopoly and especially a monopoly. I contend that both Americans and their elected representatives were blind, perhaps conveniently so given the power of large companies in American governments, both during the coronavirus pandemic, which ran from roughly 2020 to 2022, and even afterwards as Kroger and Albertsons colluded at the expense (literally) of their respective customers and workers.  

On February 26, 2024, about a year after the coronavirus pandemic ended in the United States, the Federal Trade Commission “sued to block the largest proposed supermarket merger in U.S. history—Kroger Company’s $24.6 billion acquisition of the Albertsons Companies, Inc.—alleging that the deal is anticompetitive.”[1] While testifying to a Federal Trade Commission attorney ,  Andy Groff, Kroger's senior director for pricing, said the grocery giant had raised prices for eggs and milk beyond inflation levels. In an internal email to other Kroger executives, he had written, "On milk and eggs, retail inflation has been significantly higher than cost inflation."[2] Of course, the company’s strategy was to try to discredit Groff rather than assume responsibility for having taken advantage of the pandemic. It was telling, however, that at least at Albertsons, including its Safeway division, the practice of weekly discounts shown on the shelves was greatly diminished. So, we can add ending discounts to price gouging to understand the true sticker shock that customers encountered.

The price gouging alone was “not at all surprising," Drew Powers, the founder of Illinois-based Powers Financial Group, has said. Economists had “long indicated that the grocery sector, which is composed of only a few chains like Kroger and Walmart, was benefiting from supply chain disruptions during the pandemic, allowing the companies to hike prices beyond what was necessary to retain profits. According to Alex Beene, a financial literacy instructor, "Supply chain issues, rising shipping costs, and increased wages certainly played their part in the higher prices we're currently seeing. However, the admission some prices were elevated simply because businesses knew they could doesn't help the case for those arguing price gouging isn't an issue."[3]  

Perhaps even more disturbing, but much more subtly, Kroger and Albertsons did not lower prices after the unique economic context of the pandemic had ended. In fact, both companies saw record profits into 2024 and a generally increasing trend from 2010 that belies any claim to have needed to raise prices during the pandemic to stay in business. In fact, the profits during the pandemic were greater than in 2018-2020, and record profits as of January 31, 2024. Not coincidentally, the grocers provided customers with just a slight reduction in prices of food items in 2024 even though the huge increases during the pandemic had been said to be specific to it. This demonstrates that the industry had ceased to operate in a competitive market. The following graphs from Metatrends.net of gross profits for the years (January 1) 2009 - (January 31) 2024 tell the tale, a picture being proverbially said to be worth a thousand words. 

Kroger (left) and Albertsons (right) Gross Profit ($)

That Albertsons increased prices excessively during 2022 can be inferred from the fact that the company's net income that year increased 51% from 2021 even though the pandemic was still occurring. In July, 2024, Newsweek stated the following: “Companies across multiple industries have been posting record profits since the [coronavirus pandemic] while consumers have faced the highest inflation in recent history. The math can only point to companies raising prices above the general level of inflation. As the old saying goes, 'Never let a good crisis go to waste.'"[4] And never let the end of a crisis be the end of the party, for the excuses can run their natural course if the herd animals (and their leaders) are gullible (and corrupt) enough.

That a grocery-store worker filed a class-action lawsuit against both Kroger and Albertsons in Colorado on November 25, 2024 for having colluded “against striking employees to keep pay and benefits down” may indicate that the giant chains took advantage of workers too.[5] The suit alleges that “the two competitors reached an illicit agreement not to poach employees or customers during a 2022 work stoppage.” This “gave Kroger an upper hand against its employees’ union during contract talks,” and Albertson too would likely benefit as it had the same union.[6] The word most erroneous here is competitors, and if Kroger and Albertsons were not competing for employees or customers, then it would have been easy for both managements to raise prices, essentially creating inflation (i.e., above costs and a reasonable profit), in taking advantage of the pandemic turned into a rationale for higher prices and then of societal expectations that price increases would happen and be legitimate.

That Kamala Harris ran for U.S. president in 2024 with only vague promises to help consumers with high food prices rather than a bold promise to wipe off the Sherman Anti-trust Act to apply it to break up both Kroger and Albertsons is so glaring that it could (and should) be asked whether, or to what extent, that industry, as well as the concentrated meat-producer industry, was made financial contributions to Harris’ campaign. Even President Biden’s decision to oppose the merger of those two companies ignored the likely possibility that the grocery (and meat-producer) industry was already too concentrated (i.e., oligopolistic) for price competition to have lowered food prices after the pandemic.  Both the president and the vice president (i.e., Harris) were too snug with the status quo, and perhaps relatedly too influenced, financially and otherwise, by the grocery (as well as meat-producing and even restaurant) industry. That the profits of Kroger and Albertson grew not only during the pandemic, but also in its wake, especially as compared with the pre-pandemic numbers, should have been an obvious indication that Adam Smith’s apotheotic competitive-market model could no longer operate due to the enormous sizes and few number of grocery chains in the United States. Enough voters may have been angry at Biden and Harris for not using the judiciary to restore competition—only acting to oppose the merger—to vote for Harris even though Trump would not likely apply anti-trust law even to the merger. A similar rationale concerning Biden and Harris actively supporting Israel militarily even after the UN’s top court had ruled that the occupation violated international law can be applied for why Harris lost. Enough of the American electorates wanted boldness in place of status-quo timidity that they were willing to vote against Harris and even for Trump even while disagreeing with his bold policies, such as on stopping illegal immigration.

---

1. “FTC Challenges Kroger’s Acquisition of Albertsons,” FTC Press Release, February 26, 2024.
2. Suzanne Blake, “Kroger Executive Admits Company Gouged Prices Above Inflation,” Newsweek, August 31, 2024.
3. Ibid.
4. Ibid. 
5. Dave Jamieson, “Worker Sues Kroger and Albertsons, Alleging Collusion Against Union,” The Huffington Post, November 26, 2024.
6. Ibid.  

Territorial Economic Inequality: On the Impact of Ideological Category-Mistakes

Why do some countries have more inequality in terms of wealth or economic development, whether between big cities and urban areas, or just from region to region, than do other countries? I contend that in comparing the internals of one state/country to those of another, as much “all else equal” should be satisfied as possible. This can be accomplished to a large extent by resisting the error, or temptation, to make category mistakes, such as in comparing Singapore with China—a city-state to an empire-scale country—or in likening an E.U. state to the entire U.S. European scholars of comparative politics tend to make this category mistake, and non-European scholars are so used to the ideological aggrandizement that they do not typically even recognize the category mistake of treating an early-modern(rather than Medieval) kingdom-scale state of an empire-scale federal union as equivalent to another such union, as if a state in one such union, or a comparable sovereign state, were itself an empire-scale union. Resisting the ideologically-driven urge to begin with a category mistake would do wonders in studying comparative politics and political economy and providing more accurate and beneficial conclusions and recommendations.

