corporatism Archive


This is a reaction to Inequality Is Not Inevitable by Joseph Stiglitz, who among other things has won the Nobel prize for economics.

The problem is that the power system we have today is a mixture of big business and big government. This leads to errors from critiques from conservatives and libertarians in that they see the problems caused by government, but are often ideologically blinded to those caused by business. But similarly, it leads to errors in leftist critiques like this one, in that they see the problems caused by business, but not government. Two things in particular highlight Stiglitz’s lack of understanding here. (And yes, I’m aware of his lofty credentials.)

The first is when he says, “Corporate interests argued for getting rid of regulations, even when those regulations had done so much to protect and improve our environment, our safety, our health and the economy itself.” All too often, larger businesses want regulation, because they know they can afford to absorb its costs, whereas smaller companies (especially entrepreneurs and their startups) cannot. By cooperating with government policymakers, executives of large businesses end up with a regulatory regime that shields them from competition at the expense of everyone else.

The second is the references to bankers as “among the strongest advocates of laissez-faire economics”. This is completely ridiculous, and while I realise that Stiglitz is an hardcore ideologue, he really ought to know better than to say something like this. Our system is nowhere close to being laissez faire. It’s solidly corporatist, with a powerful central government whose policymakers work to advance the interests of corporations large enough to participate in the system of collaboration. The financial system is at the very centre of this web of patronage, and its pulsing heart, the Federal Reserve, is the world’s most powerful public-private partnership. So the last thing bankers want is laissez faire.

The thing that frustrates me about critiques like this is that both sides actually perceive part of the problem, but neither sees all of it. And since conversations between left and right about the power system in our society are shouting matches rather than dialogues, people who should be working together against a common problem of corporatism instead are squabbling like children. Stiglitz refers to TARP, which is a prime example. The Occupy Wall Street movement and the Tea Party movement both initially started as a reaction to bank bailouts. Obviously left and right do not agree on most things, but that sort of corporatism is one of them and it’s arguably the biggest problem of them all.

A final thought, this word “inequality” has become increasingly popular in this era of Bernie Sanders populism. The problem there is that most people talking about it are upset about inequality of outcome, when it’s much more important to care that everyone has a baseline equality of opportunity. Let the wealthy have their yachts — in a system without corporatism they’ll have earned them and saying otherwise is simply class envy. Let the ceiling be sky high, the higher the better! What matters is where the floor is.

“A man must be big enough to admit his mistakes, smart enough to profit from them, and strong enough to correct them.” — John C. Maxwell

Over at Quartz, commentator Matt Phillips has written a piece called Face it: America’s experiment with for-profit colleges has failed. As someone who has worked in American higher education for a number of years, including for-profit and non-profit institutions, I generally agree with Mr. Phillips that many of the marketing-driven for profit schools that participate in the federal system of guaranteed financial aid are overpriced and unremarkable.

However, as with most articles about higher education written by those who don’t come from our industry, it’s an article painted with too broad a brush. Sure, there are schools like Corinthian’s, but there are also schools like Sullivan University and American Military University that are for profit and participate in the federal financial aid system, yet have earned a good reputation for delivering a decent education at a price that compares with non-profit competitors.

Ultimately I believe that universities should be evaluated the same as people — as individuals rather than as members of a group. That said, if we are going to compare universities by category, I’ve come to wonder whether it might be worthwhile for journalists and commentators to take a look at the relative behavior of schools not based on whether they are for profit or not, but to compare those that are publicly traded with those that are privately held. My guess is that we would see the lion’s share of anti-social behavior at the schools that answer to Wall Street rather than those that answer to an owning family or partnership.

Also worthy of more reporting are those for profit universities accredited by the Distance Education Accrediting Commission that do not particulate in the federal financial aid system, and who have much lower tuition rates as a result. In fact, some of these institutions are among the best values in all of American higher education. Their very existence suggests that guaranteed federal financial aid is a contributing factor in the high cost of going to college, that when that system makes tens of thousands of dollars available to anyone with a signature and a pulse, it introduces an ocean of money that tuition rates then rise to soak up.

But will journalists and commentators who write about American higher education ever go after these higher hanging fruit? One can only hope.

Pirates Be Here!
Once again Antigua is in the news for threatening to allow open distribution of materials that have been copyrighted by U.S.-based entities. This stems from a ruling by the World Trade Organisation that by forbidding Americans from accessing gambling web sites in other countries, but allowing them to go to Las Vegas and Atlantic City instead, the U.S. government was protecting their own industry by limiting access to foreign competitors. Even though they’ve lost as much as a billion dollars from U.S. protectionism here, the Antiguans haven’t yet taken advantage of the ruling, and it’s widely believed this is the case because of the fear of dire reprisal from the Colossus to the North.

