Sunday, January 26, 2014

The Pride Deficit

The Pride Deficit

President Obama is going to deliver his State of the Union address Tuesday, and by all accounts, he is going to focus on the problem of growing inequality and lack of opportunity.  That is a laudable topic, and I would imagine he is going to deliver some wonderful rhetorical flourishes wrapped around a package of small-bore initiatives. There will be a Republican Response (in fact, there are several) trotting out their many grievances and their wish list.  Neither the President’s agenda, nor that of the GOP, is going anywhere for the balance of Mr. Obama’s term.

Meanwhile, at Davos, they are holding the annual World Economic Forum.  There, the immensely wealthy and/or immensely powerful, and the people who analyze and cover them, come together to take in, and exchange, splendid views.  Coincident with Davos was the release of a report by Oxfam that indicates that the combined net worth of the 85 richest people in the world (some of whom are in attendance) is equal to that of the bottom 3.5 billion.   That is a number that seems too absurd to grasp. Expand that to the top 1%, and their aggregate wealth is $110 trillion, or 65 times the amount of the bottom half.  If you like to play with numbers (and redistributionist fantasies) try the math and take just 1/3 of that $110 trillion dollars and spread it around a little.  It is enough to equal or exceed the average annual per capita income of nearly 100 countries.

The Oxfam report is not particularly complimentary to the ultra-wealthy, and goes on at some length about the government aided kleptocratic tendencies of some of them.  Perhaps it is best thought of as part call to action, and part shaming exercise.

But perhaps the question isn’t who has the money, or how much they have. As Harry Frankfurt argued in Equality as a Moral Ideal.”  A concern for economic equality, construed as desirable in and of itself, tends to divert a person's attention away from endeavoring to discover-within his experience of himself and of his life-what he himself really cares about and what will actually satisfy him, although this is the most basic and the most decisive task upon which an intelligent selection of economic goals depends.”

Frankfurt is largely focused on how much—his thesis is that a person allocates his personal resources like time, effort and energy into the things he values the most.  Some want more money and they work more. Others want to retire earlier or take more vacations or spend more time with their family, or work in a less stressful and economically rewarding environment.  Both choices can be seen as “intelligent selection of economic goals.”  The moral duty of society is to provide an opportunity for everyone to gain a sufficiency--according to the individual’s own lights--not the same amount.

But what Frankfurt doesn’t address is how the masses get there.  His piece was written in 1987, in what can be thought of as the early stages of a wrenching change in the American economy that largely eliminated our traditional manufacturing base, and the good jobs and benefits that went along with them.  For the last thirty years, while the 1% has charged ahead, the great working and middle classes of this country have, at best, treaded water. The goal of “sufficiency” and “satisfaction” now seems quite distant for many.

The aspirational aspect of Frankfurt’s thesis didn’t anticipate two enormous tectonic forces at work in our society today that are eroding satisfaction.  The first is the growing impact of what conservatives derisively term “the nanny state”--a web of social services including Medicaid, unemployment insurance, and SNAP.  These programs help the poor, but, stripped to their essence, they give them something for nothing—money without obligation, and also without hope.  The second is the rise of soul-destroying labor that leaves one only with a modest paycheck and without any connection to the product being sold or the business that produces it.  It is money without pride of workmanship or community.

I think you can’t solve the first problem without finding success in the second.  The sociologist Saskia Sassen has noted a growing trend to “expel” people from the economy; effectively to place them at the margins, either receiving handouts or in jobs with little hope for economic advancement or emotional resonance. You deepen the connection to capitalism by valuing people as workers and consumers.  You loosen those bonds by transitioning from a manufacturing economy--one that makes things, to an “extractive” economy--one that takes things from the ground or rearranges assets. When governments weigh in, as they invariably do, to enable the wealthy to get wealthier, they further estrange, and even impoverish, the vast majority of citizens.

Sassen’s challenge hasn’t gotten any easier to resolve, because as Stephen Rattner noted in Sunday’s New York Times, “The Myth of Industrial Rebound” there isn’t going to be a manufacturing revival.  The economics of offshore manufacturing are just too compelling, and the few jobs we do “create” here tend to be heavily subsidized by taxpayer-funded incentives. 

Where does this leave us?  I first read Sassen’s paper when attending a conference at Columbia University’s Center on Capitalism in Society; “Philosophical Foundations of Economics and the Good Economy:  Individual Values, Human Pursuits, Self Realization and Becoming” in September 2011.  Edmund Phelps, the Director (and the winner of the Nobel Prize in Economics in 2006) made some introductory remarks and included something that I reacted strongly to at the time.  He said, in effect, that government policies that favored the wealthy were not per se bad, if part of the object of government was to help foster an atmosphere where the individual may achieve self-realization and growth. 