Illinois, for example, has fifteen economic regions, yet the one containing Chicago dwarfs the other regions, with are either rural or sport a medium-sized city like Springfield, Rockford, and Peoria, none of which is known for its wealth. How does this compare with Switzerland in contrasting Zurich, and to a certain extent Geneva, which is half the population of Zurich, to the counties, or cantons, that are mainly rural? Both in territory and population, Illinois is larger than is Switzerland, and Chicago relative to the rest of Illinois has a higher population and greater metro-territory than Zurich has to the rest of Switzerland; perhaps comparing Paris in France to Chicago in Illinois would be a closer comparison. Unlike Switzerland, neither Illinois nor France has a federal system, and both are semi-sovereign states in federal systems, the U.S. and E.U., so in comparing Illinois and France, a scholar would better able to “hold all else constant,” except in terms of population, than is the case in comparing Illinois and Switzerland. In that regard, comparing Arizona and Switzerland would be better, as the respective populations are around 7 to 8 million people.

Avoiding the temptation to make category mistakes, such as in claiming that Switzerland is a United States of Europe, with county-sized cantons be likened to red and blue American states, is a prerequisite to being able to make accurate comparisons. At a talk at the Center for European Studies, a Swiss junior scholar acted on the urge during a talk on this topic in November, 2024, to ignore this point even though it had been made by a senior scholar and the scholar from MIT visiting to give his talk that E.U. and U.S. states are comparable with respect to contrasting large cities with rural areas. Ideology, whether States’ Rights in America or the Euroskeptic, or “nationalist,” ideology in Europe, can entrap even scholars, such that their scholarship may be compromised from their decision on an axis of comparison. Hawaii, Alaska, or Texas becoming a member-state in the U.S. is not comparable to one of Switzerland’s county-scale cantons.

After avoiding category mistakes that are based on ideology rather than reason, we can investigate whther too much power being given by a government to localities and regions increases the economic inequality from region/locality to region/locality because there tends to less economic redistribution to less developed regions or urban areas, and because they tend to compete with each other for direct investment by companies. How can we reconcile the cities competing against others to economic equality between regions and cities within a country?

Moreover, there is not only an economic divide between big cities and rural “left behind” places; there are social and cultural differences too; for example, anti-urban sentiment can be non-economic barrier to moving to a big city for school or a job. In some states/countries, the chasm may be more cultural whereas in other cases the difference may be more economic.  To claim that cultural differences within a European state are comparable to those between certain U.S. states, such as Hawaii and Alabama, even ignoring the fact that different languages are spoken to a considerable extent in those two U.S. states and even dismissing the non-linguistic differences that can exist between two distant and large geographical territories, such as Hawaii and Alabama (or Louisiana!), reflects the convenient imprint of a European ideology.

In short, category mistakes, whether spuriously using political, economic, or cultural factors, can doom a study of comparative politics and economics from the start. Much of what is concluded by reason once such a mistake has been made is likely to be faulty. Perhaps the largest cost in doing so in many studies may be in the loss of scholarly reputation of the fields of comparative politics and political economy. Judging from the talks at Harvard’s Center for European Studies, the ideological motivate is salient even among scholars, and this prompts me to ask whether the results of their scholarship is in fact academic in nature or too compromised by the common instinctual-urge to put one’s own ideology in the driver’s seat. To Nietzsche, the content of ideas is instinctual urges, and reasoning is the process in a brain whereby those urges compete with each other for dominance.  

An Analysis of the 2024 U.S. Presidential Election: On a Party's Self-Serving Elite

The 2024 U.S. Presidential election warrants a post-partem analysis, not so much to affix blame, but primarily so the electorate might grasp the perils when the elite of a political party refuses to apply self-restraint in order to keep the party-wide platform and campaign speeches from reducing to the elite’s own favorite ideology even though it is not held by a significant number of the “rank and file” members (i.e., voters), not to mention independents. In other words, running a massive political party to serve the ideological agenda of what Bertrand Russell calls “the inner ring” can cost a party dearly on election day. I contend that this applied to the Democratic Party, which had become a center-left party still dependent on its non-college, working-class, members, whose cultural values were not necessarily progressive. To be sure, substituting managerially-oriented political calculation for visionary leadership and broad policy proposals that are based on principles rather than particular political interests can easily be perceived generally as small, especially in the context of the horrific military attacks against civilians in Ukraine and Gaza. It is paradoxical that Harris lost working-class voters who were socially conservative, and thus “anti-woke” (e.g., against men in women’s bathrooms and playing in women’s sports) even as she lost some liberals who believed that Harris, in explicitly stating on The View that she would not deviate from Biden, was too timid in standing up to Russia’s Putin (e.g., by withholding long-range missiles) and Israel’s Netanyahu rather than enabling the horrific military crimes against humanity with continued shipments of weapons as if the UN’s court were irrelevant to international law.

I begin with the immediate historical context of center-left parties. The parties on the left in the U.S. and E.U. shifted to the center in the 1990s and 2000s. The parties were able to pick up moderate voters, but at the risk of losing ideological distinctiveness (from the center-right parties), and thus their raison d’etre in terms of broad principles and policies.  The 2024 U.S. Presidential election can be fit within the broader shifts since the 2000s that have rendered center-left (rather than far-left, or even socialist) parties less successful in elections. Bill Clinton brought the Democratic Party closer to the center in part due to the losses of Edward Kennedy in challenging the center-left Jimmy Carter in 1980 and of Walter Mondale in challenging Ronald Reagan in 1984. The party’s political elite paid attention to these losses, which went down like lead balloons, and Bill Clinton was a result of the ensuing effort to move the party closer to the political center. Crucially, both he and Barak Obama were able to win with support from the middle class (i.e., labor), which was still primarily voting on the basis of economic interest, including redistribution.

Then, two shifts began that caused the Democratic Party’s working-class, relatively conservative, faction to gradually peel off. The first shift can be described as a negative reaction to the increasingly business-friendly aspect of the party moving to the center. Historically, center-left parties in North America and Europe were critical of capitalism and wanted to constrain it. In reaction to the financial crisis of 2008, however, center-left parties let go of the even more important role of constraining capitalism that had frozen up from within due to uncorrected increased market volatility.

In the E.U. state of Greece, for example, the Syriza Party campaigned against austerity measures during the state’s legislative election in 2015 by promising to renegotiate the state’s bailout agreements. However, just after winning the election, the party’s head, Prime Minister Alexis Tsipras, accepted the existing austerity conditions in spite of there having recently been a referendum in which the Greek citizens overwhelmingly rejected those very conditions. Considering that the austerity resulting from the government’s required budget-cuts was especially harsh on the working class, Tsipras’ betrayal in going along with the creditor-beholden E.U. state of Germany doubtlessly cost the center-left party votes and Tsipras was ultimately defeated (though strangely, after being reelected again).  

In the U.S., Barak Obama entered the office of federal president in 2008 at the worst of the financial crisis, and he stocked his administration with plenty of folks from Wall Street. It is no coincidence that Obama went along with financial bailouts for the banks without conditions, even in terms of putting ceilings on the bonuses of the banks’ executives. Considering that they had displayed incredibly bad judgment in over-leveraging their respective banks by packaging and even buying bonds based on risky sub-prime residential mortgages, the bankers not only did not deserve bonuses, but arguably should have been fired as a condition of getting the funds appropriated by Congress and those created by the Federal Reserve Bank. Instead, the culpable bankers received hefty bonuses out of the TARP money provided by the U.S. Treasury—money that was supposed to be lent out to stimulate the economy so the working class would not suffer from traumatic unemployment. It was not lost on the Democratic Party’s non-college working-class segment that the incompetent but wealthy bank executives got bonuses in the political elite and the financial elite being cozy. Ironically, it was not until the first Trump administration that Treasury issued checks to every American.

