Somalia, here we come!

The big buzz-word in American legislative circles these days is "deficit reduction." Let's reduce the size of government, reduce government interference in business, eliminate waste, and by doing all these things restore individual freedoms.
Like pretty much everyone, I favor eliminating government waste -- though we might have some difficulty in defining waste, once we get beyond a few glaring examples.
Let's look first at the society we might end up with if all the cost-cutters were to get their way. (I'll mention a number of proposals at both state and federal levels, because they will all -- from whichever level -- impact how we live, and because they are all expressions of the same mind-set.)
The two major categories of cuts may be in services and in regulation.
Services: States are vigorously cutting funds to education. In North Carolina, funding to universities, to community colleges, and to public schools is being cut. Admissions are being limited, tuitions are being raised (in spite of a North Carolina constitutional requirement that university tuition be essentially free), academic programs are being shrunk or eliminated, teachers are being laid off, class sizes are being increased. Cuts are being considered for many court programs that have been successful at keeping people out of prison (though experts point out that eliminating these programs will actually cost more). Various counseling programs and other programs to help young people stay in school or families stay together are being cut. Cuts are likely or are being considered in services to a wide variety of needy people -- the poor, the sick, the unemployed, the elderly. I could go on and on. Even if not all of these cuts become reality, we are looking at a future in which the well-to-do are surrounded with legions of needy, desperate people, people who cannot afford the medical treatment they need, cannot get trained for good jobs, cannot afford decent housing, and are left to their own devices in their ignorant interactions with the law. Sounds a bit like Somalia to me.
Regulations: Of course we oppose government regulation, particularly of struggling businesses. Or do we? I oppose petty bureaucratic regulation. But is that all there is? There have been innumerable newspaper accounts of tainted meat (because it was not properly produced or inspected), of farm workers harmed by pesticides (because no one was inspecting to be sure the employer did not have his workers use chemicals in a dangerous way), of imported sheet-rock that emitted formaldehyde or other noxious chemicals (again because no inspectors stopped the import or sale, of prescription drugs recalled when people began dying (because the government didn't have the manpower to check these drugs adequately before they were put on the market). The extreme example of lack of government regulation might, again, be Somalia.
So what is appropriate regulation? For me, it's this: I want to be sure that any product or food or medicine I buy is very unlikely to harm me if I use it according to directions. And I want to know that anything I buy is what it says it is -- that I can trust the label (and the advertising) to tell me the truth. And since the goal of any business is to make a profit, and since some businesses will do this by any means they can get away with, we need government regulation to ensure that all businesses play by the rules, selling safe and honest products.
Before we get too busy with our axes, let's give some thought to the kind of society we want to live in. I've given you an idea of the kind of society I want to live in. As I've said, I want a society with enough government regulation to ensure that products and foods and medicines are honest and safe.
And I want responsive government services sufficient to maintain a population that is healthy, well-educated, well-housed, employed. I want my neighbor's kids in good schools, I want any sick or injured person to get good medical care, I want both good roads and good public transit so I and my neighbors can travel where we need to go, safely, conveniently, and economically. I want services available so that abused or neglected kids get counseling or support or protection or whatever they need so that they have an opportunity to grow up to be happy, productive adults.
What kind of society do you want to live in? How much government will it take to provide that? If you want zero government, do you think you might be happier in Somalia?

Why Are You Struggling?

Long ago, on a Roman galley, the captain tried an experiment. He let everyone on board -- oarsmen and aristocratic passengers -- vote on whether to change to a democratic system, where everyone would take turns, alternately rowing and lounging in the luxurious passenger quarters. Of course the aristocrats voted to retain the existing system. But then, to his surprise, so too did the galley oarsmen.

