Let’s Give Thanks…For Being “Unbiblical”

As Thanksgiving approaches, it is incumbent upon us to count our blessings, to remind ourselves of the multiple good things in our lives. (Complaining is far too easy these days, especially if you care at all about public policy and the state of the nation. )

A recent post to the Civic Literacy blog by Don Knebel makes a pretty compelling case for the proposition that a lack of “bible-based” lawmaking should top our list of gratitude-inducing items.

Most of us simply shrug off the constant drumbeat from the theocratic Right about our “secular” laws and the need to “return to biblical principles.” Don’s post demonstrates something I’ve long suspected: these pious frauds have no idea what most of those principles actually were or are. (My personal favorite from Don’s extensive list: Public execution by stoning would be required for “stubborn and rebellious” children.  Deuteronomy 21:18-21. If I’d only known….)

Click through for a truly edifying lesson in “bible law.”

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The Achilles Heel…aka Perils of Privatization

I have previously noted my skepticism of so-called “privatization” of public assets. (I say “so called” because we Americans use the term inaccurately, to mean “contracting out” for goods and services; genuine privatization would involve selling those assets off and letting them succeed or fail in the market.)

Note that the term I use is skepticism, not opposition. There are obviously times and tasks where contracting makes sense. My concern is that government isn’t a very good judge of when and what those are.

A recent post at the Urbanophile illustrates my point (albeit inadvertently). Aaron Renn was an enthusiastic supporter of the Toll Road lease, and an equally ardent opponent of the ill-considered Chicago and Indianapolis parking meter deals. In this post, he uses a considerable amount of data to make a perfectly reasonable point: the devil is in the contracting details. There are good deals and not such good deals.

My skepticism–and that of other critics of “privatization as panacea”–comes from the recognition that contracts with units of government are qualitatively different from contracts between private actors, and those differences make it far more likely that the contracts ultimately negotiated will be unfavorable to taxpayers.

Mayors and Governors who are considering privatization are operating under a different set of incentives than the corporate CEO who is charged with long-term profitability of his business. As the saying goes, long term to a politician means “until the next election.” Typically, the elected official is looking for immediate cash to relieve fiscal stress (and improve his immediate political prospects) and is much less concerned with the extended consequences of the transaction.

Furthermore–although it really pains me as a former Corporation Counsel to admit this–the lawyers who review these deals for government tend to be far less sophisticated than  lawyers acting on behalf of the contractors. That’s not, I hasten to say, because they aren’t good lawyers–many are. But the skills required to advise a municipality or state government aren’t generally the same skills as those whose emphasis is business transaction law.

In addition to the existence of unequal bargaining capacities, there is also—unfortunately—the potential for “crony capitalism,” the temptation to reward a campaign donor or political patron with a lucrative contract at taxpayer expense. (Can we spell Halliburton?)

Ideally, the media will act as a watchdog in these negotiations, alerting the public when a proposed contract is lopsided or otherwise unfavorable. But media has never been very good at providing this sort of scrutiny, because news organizations rarely employ business reporters able to analyze complex transactions. (In today’s media environment, of course, we’re lucky if we even know a deal is in the works.)

So-too often, government contracting pits an officeholder who is focused on short-term gratification and represented by a lawyer unfamiliar with the arcana of business contracting against a savvy contractor looking to lock in long-term advantage who is represented by an experienced lawyer-negotiator.  We shouldn’t be surprised when the resulting transaction is unfavorable to the taxpayer.

Is this lack of parity reason to eliminate government contracting? Of course not. But it is definitely reason to be cautious , and read the fine print, especially when an elected official is trumpeting the great deal s/he just made.

What’s that old saying? If it sounds too good to be true, it probably is.

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A Candid Cashier

Saturday, my husband and I made our “oh-my-god-Thanksgiving-is-Thursday-and-the-cupboard-is-bare” Costco run.

As we were checking out (with more wine than two elderly citizens ought to be purchasing), the pleasant and chatty young man putting our purchases into the basket noted some purchase (I didn’t notice which one) and said “You are obviously smart shoppers.”

I laughed and responded that at least we were smart enough to shop at Costco, rather than Walmart or Sam’s Club.

At that, the cashier looked up and said, “You can say that again! I worked at Sam’s Club for 13 years, and it was terrible. I hated it. I’m so glad to be here. You can’t imagine the difference.”

I’ve read plenty of comparisons between Costco and Walmart, and their treatment of employees, but this was qualitatively different: heartfelt testimony volunteered by someone who clearly had a basis for comparison.

Later in the day, I came across this paragraph in a story about the widening gap between rich and poor in America:

Few companies are as emblematic of the New American System as is Walmart. The company that in 2011 generated more revenues than any other, the company that is now the largest food retailer in the world is the same company that recently encouraged donations of food to its own employees. It’s also a company that, putting aside any losses generated when it replaces smaller, local stores, causes a net loss to every community it enters in the form of increased tax revenues needed to support its underpaid employees. Walnart not only counts on taxpayer dollars to subsidize its “low cost” stores, it counts on those same taxpayer dollars to drive its business. Walmart employees not only need food stamps to get by, Walmart is the largest place where those food stamps are redeemed. It’s a cycle that grinds employees (and communities) relentlessly down, while driving Walmart revenues just as consistently up.