Unfortunately, the trajectory of the partial unraveling of the Democratic Party is not so simple, for it was not only the growing perception that the party had joined de facto with the Republican Party in siding with corporate America at the expense of workers that caused the latter to gradually but steadily peel off from the center-left party—after having asked, perhaps, what was still left about the Democratic Party.

Firstly, structural changes in the economy also had an impact. Economic inequality was increasing, and workers could see that the Democratic Party had done nothing substantial to stop even the increase. That the party had missed an opportunity to come up with its own, alternative economic policies with which to differentiate itself from the Republican Party was especially important because the Democratic Party had moved closer to the center, and away from the wing associated with U.S. senators Bernie Sanders and Elizabeth Warren.  

Secondly, another structural change, not economic in nature, also had an impact. Since 2000, a shift towards identity/cultural grievances had been occurring in the middle class wherein a gradually increasing number of voters have been less interested in economic redistribution than in opposing the “woke” ideology, which is centered on legalizing rights of certain groups of Americans based on group-identity. Historically, religious wars in Europe had been based on the premise that group-identity is primary in human consciousness; race riots share that assumption. The failure of the Democratic Party to constrain the excesses of capitalism during the financial crisis may be a factor in this shift away from economic distribution, as increasing numbers of working-classed voters came to realize that both major parties had become bought and paid for by the business sector through its political campaign contributions and promises of executive jobs. Regulatory capture of the regulator agencies by the regulated companies is but one result of the inordinate influence of business in government.

The shift in the American working-class voting increasingly on social issues affected the Democratic as a wedge. The “woke” ideology in favor of defunding the police, transsexual rights (i.e., men in women’s bathrooms and sports), reparations for Black Americans, sanctuary cities wherein illegal immigrants are legally protected, university “cancel culture,” such as in mislabeling pro-human-rights protests as antisemitic, and diversity programs gripped the political elite of the party and its left-wing more generally even though Kamala Harris did not emphasize “woke” planks in her speeches. Meanwhile, the “anti-work” political reaction had been gaining speed since at least 2015 among the non-college-educated working folks. This reaction viewed the gay “rainbow” flag as a cult symbol that was being imposed seemingly everywhere, and was viscerally opposed to transsexual men being able to play in women’s sports and use women’s locker rooms, the notion that illegal immigrants somehow had a right to be in the U.S. even though they had committed a crime in entering the country illegally, the proposal that even people living paycheck to paycheck should be taxed more to pay for reparations to Black people, and that certain words could no longer be spoken or written in college courses and even in political protests. Indeed, protests against Israel had practically been banned at many universities, including Yale, where 47 pro-human-rights students were arrested by private university police employees, and Harvard, which had turned Harvard Yard into a preemptive police presence by September, 2024. So much for academic atmosphere and academic freedom; non-academic employees with guns were in charge as scared academic administrators looked on as if proud mice.  My point is that Harris didn’t have to say anything “woke” on the campaign trail; non-college educated workers in the Democratic Party had by then viewed their party’s elite as very “woke” indeed. 

It can be argued that in having no internal check or self-restraint, the party's political elite had pushed the “woke” ideology too hard and too far (and perhaps, most importantly, too fast), and thus naturally had prompted a political reaction against both the elite itself and its favored ideology. That is, the political elite of the Democratic Party refused to constrain itself from pushing its mandatory ideology even though it was clear, or should have been clear without the blocking self-centeredness, that non-college-educated workers, especially in small towns, would bolt. Even with the mistaken assumption that the working class would still vote on an economic basis, the fact that the anti-woke movement was gaining steam should not have been missed or so easily dismissed for being illegitimate. Presumptuousness can indeed be blinding or distortive, as can the underlying self-centeredness and primitive desire to use power to enact one’s own ideology. This is ultimately why Donald Trump was able to win in spite of his own voters acknowledging that he was admittedly a flawed man.

The elite of a political party does its party a disservice by stubbornly pushing whatever ideology that elite loves, as if it were a fact of reason and thus should be imposed on detractors whether they like it or not, rather than applying self-discipline and a little humility to back off the ideology so as to retain the socially-conservative workers for the sake of governing to constrain capitalism. The ancient Confucian scholar, Xunzi, points to “a degree of self-restraint and even virtue, namely trustworthiness ,” as one reason why a hegemon, a ruler who is not as virtuous as is a sage (i.e., a wise and virtuous person) but is more virtuous than is a vicious tyrant, can be “a strong and successful ruler.”[1] Even though a hegemon “is not committed to moral cultivation of himself or those he rules,” applying the virtue of self-restraint, such as channeling away one’s instinctual urge to promote one’s own preferred ideology over others in a political party, can make a ruler successful (and not tyrannical) anyway.[2] The political elite of the Democratic Party could have benefited from this ancient lesson. That an increasing number of voters in the working class were more interested in voting against the societally interlarding “woke” ideology and especially its demands than in voting for economic redistribution means that the self-centered and haughty ideological stubbornness of the Democratic political elite really costed Harris votes.

Thirdly, even given the ongoing shift among working-class Democrats toward voting on the basis of cultural issues, economic pressure from the price increases, especially in gas and groceries, even after the temporary bump from supply shocks and higher transportation costs during the pandemic, prompted a significant number of voters in the middle class (and poor), which is especially vulnerable to price increases on necessities such as food and transportation, to vote on the basic of their bank accounts.

Harris’s promise to reduce grocery-store prices rung hollow because Biden had failed to do it and she said she would not differ from Biden on policies. Even given the trend in the working class to vote on the basis of social over economic issues, the center-left party erred in failing to recharge its historic mission to constrain the excesses of capitalism. Pledges to use federal anti-trust law to break up the meat-producer and grocery-chain concentrated rather than competitive industries would have differentiated the party from Trump’s rightward shift of the Republican Party. Even the Democratic Party, in accepting so much corporate money from lobbyists, was susceptible to enabling rather than lessening the tendency of markets to consolidate—to go from competition, by which food prices would have gone down after the supply shocks during the pandemic, to just a few giant companies with enough market-power to hold prices high and even convince consumers to expect even higher prices in the expectation of inflation as inevitable. As my academic advisor at Yale, who was an Episcopalian priest, once said, “If you must sin, then sin boldly!” Andrew Jackson and Teddy Roosevelt would not have lost much time translating that advice into political terms in terms of bold policy in place of political calculation and capitulation to even the private powers behind the proverbial throne. Unfortunately, neither Biden nor Harris was a Jackson or Roosevelt.

Fourthly, as for the shock that many “far-left” Democrats and even some independents had after the election that a convicted felon and narcissist had just won the popular vote (as well as the Electoral College), the explanation for Trump’s success with labor is not only due to the reasons I have just discussed, but also because Trump was very wealthy and bold in a way that vote-maximizer politicians usually are not. That these personal attributes could possibly “trump” the man’s flaws, such as admitting that he could get away with touching women sexually without their consent, allegedly pressuring Georgia to come up with more votes for him, and allegedly prompting a mob to riot through Capitol Hill as electoral votes were being counted by Congress on January 6, 2021, would shatter the ideological view held by the Democratic Party’s elite on what matters in a presidential character. Indeed, the nature of the alleged crimes may actually have augmented or strengthened Trump’s stature to working-class voters, given that their paradigmatic criteria for leadership differed so from those of the political elite (of both parties!).

