Transparency

Classes in public management routinely include lectures on the importance of transparency; after all, democratic processes depend upon the participation of informed voters, and–as yesterday’s post noted– being informed requires knowledge of what government is doing.

From that perspective, I suppose we might applaud news of the most recent survey from Transparency International.

Transparency International publishes an annual Corruption Index that ranks the world’s governments on their honesty. The United States didn’t do so well.

The U.S. has plummetedin an annual corruption index, falling out of the top 20 countries for the first time since 2011, watchdog Transparency International said in a new report that links the global erosion of democracy and tidal wave of autocrats to an uptick in graft.

“Corruption chips away at democracy to produce a vicious cycle, where corruption undermines democratic institutions and, in turn, weak institutions are less able to control corruption,” said Patricia Moreira, managing director of Transparency International (TI).

The Corruption Perceptions Index, which ranks 180 countries by their perceived levels of public sector corruption, found overall that the failure to control corruption is contributing to a “crisis of democracy around the world.”

It will probably not shock you to learn that the U.S. slipped four points since the election of Donald Trump. That’s the lowest score we have registered in seven years.

The low score comes at a time when the U.S. is experiencing threats to its system of checks and balances as well as an erosion of ethical norms at the highest levels of power,” according to TI.

President Donald Trump is a “symptom, not a cause,” Zoe Reiter, the watchdog’s acting representative to the U.S., told Reuters

“Conflict of interest wasn’t a new problem, but it was illuminated in its glory when you have someone who is basically breaking norms,” she said.

According to the Index, the least corrupt countries were Denmark and New Zealand; Western Europe and the European Union scored the highest by region.

The most obvious question raised by America’s declining honesty is: what are we going to do about it? The most obvious answer is: we’re going to begin by getting rid of Donald Trump and Mitch McConnell. As salutary as that would be–as much of an improvement their exit from public life would represent–that should only be a start. As Zoe Reiter has pointed out, they are symptoms.

There’s a reason we have rarely heard pundits and public figures use terms like “public servant” and “statesman” over the past couple of decades. The political figures worthy of those labels–in Indiana, the Richard Lugars and the Lee Hamiltons–have been replaced by ambitious empty suits who lack both gravitas and integrity (and frequently, intelligence) and who are unwilling to do the hard work needed to master policy areas.

Empty suits are much easier to corrupt. Hence America’s declining place on the Corruption Index.

The problem is, when politics becomes a dirty word, it’s much harder to recruit bright, idealistic young people to run for office.

We can only hope that the number of newcomers who ran and won in 2018 are a sign of renewed political interest among young citizens intent upon cleaning up what has become America’s disgraceful political sewer.

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No News Is Definitely NOT Good News

Indianapolis, Indiana used to have three newspapers. Little by little, we lost them–the Indianapolis Times went first, then the Indianapolis News, the evening paper, “merged” with the co-owned morning Star. Then Gannett bought the Star, and changed what had been a mediocre newspaper into a worthless compendium of sports columns and stories about new bars in town, wrapped around a daily “McPaper”–aka USA Today.

Gannett’s ownership led to a constant series of layoffs and outsourcing. The layoffs and firings decimated the news staff, with those having institutional memory going first, and the outsourcing of copy editing multiplied the number of misspellings and textual gaffes. All of this seemed–and still seems–insane to me: the only thing news organizations have to sell is news content; it makes no sense to save money by reducing your ability to produce the quality and quantity of what you are selling.

Now, a new organization evidently wants to buy Gannett. Ordinarily, I’d be delighted, but evidently, the potential buyer is even less interested in producing news than Gannett. According to a column in the Washington Post,

Print revenue is down, digital and mobile revenue aren’t nearly enough, and now a hedge fund promising even deeper cuts wants to acquire the company. If the future of corporate news operations looks bleak, that’s because it is.

In Tennessee, we’ve been watching the slow-motion destruction of our news institutions under Gannett for a few decades now, and the idea that things are about to get even worse is appalling. As badly as the country needs strong coverage of national news these days, the local news landscape is important, too. And what happened here mirrors what’s already happened in city after city.

The story of what happened in Tennessee mirrors what happened in Indianapolis.

In July, for example, local hospital operators LifePoint Health and RCCH HealthCare Partners merged in a nearly $6 billion deal that affected roughly 1,000 local employees. The Tennessean covered the story with an Associated Press dispatch written in New York, followed by a local rewriteof a news release at the end of the day. There was no follow-up coverage despite LifePoint’s founder receiving a $70 million exit package and 250 jobs getting eliminated.