There is a simple explanation for why you are having a hard time financially, why you are in danger of losing your job or your health or your home, why you don’t have access to the luxuries that more privileged members of society are enjoying.
Why haven’t you realized the truth? In case you are too dumb to figure it out, here it is: It’s because you deserve what you are getting. And because deep down inside, you know this. That’s why you keep making choices that maintain the status quo, that keep you down and struggling.
You don’t believe it? Consider this:
Our legislators obviously believe what I’ve just said. They maintain a tax structure and an economic structure that does what it should do -- it rewards the deserving and punishes the undeserving. In other words, some people get rich, the rich keep getting richer, and the rest struggle to stay where they are, and sometimes, no matter how hard they struggle, they slip downward into poverty.
Look at the statistics -- they’re all around you. You’ve seen them. The top 2% make as much money as the bottom 50%. CEOs get paid on average 400 times as much as their lowest-paid employees. When failing businesses are sold out, the top managers (who ran their companies into the ground) walk away with “golden parachutes” worth millions of dollars.
And at the other end of the scale, 10% of our workforce is unemployed. This country has some 40 million uninsured people. The middle class is getting smaller. More people are in poverty than ever. Millions go to bed hungry every night. Hundreds of thousands of homes are being foreclosed, leaving ever more people homeless.
And how are our governments, local, state, and federal, coping with all this? They are reducing services to those most in need. Thousands of state employees are being laid off, hurting not just them but also all those that they were providing services for. Universities are cutting faculty and course offerings; students must pay higher tuition for fewer and more crowded classes. Public schools are laying off teachers and aides and increasing class sizes. Mental health programs, already appallingly inadequate, are being cut further, leaving the mentally ill in crisis and unable to receive treatment that might save their lives.
Clearly the decision-makers who have brought all this about are acting out of a morality that says that the deserving will be rewarded and the undeserving punished.
And who chose these decision-makers? You did. You have chosen to elect representatives who will carry out your moral values, who will punish you for all your flaws and shortcomings. And as long as you coninue to believe that you deserve the worst, you will keep on electing representatives who will make sure you get it.

Has Obama Failed?

The hue and cry of the Republicans -- and some Democrats -- has recently been to the effect that the Obama presidency has failed. Key evidence: the continuing high unemployment rate.
Is our economic situation as we want it to be? Admittedly no. Ten percent unemployment is clearly unacceptable. So does this mean that Obama has failed? I would suggest that the implied comparison (where we are vs. where we’d like to be) is erroneous.
The proper comparison has to be between where we are, under Obama, and where we would be if his administration had not done what it has, or -- to put it very bluntly and starkly -- where we would be if McCain had been elected.
Of course, we do not know for sure what McCain and Palin would have done, but we have a pretty good idea, both from those candidates’ statements during the 2008 campaign and from the statements and positions of Republican leaders since. I think it is clear that under McCain/Palin we would be feeling the effects of more tax-breaks for the wealthy, more cuts in government programs for the poor and middle classes,and less effort at economic stimulus.
And what would those effects be? The CBO -- Congressional Budget Office -- recently released some projections that without the Obama stimulus programs, unemployment now might be 13% or 14%. And we can figure that there would be more people losing their homes, more people exhausting their unemployment benefits -- in short, we would be in a major depression, not just a painful recession.
So has Obama failed? Hardly. He has achieved a lot, compared to where the country was when he started and where it might have gotten to with different policies and programs.

And we need to recognize too that what the Obama administration as accomplished has been tempered -- and severely limited and distorted -- by the obstinacy and determination of Republicans to do everything possible to cause Obama to fail, regardless of what might be best for the country.

Gays in the Military--What's the Problem?

The long-festering issue of gays in the military has again surfaced. And I still haven’t heard anyone explain in simple direct language what the issue is. I can imagine several fears, which get expressed as issues:
One is that some straights (I suspect those with fears of their own possible latent homosexuality) are simply uncomfortable being around gays.
Another is the fear that straight guys will be assaulted by gays in their beds or in the shower.
Another -- perhaps the one behind the resistance by some congressmen -- is the conviction that homosexuality is a sin, and we shouldn’t place these sinners side by side with our virtuous straight men in the military.
And the final one I can think of is the fear of the “homosexual agenda” -- the belief, related to the point above, that homosexuality is a (sinful) choice, and that homosexuals are trying to “convert” straights to be homosexuals.

These last two are matters of ideology, unsupported by any of the research on homosexuality. Medical science is emphatic that homosexuality is a condition, not a choice. And there is no evidence that homosexuals could, or would want to, “convert” others to homosexuality. In my experience, homosexuals want just two things: fair and equal treatment and acceptance, and, perhaps, the freedom to speak to encourage latent or “closet” homosexuals to accept their own homosexuality (which is not at all the same as trying to turn heterosexuals into homosexuals).
As for the first item, I think that is much the sort of thing that was said when the question of racial integration of the military was first considered: “Our boys wouldn’t feel comfortable having to associate with colored soldiers on an equal basis.” I’d say, “Get over it.”

What about the second item, fear of being assaulted by a gay guy in bed or in the shower? How about putting that to a scientific test? It should be fairly easy on a statistical basis. There are some reputable estimates of the number of gays currently in the military under the present “Don’t ask, don’t tell” policy. And there are specific numbers of gays who have been discharged from the military since that policy was imposed.
I assume that if any of those gays were discharged for making homosexual attacks or advances on straight guys, that fact would be documented. And of all the gays currently serving without being identified as gays, they presumably have not attacked or made advances toward straight guys -- or they would have been discharged.
So where are the numbers? How big a problem is this? I suspect that the facts would make clear that it is a vanishingly small problem. All the news reports I have read on the subject mention gays (something like 1300 in the past year, 12,000 in the last fifteen years or so) who were discharged either because they themselves admitted that they were gay or because someone else reported them -- but none of these reports that I have seen mention gays being reported for making advances toward straight guys. More likely it was because someone observed some sort of sexual contact between two gays, or -- who knows? -- overheard a sexually explicit conversation between two gays.