Whereas America’s political elite and the left-wing of the Democratic party believed that voters should vote at least in part based on whichever candidate is most wise and virtuous, Trump himself might counter that the masses vote instead on the basis of wealth and being bold even in speech as well as action, rather unlike the typical people-pleasing politician, such as Bill Clinton and Barak Obama. Taking into consideration the fact that the level of education (college versus no-college) had been the single best indicator during the arduously long campaign “season” of which candidate a voter favored, it is likely that the criteria valued by the working class differed paradigmatically from the criteria valued by college-educated voters, including the political elite. Unconsciously, the elite of the Democratic Party projected its own paradigm of character-leadership onto how the non-college-educated laborers of the party’s “rank and file” see things. This can explain why even the criminal charges against Trump did not dint his base.

According to Adam Smith in his text, The Theory of Moral Sentiments, “the great mob of mankind are the admirers and the worshipers . . . of wealth and greatness.”[3] These two things are contrast to wisdom and virtue, which the masses “are perhaps incapable of even discerning.”[4] I don’t think Smith is being fair to the “masses” here, but his main point concerning the different criteria is important for college-educated Americans to grasp. Like people outside of a political (and economic) elite, Smith eschews “the proposition that people of superior wisdom and virtue possess a title to rule.”[5] He maintains that birth (family) and wealth are more visible and certain to the masses than are virtue and wisdom.[6] Wealth and greatness, Trump doubtlessly could have said during his 2024 campaign, “are my two middle names.” By “greatness,” even as he applied the adjective to the country itself in terms of its potential, consists not only of wealth, but also the kind of strength that is bold rather than timid, or limited to political calculation at home and abroad. Thinking that they too could someday be rich and admiring bold people, working-class voters could very well have loved him for being both. Again, the shift away from being concerned with redistribution to wanting to push back against the presumptuously encroaching, passive aggressive antagonistic “woke” advocates means that Trump’s “offensive” statements were viewed by the working-class as a plus rather than a minus in terms of character. In other words, few labor-union members would be likely to quote from Aristotle’s Ethics to insist that a virtuous person is necessary to put into effect Trump’s policies.

As for Trump’s pathological lying, the heads of the Democratic Party were hardly blameless in falsely claiming that Harris had been selected as the nominee in an “open, bottom-up” process. With a hundred days to go before election day, the party had time for a primary, which could have been set to take place forty days out, with the general election following after sixty more days. In the same year, the E.U. state of Germany set an election just sixty days after a scheduled no-confidence vote at a time in which that vote was just a month away. To claim that Harris’ chances were diminished by having only a hundred days fails to recognize that the year-plus long campaign season for U.S. president was excessively long. Lacking in boldness in terms of proposed policies was more of a hindrance than just having a hundred days. In other words, she had more than enough time to distinguish herself by departing from Biden’s policies, especially given his unpopularity for not going far enough in terms of a variety of areas. In fact, Harris’ lack of boldness took votes away even from the left-wing of the Democratic Party!

Going on the basis of political calculation, or “the political reality,” based on the presumed power of AIPAC (American Israeli Political Action Committee) in U.S. politics, produced political timidity just as cowering to corporate interests, even of the oil and food industries, presented Harris as a politician rather than as a leader. Leadership does not operate by calculation, but by broad principles. Whether those principles are standing up to an aggressor ravaging through Gaza rather than enabling him by being in favor of continuing to supply weapons to his military, or enforcing market competition (and a windfall-profits tax) rather than suggesting that the government give Americans money to spend in the oligarchic grocery chains that would feel free to raise prices even more rather than cut prices to compete for buyers, boldness of policy can be appreciated even more when it involves standing up to entrenched political and economic interests that have turned squalid in part because of the U.S. Government.

Management differs from leadership in part because management is narrowly focused and incremental rather than being oriented to formulating and promoting a vision of society in ideal, paradigmatic terms. I submit that both Biden and Harris were managerial in nature, whereas Ronald Reagan can be studied in terms of providing a vision (e.g., “Government is the problem.”). To be sure, not every vision that a political leader espouses is ethical. Hitler, for example, provided a vision of a strong Germany without weakness enervating the country from within. That vision can be challenged ethically both in regard to how Hitler conceptualized strength and weakness, and his government officials could be challenged for how they implemented Hitler’s vision by literally exterminating what they saw as weakness from the country and even in trying to free up living space for Germans from the U.S.S.R.—Hitler having promised Hindenburg that Communists would be eliminated within Germany, which in turn could mean going after the source further east.

What to a working-class Trump voter was boldness was viewed by some Harris voters and the Democracy Party’s elite as fascist. The claims that democracy was in the balance may have been fueled in part by the fact that Trump working-class voters tended to value wealth and political boldness over wisdom and virtue. To people who value or follow political calculation to minimize political risk, a candidate not speaking as a politician and advocating bold policies would of course be viewed with fear.

It is possible, even ironic in this case, that representative democracy can be put at risk by a cleft or division existing between a party’s elite and a significant part of its “rank-and-file” base. To be effective electorally and in sync with democracy itself, the elite of a party needs to remember that its perspective is not necessarily that of the whole of the party, and if the respective perspectives do indeed differ, the elite needs to exercise some self-constraint in place of self-centeredness and a self-assumed mandate to impose, ideologically, even on the party’s membership. In short, a party’s elite needs to put that membership first if electoral success is desired as a means to being in power.  The refusal to exercise self-restraint deserves to be voted against. Trump’s lack of self-restraint in his use of vitriol against his “enemies,” which included anyone who criticized him publicly, and even in his use of lying habitually to get out of trouble was in line with the boldness atypical of politicians that the working-class valued in a leader, whereas Harris’ lack of self-restraint regarding highlighting aspects of “wokeness” and in not standing up to big business and Israel worked against her. Not that Trump would stand up to big business, for he himself was a part of it, and not that he would stand up to Netanyahu (or Putin), but all that Trump too may have appealed to greatness-as-strength as construed and valued by enough of the the non-college-educated working-class voters.

1. Eric L. Hutton, “Introduction,” in Xunzi: The Complete Text, Eric L. Hutton, trans. (Princeton, NJ: Princeton University Press, 2014), p. xxviii.
2. Ibid.
3. Adam Smith, The Theory of Moral Sentiments, Ed. D. D. Raphael and A. L. Macfie (Oxford: Oxford University Press, 1976), I. iii.3.2.
4. Adam Smith, The Theory of Moral Sentiments, Ed. D. D. Raphael and A. L. Macfie (Oxford: Oxford University Press, 1976), VI.ii.I.20, quoted by Peter Minowitz, Profits, Priests, and Princes: Adam Smith’s Emancipation of Economics from Politics and Religion (Stanford, CA: Stanford University Press, 1993), p. 42.
5. Peter Minowitz, Profits, Priests, and Princes: Adam Smith’s Emancipation of Economics from Politics and Religion (Stanford, CA: Stanford University Press, 1993), p. 44.
6. Ibid., p. 45.