Phelps, I thought, was legitimizing the fact that governments almost invariably favored the economic elites—by extension he was making a quintessentially Republican trickledown argument.  In retrospect, I can see I was applying a linear egalitarian concept (the rich already have enough) to a far more complex issue.  What Phelps was looking for was a “Good Economy”—one that has dynamism, a free flow of capital for those of entrepreneurial spirit, rewards for innovation, and as its bedrock, the opportunity for work that has meaning and value beyond that of just profits.  He isn’t interested in eviscerating labor.  Instead, he and Sassen wanted the same thing—a high participation rate in a vibrant economy.

The difference between them may come down to trust.  Sassen sees the results of globalization and debridement of the manufacturing sector and places them in the context of an increasingly self-absorbed economic elite.  The rich not only haven’t earned our trust, they continue their efforts to further stack the deck. Phelps, on the other hand, trusts in an innovative and vibrant market to provide enough alternatives to render those advantages irrelevant to the average person.

I’m rooting for Phelps, because his ideas are closer to elevating the individual to earn, on his own, what he desires.  But for that to work, we need more than just a new class of entrepreneurs, because not everyone is cut out to run their own business.  We also need a culture change so the employee can have pride in what he is doing and the company he works for. That means a management that doesn’t claw at every dime in profit, doesn’t treat staff like chattel and customers as marks to sell the cheapest junk for the most money.

At the end of his Prize Lecture, Phelps sums up: “My conclusion is that a morally acceptable economy must have enough dynamism to make work amply engaging and rewarding; and have enough justice, if dynamism alone cannot do the job, to secure ample inclusion.”

Those are the words I’d like to hear on Tuesday from Mr. Obama and his opponents.

I have a feeling I am not alone.

Michael Liss (Moderate Moderator)

Comments or Questions, please email the Moderator

Or join us on Twitter @SyncPol

Monday, January 20, 2014

The Rich Are Immoral

The Rich Are Immoral

Last week, it was the poor who were immoral.  This week, we can focus on the crass, bloated, greedy rich.

This Sunday’s New York Times had an arresting first paragraph in an opinion piece, “For the Love of Money” by Sam Polk, “In my last year on Wall Street my bonus was $3.6 million — and I was angry because it wasn’t big enough. I was 30 years old, had no children to raise, no debts to pay, no philanthropic goal in mind.”

Not a bad way to hook you in to reading the rest.  It turns out that Mr. Polk had a number of personal issues that went well beyond love of money. He was an insatiable consumer of booze, of drugs, a self-confessed burglar subject to fits of rage. He also fesses up to cheating on his girlfriend. Thankfully, there is no mention of a dog. All in all he was an out and out crud--the type of spoiled and self-absorbed caricature that the rest of us love to deplore but happily watch via any number of TV reality shows.  We like tawdry too.  And we would love to be insulted by a $3.6 million dollar bonus.

Mr. Polk says, “I generally think that if one is rich and believes they have “enough,” they are not a wealth addict. On Wall Street, in my experience, that sense of “enough” is rare.” In a similar vein (without the uncomfortable self-confession and flagellation) there have been several recent articles and op-ed pieces, some political and some analytical, which have explored this concept of “enough.”  How much enough is “enough” before you can push away your plate, or, at the very least, just share a piece of cheesecake for dessert?

The philosopher Harry Frankfurt takes a broader view in his 1987 piece for EthicsEquality as a Moral Ideal.”  Frankfurt’s “enough” is related to what he calls “the doctrine of sufficiency.” Society has a moral duty to make sure everyone has a sufficiency.  It does not have the right to decide what is too much, or to act in a redistributionist way. “If everyone had enough, it would be of no moral consequence whether some had more than others.”

Of course, everyone doesn’t have enough.  The numbers of people in the largest economy in the world who experience poverty is staggering.  In the past recession, between 2009 and 2011, approximately one third of all Americans dropped below the poverty line for at least two months.  The annual poverty rate in 2011 was 14% (think about that for a second.) 