I think it is fair to note that, according to published reports, a woman in the military has far more risk of sexual attack from a male in the military than a straight male does of an attack, or even an advance, by a homosexual in the military.

Restore the Economy by Jobs and Education

All predictions say that even though the recession is technically over, unemployment will decline only slowly and over several years. Since -- as has been pointed out -- 10% of the population controls some 90% of the investment market, that 10% may be quite comfortable with the status quo, but for the other 90% of us the situation is at least worrisome and, for the 10% who are jobless, the outlook is just plain bleak.

It may be necessary to continue to pump money into Wall Street and big corporations and the like, but none of this has much immediate effect on the jobless.

There has been talk about job creation, but I have heard little emanating from Washington that sounds as though it will do much anytime soon, and what I've heard doesn't sound like a comprehensive coherent plan.

Here's my proposal:
First, some self-evident facts:
1) We are going to have to subsidize the unemployed for a long time.
2) The unemployed, for the most part, have lots of available time.
3) There is much work that needs doing in this country, including a) building/repairing/ upgrading facilities in national, state, and local parks and other public facilities; improving streets, highways, and bridges; building mass-transit (train, streetcar, and bus) roadbeds and rolling stock; c) upgrading the electric grid and transmission facilities; d) developing, manufacturing, and installing alternative power equipment -- solar panels, wind turbines, etc.
4) We are going to need more, and more highly trained, workers for a vast range of technologically advanced fields in the future: alternative power, medical technology, biotechnology, nanotechnology, and many others.

I would put all these indisputable facts together in this way:
Instead of just providing unemployment checks, let's offer most recipients two alternatives:
1) You can go back to school to learn some advanced skills. Government will put lots more money into paying stipends to those who want to improve their skills -- and perhaps the stipends will be bigger than the unemployment schecks. And while several million unemployed ate back in school, hundreds of thousands of teachers (who might be unemployed scientists and engineers) will also be given employment. And when the recession is truly over, and jobs are again plentiful, there will be a large workforce available of people with new high-tech skills.
2) Or you can move into any of a range of WPA or CCC type jobs: The government will pay wages for people who are available for relatively low-skill jobs improving the nation's infrastructure and public facilities. Many state and local governments have lists of "shovel-ready" jobs, some of which are already being done with stimulus finds. (Or if private companies need a boost to do many of the tasks suggested in (3) above, government might supplement wages, sort of like older OJT -- on-the-job-training -- programs.)

The advantages of this approach to the unemployment situation should be clear. Roughly the same amount of money would be spent, but this way it would produce improvements to the nation's infrastructure and facilities, and it would train a workforce for future jobs.

More on Gov. Perdue's Lifers

I was pleased to see that the N&O published my letter about Gov. Perdue’s Lifers. Please read yesterday’s blog, an expansion of that letter, before reading this one.

1) Prison authorities have been quoted as saying that the system of reducing sentences through good behavior is an important factor in maintaining order in prison. After all, if you see no possibility of getting out, or at least of getting out early, what incentive is there to be cooperative?
So if the official policy now is that all these earned credits will not count toward an earlier release date, then some prisoners – out of boredom or deep-seated anger – may be inclined to break the monotony by causing disturbances.

2) There is a moral issue here, and perhaps a paradox. These prisoners ended up in prison because they did not follow the rules of society. So it is ironic that the Governor is choosing not to follow the established rules – rules regarding the length of a sentence and the rewards of good behavior in reducing that sentence – in now seeking to redefine the meaning of credits earned for good behavior.

3) The Governor has repeatedly referred to these prisoners as rapists and murderers. Indeed, those are the crimes that got them into prison. The implication of these labels is that, once released, these prisoners would resume their past careers of murdering and raping. While I recognize that her stance on the issue is based at least in part on the attitudes of family members of the victims, I find her wording inflammatory; it is an effort to justify doing what some victims’ family members demand that she do: keep these criminals behind bars and throw away the key. I am disappointed that either she is making a decision based on emotion or she is allowing her rational principles to be influenced by the emotions of others.