The E.U.’s Parliament and the U.S.’s House of Representatives in Dialogue

On November 1, 2024, “All Saints Day” in Roman Catholic Christianity, the E.U. announced that a peaceful delegation of the elected representatives of the EU’s Parliament would be travelling to Texas during the following week to “meet American counterparts,” which is to say, a delegation of the elected representatives of the US’s House of Representatives.[1] The key word here is counterparts, for the European Parliament is indeed of the same type of legislative body and at the same level in its federal system as is the American House of Representatives.

Both legislative chambers consist of elected representatives who are elected by E.U. and U.S. citizens. Although the respective states are divided into districts, the representatives do not represent the state governments or the states themselves. Just because the state governments map out the districts does not mean that the elected representatives to the federal chamber represent the states. In fact, every party in the Parliament and the House consists of representatives from more than one state. To insist that political parties exist only on the state level, whereas only blocs or nebulous groups exist at the federal level is ideological nonsense geared to “States’ Rights advocates” in the United States and “Euroskeptics” in the European Union. It is significant that members of the European People’s Party in the E.U. Parliament sit together, and the party has members from various states, who, as stated above, do not represent their respective states, but, rather, the E.U. citizens in federal legislative districts. The same is true in the case of the U.S. House.

So it is fitting that a delegation of the members of the E.U.’s Parliament would meet with members of the U.S.’s House. “The inter-parliamentary meeting is usually an opportunity for lawmakers from both sides of the Atlantic to exchange views of their legislative agenda and priorities.”[2] The parity implied here is correct, and thus obviates any ideological claim that a state in one union is equivalent, or on the same political-system level as the other union. In terms of geography alone, Texas and France, and Montana and Germany, are both cases equivalencies. Similar equivalencies pertain to Arizona and California, and Italy and Spain, respectively. In terms of population, whereas many of the respective states of the two unions are in the tens of millions, both unions are in the hundreds of millions. The two clusters evince the qualitative (i.e., a jump, rather than an incremental change) as well as a quantitative difference between the respective state and federal levels.

The E.U’s delegation was set to be chaired by MEP Brando Benifei of the Socialists & Democrats party and the U.S.’s delegation was to be chaired by Rep. Nathaniel Moran of the Republican Party. That the possibility of a U.S. tariff on goods imported from the E.U. was on the agenda, and the E.U.’s executive branch, the Commission, has exclusive authority, or competency, on commercial law in the E.U. does not mean that only economic issues would be discussed, as if the E.U. were a “trading bloc.” The three pillars, or enumerated powers, of the E.U. extend beyond trade and even economics to include social policy and justice, including human rights, for example. The U.S. delegation could enquire of its counterpart whether the recent electoral fraud in the prospective E.U. state of Georgia (not the U.S. state of Georgia, even given the controversy in 2020!) adds to foreign-agents law in significantly reducing Georgia’s chances of gaining statehood. The E.U. delegation could in turn enquire as the viability of U.S. elections, given the accusations in 2020 from within the United States.

In short, both the E.U. and U.S. have federal systems in which governmental sovereignty is “dual,” which is to say that although the respective states have both stated and residual domains of authority, some of them was delegated to the federal institutions, which in both unions comprise governments rather than only multilateral international organizations. To be sure, an element of the latter has been retained in both unions; specifically in the U.S. Senate and the E.U. Council, both of whose members are polities (i.e., the states) rather than representatives of federal citizens. In fact, the citizens have E.U. and U.S. passports, respectively. In general, that the balance of governmental sovereignty is closer to the states in the E.U. than in the U.S. does not mean that the two unions are not both cases of modern (i.e., dual sovereignty) federalism, as distinct from confederalism, in which all of the sovereignty resides with the state governments. In 1603, Althusius distinguished between plena and non-plena federalism with this in mind even though he modeled his theory of federalism on the Holy Roman Empire. Federalism itself was originally confederal, and fit international alliances because the members differed even in terms of the type of government they had. The U.S., and then the E.U. en suite, mixed national and international elements in what is now called modern federalism to distinguish it from confederalism, which is still evinced in international alliances and organizations such as the United Nations.  To conflate either the E.U. or U.S. with such alliances and organizations is to commit a rather basic category mistake. Whether out of ignorance of ideological fervor, such a mistake prevents the two federal unions from looking at each other to gain insights so as to move towards more perfect unions.

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1. Peggy Corlin, “MEPs Seek First Contact with Trump or Harris Regimes in Texas Next Week,” Euronews.com, November 1, 2024.
2. Ibid.

Strengthening the E.U.’s Border Competency: Implications for Federalism

In politics, it’s not a bad idea to consider the impact on the system of government in formulating, voting on, and enacting laws and regulations. It is not enough to make sure that relationships with political donors are not impaired. Nor, in a federal system, is it enough to look at the implications regarding either the state or the federal level. I contend that the implications for the federal system itself should be formally and informally considered.

In the context of the E.U.’s difficulty with securing its borders even after facing unprecedented migrants entering by boat or even walking in the early 2020s, it is understandable that representatives elected by E.U. citizens and sitting in the European Parliament would try to shore up a federal response, given that in the last quarter of 2024, some state officials took action at state borders in violation of E.U. law. Undercutting federal rule-of-law is a good way to trigger a collapse of a federal system, especially one that had only existed for decades rather than centuries.

On October 23, 2024, the European People’s Party joined the Patriots for Europe, the European Conservatives and Reformists, and the ESN parties in voting in favor of an amendment that goes as follows: “The European Parliament demands appropriate funding for external physical barriers at the Union border.”[1] In other words, the far-right parties wanted a wall at the border. Although the amendment passed with 329 of the elected representatives voting for it, the resolution to which the amendment was attached was later voted down. Victor Negrescu of the S&D party told reporters that a resolution is not necessary for the Parliament to be able to negotiation with the Council on what projects to fund. Tomas Tobé, vice chair of the European People’s Party, countered that because “it is our long-standing policy to advocate for E.U. funding for external border infrastructure,” it is “also in line with the position of the European Council: physical barriers are essential for securing the E.U.’s external borders and managing migration policy.”[2] At the very least, formally letting the Council know the will of the Parliament wouldn’t hurt.

It did hurt the coalition of parties that supported President Von der Leyen’s reelection as President of the E.U.’s executive branch, the Commission, for members of the Renew Europe party could have seen the European People’s Party as betraying the centrist governing coalition in the Parliament by joining the far-right parties there in support of building a wall. But such grumblings may have been overdone, as it was still very unlikely that the EPP would join with the parties on the right on much else, given the daylight between them and the EPP.

Moreover, the resolution served an overriding positive role in fortifying the E.U. itself in regard to its federal system. For it had been a failing policy at the federal level that had prompted more than one state government to exploit the “national emergency” loophole in the Schengen Agreement by patrolling state land-border crossings. In other words, showing signs that the federal government might finally competently secure the E.U.’s borders might get the state violators of Schengen to back off and follow rather than violate the Agreement. The E.U. had only existed for just over thirty years; its federal system was still fluid and thus vulnerable to punctures by state officials heeding popular pressure at home. From abroad, that looks like self-inflicted wounds within the European Union. To some officials of some of the states, most notably Hungary and Slovenia, the Commission may seem to be foreign, but this is not so in state-federal relations within a federal system. For such a system to be viable beyond the short term, the two systems of government—that at the union level and those at the state level—cannot be working against each other without even respecting each other’s laws.

