Houston, We Have a Problem…

In my periodic rants about the state of civic knowledge, I’ve frequently cited the results of a test periodically administered by the Intercollegiate Studies Institute (ISI) as evidence of the American public’s worrisome deficit of civic literacy.

As troubling as that deficit of public knowledge is–as much as it contributes to political polarization and our inability to hold government actors accountable to constitutional standards– another outcome of ISI’s research should really terrify us.

Elected officials’ scores were lower than those of the general public in almost every category.

Of the 2,508 People surveyed, 164 say they have held an elected government office at least once in their life. Their average score on the civic literacy test is 44%, compared to 49% for those who have not held an elected office. Officeholders are less likely than other respondents to correctly answer 29 of the 33 test questions. This table shows the “knowledge gap” for each question: the difference between the percentage of common citizens who answered correctly and the percentage of officeholders who answered correctly.

Think about that for a minute.

Manufacturers don’t hire workers who don’t know how to make the product. Athletes who don’t understand the rules of their sport are soon gone. A lawyer who doesn’t know the rules of procedure and the precedents governing his practice area is likely to get sued for malpractice. Surely we have a right to expect our public officials to have a basic acquaintance with, and understanding of, the Constitution they swear to uphold.

I suppose ISI’s findings shouldn’t come as a shock; those of us who are watching the political spectacle that is the run-up to the 2016 Presidential election have seen plentiful evidence that–even among the people who presume to run for the highest office in the land–a number appear to be woefully ignorant of America’s history, philosophy and constitutional principles.

Perhaps we should test candidates for political office for basic constitutional competence before we allow them to run.

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La La La…I Can’t Hear You!

Remember when you were a kid on the playground having an argument, and felt you were losing? Remember sticking your fingers in your ears and going “la la la” as loudly as you could, in order not to hear what the other kid was saying?

Some of you who are reading this were probably  never that childish, and most of the rest of us have since grown up.

All except Congress.

A congressional ban on gun violence research backed by the National Rifle Association (NRA) has been extended in the aftermath of the Charleston church shooting that left 9 people dead.

As Public Radio International (PRI) reported recently, the House of Representatives Appropriations Committee voted to reject an amendment last month that would have allowed the Centers for Disease Control and Prevention (CDC) to study the relationship between gun ownership and gun violence.

The purported reason for the ban is that gun deaths are not “diseases.” Neither are cigarettes, but the CDC researches the health effects of tobacco. Guns certainly affect health; guns kill more Americans under 25 than cars. (More than 25% of teenagers ages 15 and older who die of injuries in the US are killed by gun-related injuries.)

The costs of gun violence are staggering: American taxpayers pay roughly $12.8 million every day to cover the costs of gun-related deaths and injuries. Total social costs have been estimated at 100 billion each year. That, of course, excludes the human losses.

The CDC used to conduct firearms safety research, but in 1996, the gun lobby persuaded Congress to restrict CDC funding of gun research; similar restrictions on other federal agencies followed.

Far from hiding its role, the NRA has publicly taken credit for preventing the research. In 2011, it issued a statement :”These junk science studies and others like them are designed to provide ammunition for the gun control lobby by advancing the false notion that legal gun ownership is a danger to the public health instead of an inalienable right.”

The CDC doesn’t do “junk science,” of course. And denying that guns pose a danger to public health is tantamount to an admission of insanity. But facts and evidence pose a special threat to the NRA extremists who no longer even reflect the position of most NRA members.

They can’t put their fingers in their ears, so–like the bullies on those long-ago playgrounds–they’re trying to deprive advocates of sensible gun control measures of data that they know would strengthen those advocates’ arguments.

It’s their version of “la la la–I can’t hear you.”
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The Bottom Line and the Common Good

I’ve done my share of business-bashing on this blog–pointing out corporate overreach and bad behavior. But as Frank Bruni recently reminded us in a timely and excellent column for the New York Times, there’s a sunny side to greed.

Self-interest has contributed to sanity on a wide number of issues. As Bruni notes,

They’ve been great on the issue of the Confederate flag. Almost immediately after the fatal shooting of nine black churchgoers in Charleston, S.C., several prominent corporate leaders, including the heads of Walmart and Sears, took steps to retire the banner as a public symbol of the South; others made impassioned calls for that.

And when Nikki Haley, the South Carolina governor, said that the Confederate flag at the State House should come down, she did so knowing that Boeing and BMW, two of the state’s major employers, had her back. In fact the state’s chamber of commerce had urged her and other politicians to see the light.

Eli Lilly, American Airlines, Intel and other corporations were crucial to the defeat or amendment of proposed “religious freedom” laws in Indiana, Arkansas and Arizona over the last year and a half. Their leaders weighed in against the measures, which licensed anti-gay discrimination, and put a special kind of pressure on politicians, who had to worry about losing investment and jobs if companies with operations in their states didn’t like what the government was doing.

Bruni quotes a business consultant for the observation that successful businesses must be more responsive to the general public than politicians.

If you’re a politician and all you care about is staying in office, you’re worried about a small group of voters in your district who vote in the primary,” he told me, referring to members of the House of Representatives. “If you’re a corporation, you need to be much more in sync with public opinion, because you’re appealing to people across the spectrum.”