But, just because a great many people are poor, does that mean the rich are particularly avaricious and immoral?  Frankfurt likes to challenge with extreme examples.  To paraphrase one, let’s assume you in a remote location with nine other people.  All ten of you come down with a potentially fatal disease, but when you look at your supplies, you find a total of forty doses of medicine, and to be effective, each person needs exactly five doses—four won’t cure and six will be toxic.   You could all be self-sacrificial and say that if all couldn’t survive, none should (of pretty questionable morality itself.)  Or you could draw straws, or find some crude but equitable way of selecting the losers.  Maximizing the number of survivors should be the only moral imperative.  But, what happens if one of the ten of you happens to be very rich, and decides that he needs an extra dose of five just in case he gets re-infected later on. So, he offers everyone in the group the following deal: one million dollars for anyone willing to vote him an extra share.  The impact of that, of course, would mean one more dead person, a situation Frankfurt (and we) would find morally abhorrent.  But, if there were 41 doses, would the same apply?  If the rich guy bids on the 41st dose, what harm does that actually do?  We know the 9th and 10th people will die anyway, so it’s irrelevant whether they get anything.  Our rich person doesn’t “need” the extra dose, it is not going to do him any good, but if he wants it and it doesn’t actually hurt anyone, why shouldn’t he have the right to engage in some “conspicuous consumption”, such as it is?

Isn’t that greedy? Shouldn’t he be doing something better with his money, something suitable for announcing at a beauty pageant, like curing cancer or world peace?  That 41st dose has absolutely no utility. Perhaps, but why is it our business? If we live in a culture that values a work ethic, and if that person earns his wealth through honest effort without causing harm to others, why should we care?  Yes, one can question a value system where a brilliant math teacher earns a tiny fraction of the “quant” he taught, or an inspiring vocal coach that of a pop star, but that is reflective of a capitalist system that pays highly for special talents.  If I had a cut fastball like Mariano Rivera I would still write Syncopated Politics, but I might otherwise reorder my workweek.  In a nanosecond.

I don’t see the difference between the factory worker who pulls an extra shift so his daughter can have skating lessons, and the hedge fund associate who does the all-nighters because he wants the house in the Hamptons.  The Dad seems more human to me, and warm and fuzzy makes for nice Hallmark movies.  But honest and legal effort, regardless of the motive behind it (beaming child, expensive bauble) has an intrinsic value and should be respected.

So, where is the moral issue?  It arises when powerful forces use their economic heft to further tilt the playing field by having the government give them preferences.  Those are the people who can never have enough if there is more to take.  Why pay taxes if the government says you don’t have to?  Why operate your facility safely if the government won’t mandate it? Why spend your own money on infrastructure, if the government is willing to spend the taxpayer’s? It’s not grifting if the government says it isn’t.

Sadly, the doors are always open for this.  The politicians who run the government are often acutely sensitive to individual needs: the need to collect campaign contributions, the need to get the proper committee assignments, the need for a fine watch and a luxe engagement party for a daughter, the need to stay in office, the need to have a soft landing at a cushy job when you are no longer in office.  So, when someone approaches them with a nice wad of Citizen’s United-blessed confidential cash in return for just a teensy paragraph in a 1000 page piece of omnibus legislation, they often conflate their own self-interest with some ideological imperative.  And once bought, they tend to stay that way. It’s amazing how much outrage can be aroused when 300,000 people are unable to draw “enough” water for their personal needs—outrage at needless government regulations, not at the plight of the citizens who are suffering. 

Charles Dickens, speaking through Wilkins Micawber in David Copperfield, once famously defined “enough” as  "Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery."

Of course, the conditions in those days were positively Dickensian.

Michael Liss (Moderate Moderator)

Please join us on Twitter @SyncPol

Monday, January 13, 2014

The Poor Are Immoral

The Poor Are Immoral

“In its majestic equality, the law forbids rich and poor alike to sleep under bridges, beg in the streets and steal loaves of bread.” (Anatole France, 1921 Nobel Prize winner for Literature.)

One of my routes home is, in fact, under a bridge underpass where between one and three desperately poor, filthy, miserable, and often soaked and freezing homeless men camp out.  One tries to keep his personal belongings in a couple of carts, but the others scatter garbage (and, occasionally, less attractive items) in “their” areas.   I have no idea what their experience with the law might be, but it’s safe to assume that if there are interactions, they might not be entirely gentle. 

Walk the streets of my city, an epicenter of some of the greatest wealth in the world, and you will see similar scenes—in parks, on the steps leading to churches, on benches, on the promenades that overlook the Hudson and East Rivers.  They are there--and they are the tip of the iceberg, because more than 50,000 people, over a third of them children, sleep in shelters every night.

The poor, of course, are not confined to cities.  50 years ago, LBJ launched his war on poverty with a trip to Appalachia, and the black and white images of shotgun shacks with no indoor plumbing, one room school houses, rusted trucks, and barefoot children still have emotional resonance.  Nor is rural and exurban poverty a thing of the past, or just something that comes with an accent.   A doctor friend who lives and works in upstate New York told me the other day is that the most visible evidence is her patient’s teeth.  They just can’t afford a dentist, and there is neither the money to attract dentists to come to the area, nor to support a free dental clinic. 