Especially in a new federal system, government officials at both levels would be wise, if they want to continue to get the benefits from the combined power on the world stage, to consider the implications on the federal system itself from any policy proposal or vote. Even as of 2024, European integration politically and economically was not a foregone conclusion. Even though the E.U. had managed by fits and starts rather than in a linear line toward a more perfect union, the threat to the viability of E.U. law, including directives and regulations, was increasing in 2024.

State governments ignoring federal law is an existential threat to any union of states, which is politically distinct from a mere military alliance or trade “bloc,” such as BRICS. Willfully violating federal law could represent more than just a temporary slippage back before bouncing forward again, especially if a few such occurrences gain traction and thus become a de facto norm. Then the de jure federal system is really in trouble, with collapse being even imminent. The category mistake of viewing a federal system in which governmental sovereignty has been divided (i.e., “dual sovereignty”) as an alliance or even worse as a trading association, or “bloc,” can give rise to such destructive opportunistic violations of federal rules, directives, and regulations (i.e., federal law) because they are not viewed as real law. Similarly, the Euroskeptic ideological "word-game" wherein political parties at the federal level are merely "groups" subtly undermines the legitimacy of E.U. law and democracy at the federal level. 

Voting for stronger federal action at the federal borders may have had the effect of reassuring nervous state officials enough that they might return to supporting rather than violating the strictures that hold the Union together. At the time, it could hardly be said with confidence that the E.U. itself would continue as a going concern, so much long-term benefit could be gained by governmental officals at both levels asking themselves how their proposals and actions could impact the federal system itself. 

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1. Vincenzo Genovese and Paula Soler, “EPP and Far Right MEPs Call to Build a Wall at the E.U. Border, Stoking Controversy,” Euronews.com, October 23, 2024.
2. Ibid.

On the American Media’s Hyperbole in Politics

If America can be said to have violent cultures, relatively speaking and especially in countries such as Honduras but also in some U.S. states such as Illinois (e.g., Rockford and south Chicago), the media may simply be reflecting the wider culture in writing of political debates by using words like fight and battle in place of argue and debate. One effect is to exacerbate the problem, culturally speaking. Another effect is to garner more attention, which in turn translates into more revenue from selling advertisements. To the media, the latter counts whereas the former does not; the media can blame the “heated rhetoric” of candidates for office and elected officeholders for an uptick in political violence rather than assume some of the responsibility. I submit that journalists are even more at fault when they magnify the significance of a political event to the point of being mistaken, widely missing the actual mark. The lack of any follow-through in the field wherein one media outlet holds another accountable is also a problem, especially when all of the major outlets are on the proverbial bandwagon.

Before the Harris-Trump U.S. presidential debate in 2024, CNN stated, “Harris’ joyful campaign will Tuesday be hit by the blunt force of reality—a debate with Donald Trump—the most menacing political foe of modern times.”[1] Besides the word Tuesday being awkwardly placed before rather than just after the words, be hit, the journalist’s certainty, as evinced in will be instead of might be hit turned out to be wrong. After the debate, Newsweek titled one of its articles on the debate, “’Trump Was So Bad’: Fox News Voter Panel Declares Harris Debate Winner.”[2] Twelve on the panel thought Harris had won, whereas only five thought that Trump had done so. Time titled its debate analysis piece, “Trump Spent the Debate Walking into Traps Harris Laid for Him.”[3] It was Trump, rather than Harris, who refused after the debate to have another debate. That says it all.

So, where was the headline, “CNN Erred in Declaring Trump the Winner before the Debate”? Even with such a headline somewhere in the public discourse, CNN would probably not smart enough from the virtual slap to resist the temptation to be so certain epistemologically in the future, and I suspect that too many viewers or readers would not recalibrate how much credibility they give to definitive assertions made by CNN in the future. Similarly, too many people tend to believe politicians even with a reputation for being pathological liars as if speaking in front of a microphone and camera mean that the person speaking must be declaring truths.

In short, the refusal of the media companies to hold each other accountable when they get something very, very wrong plus the gullibility of people reading or viewing politicians in public discourse enable journalists (as well as the subterranean politicians) to make outlandish claims, including those that are actually the journalists’ opinions being “reported” as if facts of reason. To claim that Harris’s campaign will be hit is an opinion clothed in a stiff, grizzled suit of fact. Alternatively, the journalist could have interviewed a political analyst, who could have given an informed opinion. That would be reporting.

To be sure, debating who won a debate is of questionable importance, really. In fact, with few exceptions—one being the Biden-Trump debate in 2024 and another being the Kennedy-Nixon televised debate in 1960—winning a presidential debate typically has not had much impact on races. Costin Ciobanu, a political scientist at the University of London, presented a study in which he found “that presidential debates have a weak influence on vote choice . . . due to the importance of longer-term structural variables.”[4] The recession in 1991, for example, is generally recognized by political scientists as having a strong impact on George H.W. Bush’s loss. A debate may be momentarily titillating, but people tend to vote figuratively speaking with their pocketbooks or wallets.

Even so, The Huffington Post’s headline prior to the Harris-Trump debate was: “Tonight: As High Stakes As It Gets.” Politico characterized the debate beforehand as “historic.” That reporter, a national political correspondent, was so brazen that he admits that there is “hype” ahead of the debate, but even that does not keep him from declaring “just how momentous” the debate “will be” as if its HUGE significance were a well-established fact of reason.[5] The opinion and its underlying judgment were grossly incorrect; the race between Harris and Trump remained a toss-up.

Why the preposterous hyperbole? Journalistic marketing. It is in the media’s financial (and personal) self-interest that the “must-see faceoff” be watched by as many viewers as possible.[6] Besides the questionable ethics of overselling a debate as a momentous, even historical event, and especially if fabrication is involved, lying in doing so, negative implications could be ripple through the electoral system. To the extent that debates are entertaining “tit for tats” rather than informative on policy positions and rationales (i.e., making the underlying values explicit and perhaps even debating them!), building a societal political norm wherein one is supposed to vote on the basis of who the voter thinks won the debate can undermine the credibility of popular sovereignty (i.e., the People’s power in voting) as the basis or bedrock of representative democracy in a republic. Additionally, given the obscenely long duration of modern presidential campaigns in the U.S., hyping each event along the way as if it will be decisive can exhaust voters and turn some off completely. Take for instance the Christmas season, which seems to get longer every year. By Christmas Day, I wouldn’t be surprised if many people are more than ready to turn off the Christmas music and go to a movie in ordinary time. Imagine if every weekend between Halloween and Christmas, people are told that it is a must-celebrate (and must shop) weekend. You don’t want to miss out on the Christmas spirit! By Christmas Eve, it might be time for a nap. By election day, it might be a time for gratitude that the thing is finally over.