It’s a fascinating case, and one that anyone interested in international trade should follow. In the meantime, though, to help one gain an understanding, one of the more amusing analogies for explaining why the Antiguans have such a strong case comes from Greg Sabino Mullane, who wrote:

They’re doing it flagrantly because it’s explicitly tit-for-tat. It’s their way of pointedly asking “Do we have rules or not?”

Let’s say you and I are sociopathic assholes, so whereas most people might have some kind of implicit social contract, and a sense of how people should act decently to one another, we’re jerks and write up and agree to some formal rules. Among these rules are things like “Neither party will ever hit the other in the head with a hammer and then steal their wallet while the victim is incapacitated.” Call that the WIPO rule.

We have another rule too. It’s “Neither party will ever vandalize the other’s car.” Call that the WTO rule.

Then I go and vandalize your car, totally in violation of the rules. I don’t deny it, either. Instead, I explain I had good reasons to do it. “I really wanted to vandalize your car, and it looked so vulnerable. I just couldn’t help it!” but whether I had a good reason or not, you claim I broke our agreement. You might not feel all that hurt about the car, but breaking the agreement… oh dear. We’re sociopaths, but we’re not uncivilized, are we?

After my amazing explanation for why I did it, you ask me: “Are you going to do it again?” and I answer “Yeah, probably. Your car still does look pretty vandalizable, and I really like vandalizing cars.” You answer “What about our agreement?” and I just shrug. You ask, “Are our agreements important?” and I shrug again!!

You go see our mutual acquaintances, perhaps some people with whom I also have some agreements. They’re a little concerned to hear I value our agreements so little. Will their cars be next? They think it over and say, “Yeah, Sloppy broke his agreement to not vandalize your car. You should get even.”

So you do. You hit me in the head with a hammer and I wake up without a wallet. You do it openly, too. Our acquaintances nod with approval, even though you’re breaking the agreement now. I ask, “How can you do that?!?”

You explain: if I think the rules are so important, and I have such a problem with being hit with hammers, THEN MAYBE I SHOULD STOP FUCKING AROUND WITH OTHER PEOPLE’S CARS.

I don’t know what I’ll do. I still really do like vandalizing cars. I’d like to vandalize your car again, and that other dude with whom I have a no-vandalize agreement. But I’m not sure I like this hammers development. OTOH, I don’t know, maybe it’s worth it. The hammers hurt and I don’t like losing my wallet all the time, but the cars! Oh, the cars! That’s so much fun.

Now, the analogy isn’t quite apt because the Antiguans haven’t actually allowed open redistribution of copyrighted materials, at least not yet. But if they do, then the American mainstream media are sure to slam them as the next incarnation of Somalia, so it’s important in advance for people to understand who really started the trouble — and it’s not Antigua.

Another Insult From Verizon

Posted April 5, 2012 By Steve

SOLD: Western Electric antique wallmount telephone
I almost deleted the email as probable spam, but then I actually read it:

Thank you for being a loyal Verizon customer. At Verizon, we are committed to bring you the best suite of products and the most current capabilities, while providing the value and quality of service that you expect. From time to time, we must make changes to our product offering to meet these goals. Beginning May 6, 2012, we will no longer offer High Speed Internet without local voice service on the same account.

Let me get this straight — to reward my loyalty, and as part of their commitment to bringing me the value I expect, Verizon has decided that if I ever move and want to retain their DSL service I must also pay them every month for a landline phone that I don’t want and can’t use? I think “ridiculous” is among the nicer words I can use to describe that scenario. And even if I had enough use for a land line to get one, it surely wouldn’t be their outrageously overpriced service, it would be something like magicJack Plus which offers effectively the same thing for a tiny fraction of the price.

I guess I’m not the only one who refuses to overpay for a land line, and I suspect the problem here is that Verizon executives have clumsily responded to minimal demand for this overpriced service by holding the services people actually do want hostage. I don’t think that will work, and it surely won’t work on me. I’m grandfathered in, apparently, and hopefully that means as long as I stay at this address. But in a few years we’ll move, and if this policy is still in play at that time, that will be the last straw that finally pushes us to a different Internet service provider.

I wish all these telecommunications companies and other media companies would get it that people want a single telecommunications connection that’s reliable and fairly priced, and they want to use that single pipe as the conduit for all the other applications, whether voice, TV, or other, that they can then get from a competitive marketplace. Perhaps it’s because the few large companies in the telecommuncations space are a cartel supported by municipal guarantees of monopoly that they’re so slow to adapt to what their customers actually want, or perhaps they realize in an efficient system, they can’t compete, but whatever the reason, the end of companies like Verizon thinking that customers can be coerced like this is long overdue.