In Indianapolis, the locally-owned Indianapolis Business Journal (disclosure: I write a column for the IBJ) does a good job of covering the business community. (It actually does a better job of covering state and local government than the Star, but that’s not its primary mission and being better than the Star is to clear a low bar.) Nuvo, our alternative weekly newspaper, does excellent reporting on selected scandalous or corrupt matters, but doesn’t have the resources to provide the sort of comprehensive coverage we used to get from daily papers. Thanks to the Star’s shortcomings, citizens of Indianapolis get only the most superficial coverage of state government, the legislature and city agencies.

And it matters.

When no one is watching the store, there is no way to evaluate whether  or how local officials are doing their jobs. There’s no “early warning system” allowing citizens to object to changing rules. There’s no authoritative, trusted source to rebut or confirm rumors or conspiracy theories.

It’s hard to disagree with the conclusion of the cited article:

All over America, we need something different: We need more reporters covering the issues that matter to our communities. We need to stem the crisis in statehouse reporting; here in Nashville, the Capitol Hill press corps has dwindled from 35 to just 10 over a few decades. We need more investigative power to follow the billions of dollars spent by state and local governments, often with little oversight. We need competition in places where corporate news has carved out monopolies and let local news wither.

 And we need to do it fast, because the butchers are sharpening their knives.

No news is definitely not good news.

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Words Utterly Fail….

A few days ago, I posted about the excellent bill Congressional Democrats have introduced to begin the overdue cleanup of corrupted democratic processes. The bill includes curbs on gerrymandering and safeguards against vote suppression, among other things.

The one element of the bill that I figured was unlikely to be controversial was the proposal to make Election Day a national holiday. Good government groups have been lobbying for this for years. I mean, how can you argue against making voting easier for people who work long hours and have other problems getting to the polls?

Mitch McConnell–aka the most evil man in America–just answered what I thought was a rhetorical question. He has labeled the proposal “a power grab.”

I suppose if you are convinced that facilitating citizens’ ability to cast their votes will lead to  higher vote totals for your political opponents–if you know, in your heart of hearts that you and your party are historically unpopular– that might seem like a power grab…Still, it’s hard to imagine McConnell offering this argument with a straight face.

There has been a lot of outrage expressed in the wake of McConnell’s chutzpah, but I think Ed Brayton’s response at Dispatches from the Culture Wars is my favorite.

The man who refused to allow even a committee vote on Obama’s Supreme Court nominee for nearly a year so a Republican could appoint the next justice is accusing someone else of a power grab? The fact that he wasn’t immediately struck dead by lightning is powerful evidence that there is no god (or that god is a first-class jerk, take your pick). This is Trumpian-level lack of self-awareness and shamelessness. I can’t imagine how the man sleeps at night, other than on a pile of money.

McConnell was recently described by a historian as “the gravedigger of American democracy,” a description he has clearly earned. (Even Donald Trump, who never met a greedy thug he couldn’t relate to, evidently told aides that McConnell was “meaner than a snake.”)

McConnell has defended his opposition to making Election Day a holiday by claiming it would cost money, because it would require government workers to be paid. In Mitch’s world, the country can easily afford to give billions in “tax relief” to corporations, but can’t manage continuing to compensate government employees for one extra day off.

Hoosiers like to make fun of folks from Kentucky, characterizing them as not-too-smart hillbillies. I’ve always maintained that bigotry–even geographical bigotry–is always wrong. But to the extent that there is  evidence for that characterization of our neighbors to the south, it is that they have repeatedly voted for Mitch McConnell.

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We The Raw Material

A recent article in the Guardian began with a paragraph that struck me as incredibly important, not just as an introduction to the subject-matter of the article (Surveillance Capitalism) but as an explanation for our tribalized and angry age.

We’re living through the most profound transformation in our information environment since Johannes Gutenberg’s invention of printing in circa 1439. And the problem with living through a revolution is that it’s impossible to take the long view of what’s happening. Hindsight is the only exact science in this business, and in that long run we’re all dead. Printing shaped and transformed societies over the next four centuries, but nobody in Mainz (Gutenberg’s home town) in, say, 1495 could have known that his technology would (among other things): fuel the Reformation and undermine the authority of the mighty Catholic church; enable the rise of what we now recognise as modern science; create unheard-of professions and industries; change the shape of our brains; and even recalibrateour conceptions of childhood. And yet printing did all this and more.