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1. Stephen Collinson, “Harris Braces for the Most Critical Moment of her Political Career at Debate with Trump,” CNN.com, September 10, 2024. Although the empirical study’s data came from Europe, many American political analysts have reached the same conclusion regarding the American presidency.
2. Joe Edwards, “’Trump Was So Bad’: Fox News Voter Panel Declares Harris Debate Winner,” Newsweek, September 11, 2024.
3. Phillip Elliott, “Trump Spent the Debate Walking into Traps Harris Laid for Him,” Time, September 10, 2024.
4. Costin Ciobanu, “Do Presidential Debates Matter? Evidence from an Eastern European Context,” Paper presented at the ECPR General Conference, Oslo, 06-09 September, 2017.
5. Brakkton Booker, “It’s a Historic Debate Tonight. No One Really Wants to Talk about It,” Politico, September 10, 2024.
6. Ibid.

Hungary’s Delusion of Sovereignty

On October 3, 2024, The European Commission, the E.U.’s executive branch, filed a legal complaint against the E.U. state of Hungary with the E.U.’s judicial branch—the high court of which being the European Court of Justice (ECJ). The Commission had won a case against the state and recently subtracted the amount of fine issued by the court from the federal money set to go to the state because the Hungarian government was refusing to recognize the verdict. Like Britain before it had seceded from the Union, Hungary was operating under the incorrect premise that it still enjoyed full sovereignty even though every state delegates some of its governmental sovereignty to the Union in becoming a state thereof. In the case of Hungary, the state law at issue in 2024 had in its very name the fundamental problem out of which the state’s disputes with the E.U. were emanating.

 In its written statement, the Commission describes Hungary’s “contentious act,” which “establishes the so-called Sovereignty Protection Office (SPO) to investigate people and organizations suspected of undermining the country’s ‘national sovereignty’ and ‘constitutional identity.’”[1] Assisted by the state’s secret police, the SPO could legally “collect information on individuals or groups that receive funding from abroad and are perceived to influence the democratic debate and electoral processes ‘in the interest of another state’ or ‘foreign organ,’ meaning a non-state actor.[2] Undue political influence from outside the E.U. state could presumably come from another state in the Union or from outside of it. Treating both the same involves making the dubious claim that for one state or people therein to buy political advertising or contribute to a political campaign in another state is anti-democratic.

Furthermore, that such interstate political influence somehow violates Hungary’s sovereignty ignores the fact that every state in the Union has given up some governmental sovereignty even just for qualified majority voting to be allowed at the federal level in the Parliament, the European Council, and the Council of the European Union. Only if every E.U. law, directive, and regulation required the unanimous consent of the state governments, which could legally ignore rulings by the ECJ would the Union be composed of sovereign states, such as the U.S. was under its initial Articles of Confederation from 1777 to 1789.

The claim of Hungary’s government that its sovereignty is violated by political influence from elsewhere in the Union can be answered by pointing out that the state is no longer in fact sovereign anyway because it is in a Union whose federal system rests on dual-sovereignty. Put another way, the states have consolidated politically to an extent for their common good, which includes being able to have more political weight in the world, so interstate political influence can be viewed as part of that intermingling that is actually a good thing for such a federal system. If states are too heterogenous (i.e., different), then achieving united action at the federal level is very difficult. The combined sovereignties that instantiate federal sovereignty is actually partly Hungary’s, so interstate influence does not necessarily violate Hungary’s sovereignty.

Back in February of 2024, the Commission cited “the principle of democracy, the right to private life, the protection of personal data, freedom of expression, information and association, and the presumption of innocence, among others,” as being violated by the state of Hungary presumably because they threaten the state government’s sovereignty.[3] More accurately, they may have been a threat to Viktor Orbán’s party remaining in power in Hungary. The principles of liberty and democracy that the Commission was arguing that the Hungarian government was violating can be viewed as competencies, or domains of authority, that both federal and state governmental institutions could legally act on. Put another way, the Commission was well within its rights to protect democracy at the state level. In the U.S., the executive branch had acted to protect democracy at the state level, as in enforcing civil rights with regard to the access of Black people to schools and voting. Alabama could hardly say that its sovereignty was being violated because the federal institutions had the authority to enforce democracy in the United States.

The very name of Hungary’s Sovereignty Protection Office is wrong, for the state had delegated some of its sovereignty when it joined the European Union. Just days after the Commission announced that it was taking the state of Hungary to court at the federal level (i.e., at the ECJ), the Hungarian trade minister voted no in a vote taken at the Council of the EU on whether the EU should put tarriffs on Chinese electric vehicles. Had the measure passed the Council, Hungary would have had to recognize the tarriffs as valid within the state. This alone means that Hungary had given up some governmental sovereignty when it acceded to the E.U. as a state.  As it happened, too many votes were abstentions, so there was no final vote either way. So the Commission used its exclusive authority, or competency, in commercial law and policy to enact the tarriffs.  So it is not just qualified majority voting in which the E.U.'s state governments were no longer fully sovereign states. That the E.U. has shared and exclusive competencies, or domains in which it can enact laws and regulations, means that the state governments no longer were fully sovereign. Hungary's "National Sovereignty Law" was thus not only contrary to a basic EU value (and norm), but also a misnomer that gives people the wrong idea concerning Hungary in the E.U. 

To pretend to be sovereign still, such as by ignoring a negative verdict by the ECJ, undermines the sovereignty that Hungary and the other states delegated to the Union, and thus in a way their own sovereignty too because the state governments play a significant role at the federal level not only in the European Council and the Council of the E.U., but also in nominating commissioners for the College in the Commission. In this respect, the state government of Hungary was compromising a part of its sovereignty—that which had been combined with parts of the respective sovereignties of the other states. By making interstate political influence illegal in Hungary, Orbán failed to recognize that the sovereignty at the federal-level has a legitimate interest in there being at least some interstate harmonization, and legally includes protection of the basic values of the Union, such as democracy and liberty. If as I suspect he believed that Hungary was still fully sovereign as a country, then it had no business being a state in the European Union. Britain seceded for this reason—David Cameron, as prime minister, had said that the E.U. was just one of the networks that the UK was in. Similarly, Orbán’s Sovereignty Protection Office explicitly belies or undermines Hungary’s claim to be a state in the Union of states. The Union would be better off without that internal contradiction.

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1. Jorge Liboreiro, “Brussels Takes Hungary to Court over Its Controversial ‘National Sovereignty’ Law,” Euronews.com, October 3, 2024.
2. Ibid.
3. Ibid.

The €35 Billion E.U. Loan to Ukraine: One E.U. State as a Destabilizer

On September 20, 2024, it was announced that the E.U. would “raise a €35 billion loan to support the Ukrainian economy and military.”[1] At a press conference next to Ukraine’s president Zelenskyy, the E.U.’s president said, “Russia keeps targeting your civilian energy infrastructure in a blatant and vicious way to try to plunge your country in the dark.”[2] So the loan stood to impact the Ukrainian people directly and significantly. It would be a shame if the principle of unanimity in the European Council would stand in the way of the Ukrainian people being warm during the upcoming winter. This is a very tangible way for people to grasp just how real the costs are of state governments having vetoes over a significant number of E.U. competencies (i.e., enumerated powers). “The European Union is here to help you in this challenge to keep the lights on, to keep your people warm as winter is just around the corner, and to keep your economy going as you fight for survival,” Von der Leyen said at the news conference.[3] Hungary’s Viktor Orbán stood in the way, however, to securing the collateral for a long enough period to render the loan (an any from the U.S. based on the collateral) secure.

