Category Archives: Public Policy and Governance

Welcome to the Oligarchy

study that will appear in the Fall 2014 issue of Perspectives on Politics, a very highly regarded academic journal, concludes that the U.S. is no longer a democracy. Instead, we have become an oligarchy, and a pretty corrupt one at that.

“Despite the seemingly strong empirical support in previous studies for theories of majoritarian democracy, our analyses suggest that majorities of the American public actually have little influence over the policies our government adopts.”

The study provides pretty conclusive evidence that the US government does not represent the interests of the majority of our country’s citizens, but is instead ruled by the rich and powerful. As the Telegraph reports:

After sifting through nearly 1,800 US policies enacted in that period and comparing them to the expressed preferences of average Americans (50th percentile of income), affluent Americans (90th percentile) and large special interests groups, researchers concluded that the United States is dominated by its economic elite.  

That domination helps to explain another recent study, this one by French Economist Gabriel Zucman.  Zucman looked at international data on what economists call investment positions (each country reports its assets abroad and foreign-owned assets at home). He found that the numbers don’t add up: globally, according to the reports, liabilities substantially outnumbered assets. But that’s mathematically impossible.

Zucman investigated further; He eventually concluded that the only way to explain such a result is if a lot of money is run through offshore havens, and the ownership doesn’t show up in any country’s national statistics. 

Zucman estimates that the world’s wealthy are using tax havens, including Swiss banks, to hide at least $4.5 trillion but more likely $6 trillion from the tax collectors. That’s $6,000,000,000,000—close to six percent of the entire world’s gross economic output for one year. In other words, as one pundit noted, not chickenfeed.

Not only are we being governed by wealthy oligarchs, for all intents and purposes–they aren’t even beneficent oligarchs. What’s ours is theirs, what’s theirs is theirs–and they aren’t sharing.

Welcome to our brave new global economy. The American republic was nice while it lasted.

Now THAT’S a Retirement Speech!

In the wake of the Great Recession, the SEC has come in for plenty of criticism from academics and pundits who follow financial regulation. But few critiques have been as blunt and biting as the one recently issued by a retiring SEC lawyer.

James Kidney had joined the SEC in 1986. He made a speech at his retirement party last month that has garnered considerable attention, not least because his audience was composed primarily of SEC lawyers and alumni.

Kidney had campaigned within the agency to bring charges against more executives, especially in the SEC’s  case against Goldman Sachs Group Inc. (GS)

According to a copy of his remarks that found its way to Bloomberg News, Kidney said the SEC had become “an agency that polices the broken windows on the street level and rarely goes to the penthouse floors. On the rare occasions when enforcement does go to the penthouse, good manners are paramount. Tough enforcement, risky enforcement, is subject to extensive negotiation and weakening.”

Kidney said his superiors were more focused on getting high-paying jobs after their government service than on bringing difficult cases. The agency’s penalties, Kidney said, have become “at most a tollbooth on the bankster turnpike.”

“I have had bosses, and bosses of my bosses, whose names we all know, who made little secret that they were here to punch their ticket,” Kidney said. “They mouthed serious regard for the mission of the commission, but their actions were tentative and fearful in many instances.” 

Kidney’s remarks serve as a reminder that no senior executive at a major financial firm has gone to jail; for that matter, the SEC has brought civil charges against only a handful. 

The revolving door between government agencies and those they are supposed to be regulating is an open secret–and a clear impediment to vigorous enforcement of the laws.

Sometimes, it takes an inside guy to remind us outside folks why things aren’t working the way they should.

I Know I’m a Broken Record…

It really, really gripes me that taxpayers are subsidizing Walmart’s bottom line. I’ve beaten that drum repeatedly, but when I saw this video, the message was presented in so clear and compelling a way, I just had to share.

In fairness, let me point out that this analysis applies equally to the many other greedy recipients of corporate welfare. (McDonalds, I’m looking at you!)

You either believe in markets or you don’t. Walmart and its ilk may beat the drum for capitalism, but they don’t want to abide by its terms, and compete fair and square in the market–without public subsidy.

 

Rick Scott: All-Republican

I know that in sports, some players are “All Americans.” In Florida, Governor Rick Scott might be considered “All Republican.” He follows the script of today’s GOP (a party that bears little resemblance to the GOP I once knew and supported), but without the finesse that allows other Republican lawmakers to at least pretend they care about their constituents, and that their policies, however damaging, are based on good intentions.

Scott has been everything you’d expect from a sleaze who–before turning to electoral politics–admitt to 14 counts of Medicare fraud and paid the federal government more than $600 million dollars in fines.

A couple of days ago, the Tampa Bay Times issued a blistering critique of Scott, calling him the worst governor in Florida’s history. Titled “If He Only Had a Heart,” it’s well worth reading in its entirety, but I’ll just share the summary:

In Scott’s Florida, it is harder for citizens to vote and for the jobless to collect unemployment. It is easier for renters to be evicted and for borrowers to be charged high interest rates on short-term loans. It is harder for patients to win claims against doctors who hurt them and for consumers to get fair treatment from car dealers who deceive them. It is easier for businesses to avoid paying taxes, building roads and repairing environmental damage.

Scott may lack their talent to project a “kinder, gentler” facade, but there is an entire cohort of Republican governors operating from the same playbook.

Most, like Indiana’s governor, are much smoother, but the agenda is same.

I Love It When I Turn Out To Be Right…

Way back in 2000, I wrote a column listing all of the reasons the U.S. should reform health insurance. I was advocating adoption of single-payer (Medicare for All), and I still believe that would have been the simplest and most effective policy–but politics, as we all know, is the art of the possible, and single-payer wasn’t going to fly.

I had a long list of benefits I predicted would flow from universal access to healthcare. Down in the “and also” part of that list was the following:

Individuals would save money. Auto and homeowners insurance premiums would decline, because the underwriting would no longer need to take the costs of medical care into account.

Researchers are now investigating the actual costs and savings attributable to the Affordable Care Act (as opposed to the political talking points and hype). Rand has just issued one such study:

The Affordable Care Act may result in lower automobile insurance rates according to a study conducted by David Auerbach and colleagues at the RAND Corporation that was published on April 9, 2014.

Auto insurance providers pay for some or all medical injury claims that are sustained in automobile accidents in the United States depending on the terms of the policy. The dollar amounts involved are based on an analysis of the amounts that all U. S. auto insurance providers paid for automobile injuries in 2007. The total was $35 billion.

The entire cost of auto injury health care will be taken over by health insurance providers according to the terms of the Affordable Care Act.

I told you so.