Why choose 1495? Because we’re about the same distance into our revolution, the one kicked off by digital technology and networking. And although it’s now gradually dawning on us that this really is a big deal and that epochal social and economic changes are under way, we’re as clueless about where it’s heading and what’s driving it as the citizens of Mainz were in 1495.

These paragraphs were a lead-in to a description of Shoshana Zuboff’s new book, in which she describes “Surveillance Capitalism.” Zuboff is a Harvard Business School professor, and her basic insight is that the changes being made are less about the nature of digital technology and more about a “new mutant form of capitalism” that uses tech for its purposes.

It works by providing free services that billions of people cheerfully use, enabling the providers of those services to monitor the behaviour of those users in astonishing detail – often without their explicit consent.

“Surveillance capitalism,” she writes, “unilaterally claims human experience as free raw material for translation into behavioural data. Although some of these data are applied to service improvement, the rest are declared as a proprietary behavioural surplus, fed into advanced manufacturing processes known as ‘machine intelligence’, and fabricated into prediction products that anticipate what you will do now, soon, and later. Finally, these prediction products are traded in a new kind of marketplace that I call behavioural futures markets. Surveillance capitalists have grown immensely wealthy from these trading operations, for many companies are willing to lay bets on our future behaviour.”

The essential point being made is that we live in an era of both state surveillance and its capitalist counterpart, in which digital technology is separating people into two groups: the watchers (invisible, unknown and unaccountable) and the watched–the “raw material.” We can limit state surveillance through the law, but at this point, there is no law restraining the use of our data by Facebook, Google, et al.

This has profound consequences for democracy because asymmetry of knowledge translates into asymmetries of power.

I have no way of evaluating either the accuracy or the imminence of this threat. And that brings me back to the article’s opening paragraph. We are living in a time of profound change, and anyone who says they know where that change is taking us is smoking something very strong.

We are “raw material” in so many ways…..

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It’s Complicated

The usual reason economists oppose monopolies is that when a business effectively dominates a particular market, it is able to raise prices. A monopoly has effectively eliminated the competition that keeps prices low. The higher prices harm consumers, and allow the company to rake in more profit than it would otherwise be able to generate.

One of the criticisms of the current administration (a criticism that tends to get lost among the mountain of others) is that enforcement of anti-trust laws has been somewhere between lax and non-existent.

Despite their almost-universal support for vigorous anti-trust enforcement, however, few economists identified a relationship between monopolies and the growth of  inequality. As a post from Inequality.org informs us, that may change.

Andrew Leigh is both a member of the Australian Parliament and an economist, and his recent research is making waves.

Working with a team of Australian, Canadian, and American analysts, he’s been studying how much the prices corporate monopolies charge impact inequality.

The conventional wisdom has a simple answer: not much. Yes, the reasoning goes, prices do go up when a few large corporations start to dominate an economic sector. But those same higher prices translate into higher returns for corporate shareholders.

Thanks to 401(k)s and the like, the argument continues, the ranks of these corporate shareholders include millions of average families. So we end up with a wash. As consumers, families pay more in prices. As shareholders, they pocket higher dividends.

But this nonchalance about the impact of monopolies, Andrew Leigh and his colleagues counter, obscures “the relative distribution of consumption and corporate equity ownership.” Average families do hold some shares of stock, but not many. In the United States, for instance, the most affluent 20 percent of households own 13 times more stock than the bottom 60 percent.

In other words, when prices rise, low- and middle-class families pay and wealthy families profit. According to Leigh and his fellow researchers, this redistribution from the less affluent to the wealthy via corporate concentration has shifted 3 percent of national income out of the pockets of poor and middle-class families and into the wallets of the affluent.

The research also shows that corporations grow large because there are incentives to growth to which their executives respond.

Indeed, firm size determines how much executives make more than any other factor, as research has shown repeatedly over the years. Executives don’t have to “perform”— make their enterprises more efficient and effective — to make bigger bucks. They just to need to make their enterprises bigger.

Executives, in short, have a powerful incentive to grow their companies, and that powerful incentive, as the latest research from Andrew Leigh and his colleagues shows, isn’t just making these executives richer. It’s leaving our societies much more unequal.

An obvious lesson from this research is that we need much more robust anti-trust enforcement. Another remedy, just now being tried, is a requirement that corporations publish the  pay ratio between their CEOs and their workers. (Portland, Oregon imposes an “inequality tax” on companies reporting too wide a disparity.)

Evidently, size does matter–at least, in corporate America.

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