The loan uses Russia’s immobilized assets as collateral, and E.U. sanctions on the assets had to be renewed every six months by unanimity. The concern was that Hungary would use its veto because it is the “most Russia-friendly” E.U. state.[4] Before the announcement, the Commission had proposed alternative asset renewal periods ranging from 36 months to five years. Tellingly, one state government announced that it would wait until after the upcoming U.S. election before considering the options. This made it difficult for the E.U. to give the U.S. legal assurance that the Russian assets in the E.U. would remain frozen—that the collateral would remain under the control of the E.U. rather than go back to Russia. Because the collateral could not be assured going forward, the U.S. Congress would have to approve funding for any American loan to Ukraine secured by the collateral in Europe. Of course, the E.U.’s own loan depended on the collateral too, so the possibility that one state government would veto an extension of the assets being frozen meant that the E.U. risked being “on the hook” should Ukraine fail to pay back the E.U.’s loan.

Incredibly, Andrew Moravcsik of Princeton University spoke at Harvard on the same day as the announcement of the E.U. loan that even though right-wing state governments in the E.U. have a loud bark, their bite is muted, meaning that in terms of government policy the impact is nil. He argued that they had to appease moderates to get enough support to have any impact on actual policy. Yet Hungary’s refusal to consider any of the longer periods to keep the Russian assets frozen in the E.U. meant that the E.U. and U.S. had to assume more risk in lending to Ukraine. One need only point to the refusal of Orbán’s government to pay the €200 million fine levied by the European Court of Justice, the E.U.’s supreme court, because the Hungarian government had violated E.U. law, and to the violation itself, plus Hungary’s threat to bus migrants to the E.U. capital, to know that the ideology of Orbán’s party was indeed having an impact in policy. This had hardly escaped the notice of the Commission and the ECJ. The implication is that the E.U. could ill-afford the principle of unanimity for any E.U. competency; Euro-skeptic ideology could indeed impact policy at the federal level—and, yes, the E.U. had a federal system even in 2024 of dual-sovereignty (hence the union was not an international organization or a “bloc”). Too much sovereignty remained with the state governments in the form of the veto that they could wield in the Council, and the harm can be seen in the possibility that Ukrainians would not have enough heat during the upcoming winter. Is collective action really so bad? Should one state be able to thwart it on ideological grounds?

I submit that the E.U.’s effort is laudatory but that the E.U. itself contains its own obstacle in continuing with the principle of unanimity in the Council that represents the states. Just imagine the impact on U.S. policies if one state could defeat a measure in the U.S. Senate. Even though the E.U. had fewer states at the time, there were too many for unanimity to be at all realistic on most matters. Empire-scale unions inevitably have states that differ from each other culturally and ideologically. Majority voting and qualified majority voting accommodate this fact, whereas the principle of unanimity does not.

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1. Jorge Liboreiro, “EU to Raise €35 Billion Loan for Ukraine Using Russia’s Frozen Assets, Von der Leyen Says,” Euronews.com, September 20, 2024.
2. Ibid.
3. Ibid.
4. Ibid.

Nature Credits in the E.U.

One of benefits of the market mechanism, by which, for example, economic goods are bought and sold, is that self-interest is relied on; people don’t have to be told to buy or sell a product because it can be in their self-interest to do so if the price is right. As an alternative to regulatory standards, a government can create units of pollution-allowance that businesses can purchase so to be lawfully able to pollute in so far as a purchased unit allows. In the E.U.’s emissions trading system, “operators of power plants and factories have to buy tradeable allowances to cover every tonne of carbon dioxide they emit.”[1] Business could buy and sell allowances so as to cover the amount of pollution that is anticipated. In this way, the market mechanism efficiently allocates pollution in line both with the interests of the companies and the public interest—the latter being made concrete in the decision on how much pollution per allowance and how many allowance units to create. Crucially, the company private interests are put within the purview of the public interest; the tail is not directing the dog. In political economies in which political-campaign contributions by businesses are high, especially if unlimited, the tail can indeed wag the dog, such that the public interest is determined by private interests. This is one reason why the Citizens United (2010) U.S. Supreme Court case is so significant. It allows corporations and labor unions to spend unlimited amounts of money on political campaigns and directly on advertisements—both being beneficial to elected officials in positions to curry favor through legislation and regulations favorable to business (or labor). The informal exchanges of political donations and legislation or regulation comprise a market of sorts. So, the market mechanism, which is created or at least regulated by government, can serve for good or ill, from the standpoint of the public interest.  Using the mechanism, such as the E.U. president proposed in 2024, on behalf of ecosystems, is for good rather than ill, and thus using, in effect, the self-interest of farmers could be better than relying on regulatory requirements that farmers expend some money and effort to beef up their local ecosystems.

At a conference on September 13, 2024, a Friday, E.U. President Ursula von der Leyen said, “We need new financial tools to compensate farmers for the extra costs of sustainability and compensate them for taking care of the soil, the land, the water, and the air.”[2] The assumption is that the farmers would not otherwise do so because expending the energy and paying the costs for the externalities would not add to their profits from farming in the short or medium term. The time-value of money too reflects the penchant in human nature for immediate over delayed gratification. To extend the farmers’ “event-horizon” and broaden out their concern to include their vicinity would be the purposes of “the market-based system of ‘nature credits’,” which Von der Leyen hinted “could also be applied beyond the agricultural sector.”[3] This is part of the beauty of the market mechanism: it can be applying to various things, serving various purposes, rather than only pertaining to economic products and services.

Via “nature credits,” a water company could have the incentive as per self-interest to help to take care of a spring that that company depends on, and a fruit company would be more likely to invest in the “essential work of pollinators.”[4] That the language of long-term investment applies raises the question of why farmers in general do not do what manufacturing businesses do as a regular part of business. It would seem that making sure that a principal water source is not lost or that bees stay in the area of the fruit trees would be in the self-interest of the respective companies. Why would compensation by the government be needed to run a sustainable business?  Is the managerial perspective really so delimited that the viability of the business is not included?

Unfortunately, even by 2024, climate change was perceived by many business practitioners still as a gradual and outside process not germane to business. Johan Rockstrom of the Potsdam Institute for Climate Impact Research, said at the same conference, “I can tell you, science is clear today that the ultimate determinant, what regulates the stability of the planet, its ability to stay in a desired equilibrium state is nature.”[5] According to a journalist, Rockstrom was “suggesting that action of biodiversity and climate made sense even if purely pragmatic.”[6] If farmers didn’t yet see it as such, “nature credits” would help render biodiversity pragmatic from an agribusiness standpoint—essentially interiorizing some externalities.

To be sure, even if a private interest broadens out to include some hitherto externalities, that interest is still not the same as the interest of the whole: the public interest. It would still be important to protect the public interest from being captured by a private interest; a large company or an industry that would implicitly presume to be in charge of its own regulation by dictating legislation and regulation to sycophantic government officials should be withstood by them. Even so, expanding the practical purview of private interests is in the interest of the whole, and the market mechanism can be used to make this so.

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1. Robert Hodgson, “Von der Leyen Moots ‘Nature Credits’ Market to Avert Ecosystem Collapse,” Euronews.com, September 13, 2024.
2. Ibid.
3. Ibid.
4. Ibid.
5. Ibid.
6. Ibid.