Does this sensitivity to the population outweigh the damage that some corporations do to the environment? Does it make up for others’ exploitation of workers? Of course not, but as Bruni notes, “it does force you to admit that corporations aren’t always the bad guys. Sometimes the bottom line matches the common good.”

And it should force those of us who think and write about such matters to make important distinctions. I get angry when people make sweeping generalizations based on race, religion or sexual orientation, because there is no monolithic group. Every human category includes assholes and saints and everything in-between.

That’s equally true of corporations and business enterprises.

The market provides many incentives for good behavior. As I noted yesterday, many existing public policies reward less salutary behaviors, and those need to change.

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Changing Perverse Incentives

The Brookings Institution has released a report that I can only describe as “compelling.” Titled “More Builders and Fewer Traders,” it focuses like a laser on the perverse policy incentives that have contributed to dramatic levels of inequality.

In our new paper “More builders and fewer traders: a growth strategy for the American economy” we identify a handful of obscure but important shifts—in laws, regulations, and standard practices—which, taken together, have changed the incentive structure of leaders in American corporations. This set of incentives has led to short term behavior on the part of corporate leadership. These incentives are so powerful that once they became pervasive in the private sector, they began to have broad effects. No one set out to create this myopic system, which arose piecemeal over a period of decades. But taken together, these perverse new micro-incentives have created a macroeconomic problem.

The report zeros in on four trends that have contributed to what the authors call “short-termism.”  One consequence of these trends is that–while cash distributed to shareholders as a share of cash flow has surged– the share devoted to capital investment has fallen to a record low.

I don’t disagree with the authors’ focus on these trends, the problems they pose for the economy, or their contribution to inequality.  I do wonder, however, how much of the lack of investment in the future of American industry can be traced back to the way we  finance corporations and the separation of ownership from management.

“Ownership” can mean many things, but it is difficult to square our common-sense understanding of ownership with the purchase of a few hundred shares of stock in a major corporation. Such “ownership” carries with it no meaningful control, no right to make decisions, and “risk” only to the extent that there may be a decrease in the value of one’s stock.

The reality is that American corporations borrow money two ways–through the sale of bonds, which are more secure but which carry only a stated rate of return, and the sale of stock, the proceeds of which represent a gamble on the future of the enterprise: more risk, but the chance of a superior “reward.” Let’s be honest: Neither the bondholder nor the small or medium-sized shareholder is an owner in any meaningful sense of the word.

Meanwhile, the people managing these companies are frequently not “owners,” either. They’re hired hands, often with little investment in the business. Their compensation and continued employment depend significantly upon their ability to keep short-term stock prices high, thus they have every incentive to keep workers’ wages down and their own paychecks as high as possible.

None of this fosters the capitalist virtue of pride in the product, or good corporate citizenship (except as a marketing tool), or decision-making that is in the long-term best interests of the enterprise.

When a company is truly owned by an individual or small group, when those owners see their own prospects intimately bound up with the long-term success of the venture, corporate behavior changes. Such owners are certainly focused upon earnings and the bottom line–but they understand what innovations and behaviors will be needed to protect that bottom line into the future. Concern for long-term fiscal health provides incentives to care about their reputation, their workforce, the quality of their products and the health of the communities in which they operate.

When public policies incentivize short-term gains over long-term decision-making, the focus turns from producing goods and services to playing financial games–with broad negative consequences for job creation, wages, economic stability–and ultimately, American competitiveness.

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Respect and Civility

I know it will come as a real shock to those who read this blog, but I have opinions. A point of view. And admittedly, a regrettable tendency toward snark. (A Republican colleague at the University regularly greets me with “Hi, Snarky!)

I know those things about myself. At my age, I should.

Nevertheless, I was taken aback by a recent email from a reader agreeing with a column I’d written for the Indianapolis Business Journal. He informed me that such agreement with me was rare, and chided me for what he perceived to be a lack of respect for those holding contrary positions.

I thought about that accusation, and I decided that he is half right. Although I hope that I “walk the talk” with respect to my frequent calls for greater civility, civility is not respect. It is possible to be perfectly polite–perfectly civil– to someone for whom you have no regard.

So, what about the “respect” allegation?

I do have respect–great respect–for people who clearly share a commitment to important social goals (equal treatment under law, amelioration of injustice, official accountability and the like) but who disagree, sometimes strongly, about way we define those goals, or the policies most likely to achieve them. They are well-intentioned people with a perspective that is contrary to mine–a perspective I try  (not always successfully) to understand.

But it is true that I do not have respect for people who are self-serving and intellectually dishonest, the self-aggrandizing and/or antagonistic types we all come across–the “look at me!” know-it-alls who clearly aren’t interested in leaving the world a bit better than they found it, or making things any easier for those having a hard time. They are the trolls, the race-baiters, the angry name-callers, the people who don’t engage with the specifics of any discussion but seem only to be looking for a fight. My lack of respect for them undoubtedly comes through, because I tend to simply ignore such people. There is no point in feeding animus.

In my own defense, I think respect has to be earned.

Everyone is entitled to be treated civilly. Not everyone is entitled to be respected.

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