4) Admittedly we do not know – with total certainty – what these prisoners might do when released. But we have a pretty good idea. First of all, we know that when they committed their violent crimes, they were in their teens or early twenties. And it is well known that people tend to “age out” of their violent impulses. People in their fifties and sixties are far less likely to be involved in violence than young people. And let’s look at the record these prisoners have compiled: To have their sentences, in effect, cut in half, they have compiled forty years of at least good, and probably exemplary, behavior. At a minimum they have stayed out of trouble, in an environment where that can be very difficult. But many of them (and I would like to see the facts on this published) have furthered their education, helped teach fellow inmates, and generally shown that they have turned their lives around. Some of them have done more with their lives in prison than many people I know of out of prison. If you can compile such a record during forty years in prison, then I, for one, have no fears that you will harm me, and I would be happy to have you as a next-door neighbor.

5) Except for the criminally insane, who might well commit more violent crimes if they were released, the goal of society should be to lock up criminals, to offer them opportunities to be rehabilitated, and then to release them back into society as soon as there is reasonable assurance that they are ready to be good citizens. It makes no sense to spend vast amounts of taxpayer money to imprison people who are not a danger and who could be productive citizens.

Credit-card sharks vs. regulation

A PBS Frontline program last night documented the thinking and the policies of credit-card companies as they seek maximum income. An interview with the man who, in a sense, started the whole process when he was CEO of Providian was refreshingly (and frighteningly) candid. He acknowledged that Providian had led the way (with many followers) in offering free credit cards (when most competitors were still charging annual fees) but making up the lost income by charging high interest rates combined with huge overdraft and late-payment fees. And of course other credit-card companies and banks saw the possibilities and quickly followed suit.

But this former CEO said something that I think gives a clue to the whole issue of government regulation of business. He acknowledged that his company – like almost every other – will be looking for loopholes in the newly passed credit card law. He said (paraphrased), “You [the government] can make any stupid laws you want, and we will play by those rules. But since our job is to make money, we will be looking for angles, loopholes, that will leave us a way to make a profit.”

I think this is a reasonable attitude, much though we would like every business to be charitable and altruistic – and much though it appears that Congress believes that to be the case when it passes laws that let business monitor itself and make its own rules.

No, let’s have a realistic separation of functions: let us recognize that the function of business is to make money, and one necessary function of government is to set up reasonable but realistic limits on how business can make money.

It appeared from the PBS program that the new law already has numerous loopholes, and credit-card companies will be able to exploit them to make even more money. Since it takes Congress an extremely long time to respond to abuses (and then the influence of lobbyists prevents Congress from really solving the problem), there seems to be an excellent case for a new regulatory agency that can create rules for credit-card companies (and other lending institutions) and modify them in a timely manner if they do not work as intended.

The Need for Regulation

Those who supported deregulation of the financial markets in the past (though perhaps not so enthusiastically now) seemed to have two assumptions underlying their position:

1) People (even financial types) are good, and will do the right thing even if there are no regulations requiring them to -- so we can trust them. (This assumption never seemed to get expressed in words, and when it is expressed it certainly becomes harder to maintain.)

Or

2) The market will make corrections. If there is fraud, it will be eventually found out, and those who cheat will be put out of business by the normal operation of market forces. If any stock or commodity becomes ridiculously overpriced, the market will figure this out and the market will adjust -- without any need for regulators to intervene. (This argument has been expressed, most notably by Alan Greenspan.)

I’d suggest a different way of looking at the market.

I believe that people are basically good -- but subject to temptation. Good people can do bad things. Good people, left unsupervised and unregulated, will all too often succumb to the temptation to make a huge profit at someone else’s expense. So a market without regulation is like a city without door-locks or policemen. Even if most participants (citizens, investors) want to be fair and decent, a few won’t, and they can corrupt the whole system. And before long we have a feeding frenzy.

Will the market make corrections, without any need for regulation? Very likely -- but only over a considerable period of time, by which time many innocent people will be hurt -- their jobs and their savings wiped out. Witness the most recent Wall Street disaster.

So let’s acknowledge these realities, and let’s state them this way:

The purpose of business (whether a restaurant, or a clothing store, or an auto manufacturer, or a bank) is to make money. For many participants, that will mean making money by any means possible. To expect otherwise is to expect sharks and wolves not to act like sharks and wolves.

The purpose, therefore, of government, is to restrain the natural shark-like tendencies of business -- to set up and maintain the rules under which business will be allowed to make money. It is the role of government to protect the customer, the consumer--

-- by requiring honesty -- truth in labelling, truth in lending, contracts that are understandable, products that are as advertised

and

-- by establishing and enforcing standards -- food must be free of harmful chemicals, products must be safe, interest rates must be reasonable.