In principle, I don’t mind having my tax dollars used for welfare. But I do object–strenuously–to the use of my tax dollars to subsidize Walmart’s (outsized) profits. If Walmart insists on screwing over thousands of people like the cashier I met yesterday, the company needs to do so on its own dime, rather than on the back of taxpayers. (But of course, that wouldn’t work. Walmart needs public assistance in order to continue paying the below-living wages that generate its generous profit margins.)

Ironically, as I’ve previously noted, Costco’s profits per square foot exceed Walmart’s by a significant percentage, even though Costco pays its employees far more, treats them better and provides health insurance.

Costco will be closed on Thanksgiving, so that its employees can spend time with their families. Walmart–of course–will be open.

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Exceptionalism, Corporate Edition

Only in America. No other nation gives its corporations as many rights as we do.

Before you launch into a knowing and cynical “sure–big business bought our lawmakers,” consider the fact (highlighted in a recent article in the Journal of Law and Courts) that these expansive rights are almost all the result of federal court decisions, not legislation.

The privileges currently enjoyed by the fictitious “persons” we call corporations weren’t a result of our Constitution, either.  According to David Ciepley, author of the referenced article,

“the framers were so concerned about the possibility of privileged monopolies squeezing out ordinary citizens that they did not endow Congress with the traditional right of Parliament to charter corporations, let alone expressly extend constitutional rights to corporations.”

There are three theories about corporations and their rights: the associational theory (corporations are constituted by their members and thus deserve the same rights as those members); the “real entity” theory (a corporation is distinct from its members–a separate, albeit fictional, “person” entitled to the rights accorded to “persons” under the 14th Amendment); and the grant theory (corporations exist because government has created them, and they have only the powers with which their creator endowed them).

The legal problem with the associational theory is that in the U.S., rights are individual. My family doesn’t have a right to free speech–although each member of my family does. The practical problem with basing a corporate right to free speech on the First Amendment rights of its shareholders is obvious: those shareholders are likely to have different opinions (especially on public policy issues) and to want to say different things.

The notion that a corporation is somehow an organic “person” separate from both government and its shareholders and entitled to 14th Amendment protections is so historically and logically flawed as to require little rebuttal–especially in an era where Justice Scalia remains ambivalent about including living, breathing women within that Amendment’s protections.

The only theory that accords with both history and logic is the grant theory. Governments  created corporations in order to encourage commerce–in large part by limiting the liability of individuals. (We are more likely to innovate if a failure won’t entirely wipe us out.) Corporations should have all of the rights that are required to fulfill their purpose, which is to do business–the right to own property, to contract and to engage in commercial speech.

The Supreme Court has gotten two things very wrong: money is not speech, and corporations are not people. (I have to agree with a popular Facebook slogan: I’ll believe corporations are people when Texas executes one.) Those two errors have massively distorted our politics and corrupted our governing institutions.

The Court failed to recognize the contemporary operation of the golden rule: He who has the gold, rules.

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It’s More Complicated Than That…

H.L. Mencken famously said that for every problem, there’s a solution that’s clear, simple  and wrong.

That’s an observation that has escaped lawmakers and economists for a long time, although in the last several years, many of them have come (grudgingly) to recognize its wisdom.

For a long time, economists predicted human behaviors using a “cost/benefit” framework; incentives were  “profit maximizing” and costs were, well, costs.  Of course, real human beings aren’t so one-dimensional. We don’t behave as the economists predicted, because what constitutes an incentive or disincentive for any particular person cannot be so neatly identified.

It isn’t that we humans don’t act in our own self-interest–we do. It’s just that “self-interest” means different things to different people. Teachers who could make more money in the private sector are rewarded by making a difference in children’s’ lives; lawyers for public-interest organizations forgo substantial monetary rewards but derive immense satisfaction from “doing justice.”

“Value” and “reward” are inescapably subjective.

The incentives to which people respond–what impels someone to work, or to work at this job rather than that one–is often a matter of cultural values and expectations. That’s why the widespread belief that a social safety net creates a “culture of dependency” has always been flawed. People don’t work just for sustenance; they work for cultural acceptance, meaning, self-esteem and personal pride, among other reasons.

A recent cross-national study has recently confirmed the lack of a relationship between the generosity of a country’s social safety net and the diligence with which unemployed people look for work. (It also found that receipt of social benefits didn’t make people happier or more satisfied. Depending on the kindness of strangers simply keeps folks fed and/or housed, not cheerful.)

In other words, feeding people who’ve lost their jobs doesn’t make them stop looking for work, and providing minimal support to those who are down and out doesn’t make us suckers.

It might, however, make us better humans.

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