Who is to blame for all of this? Why even talk about blame when people are in need?  Because we live in a political world as well, where the greatest wealth and power, by far, is that possessed by the government. Government can regulate, and tax, and redistribute, and subsidize.  And, however coldly some of our electeds may divide up the spoils in private, in public they adopt the language of blame and immorality to justify their choices.  Barack Obama talks about the one percent and income inequality.  Republicans talk about freeloaders and free cellphones. 

These words are clearly emotional shorthand—a way to razz up the base.   By focusing on a caricature (the cigar-puffing plutocrat, the welfare queen) they dehumanize the issue.   They don’t provide an intellectual framework for any solutions—in fact they almost guarantee the status quo, as both sides hunker down and fight smaller skirmishes for small prizes that have mostly symbolic value.  The argument over extended unemployment insurance is an excellent example of that. 

That process tends to provide an emotional safe-haven for the vast majority of us.  We don’t have to think about ameliorating the plight of people sleeping under bridges and rotted teeth and kids who go hungry.  We can walk past them, as I do, when I take that route home. 

But most of us also know this emotional model is incomplete. We would prefer a binary, moral definition of wealth and poverty.  Politics attempts to provide that as a means to an end.  On the far Left, wealth (particularly excessive wealth when others are in need) is wrong and needs to be rectified by state action.  Charity becomes egalitarianism and egalitarianism becomes a justification for redistribution on a large scale.  On the far Right, unemployment and poverty is the genetic marker for immorality.  People don’t work because they have a character deficiency: they don’t want to work--they are strictly “takers” and the way to bring them to the path of righteousness is through tough love (and, if necessary, starvation.)

Most of us, however, are in neither camp.  We know that every person of wealth does not wake every day wondering which company they can buy up, loot the pension plan, close the plant, lay off the 1,000 workers, and cause the small company town it is located in to careen into decrepitude.  And we also know that most of the poor don’t get into their Escalades to drive to the store to buy junk food with their food stamps. But we don’t really know how fix it, and we have our own lives to live, so we content ourselves with worm-eaten chestnuts.  Detachment is safe, comfortable, and I have my children’s tuitions to pay.   

A friend sent me an article from Ethics written by the philosopher Harry Frankfurt, “Equality as a Moral Ideal.”  In it Frankfurt rejects the idea of economic egalitarianism and economic equality as an ideal and embraces what he terms “the doctrine of sufficiency.”  “(W)ith respect to the distribution of economic assets, what is important from the point of view of morality is not that everyone should have the same but that each should have enough.”

Intuitively, that makes some sense, at least from a moral perspective, although in today’s political environment one would think that places Frankfurt far left. But Frankfurt expressly rejects an egalitarianism that ends in income equality, and goes to considerable length to debunk the opinions of others who are more sympathetic to that view. I may be paraphrasing somewhat here,  but Frankfurt wouldn’t take my kid’s college savings accounts in order to fund Universal Pre-K.

I found Frankfurt a very challenging read, so I asked my friend, a generous person and high achiever, what he saw as his moral obligation. “I don't think there's a moral duty to do anything other than deal with people in distress.”

Then I saw Tom Donlan’s “Poverty and Measurement” in this week’s Barron’s. To him, LBJ’s War of Poverty has been akin to General Westmoreland’s infamous “destroying the village in order to save it.” He says, “In 50 years of programs to reduce the pain of living in poverty, the U.S. paid too little attention to reconstructing the damage that poverty wreaks on character. The final struggle in the war on poverty must be to restore the balance between government support and individual earnings.”

Donlan, for all his astringent Calvinism, is right.  Transfer payments without a way out are the equivalent of opiates for someone with a broken leg.  They may dull the edge, but if you don’t reduce the fracture and put a cast on it, there’s not going to be a lot of walking going on. And without that way out, every act of personal charity my friend (and all of us) might make are drops of water in the ocean.  As are the “sufficiency” aspirations of Frankel.  We will never get to “enough.”

But Donlan’s pleasant poetry of character building for the poor through the application of more pain falls short as well.  We have a moral duty to stop bellying up to the bar ourselves and instead demand that our politicians, who run the biggest business in town by far, do the same.  You want people to be self-supporting? Stop demeaning them--or enabling them--and focus your energies on creating economic opportunity.

Both the President and several prominent Republicans have started talking about ways to address this, but they can best begin anew by discarding every comforting nostrum.  It’s not starving the poor or giving them more, it’s not further incentivizing the “job creators” or taxing them more, it is having a rational discussion—and political horse-trading is encouraged if that is what it take to get it done. Give people the chance to pull themselves out of poverty, and my bet is that you would find the “immorality” levels dropping rapidly in this country.

Can our politicians do this?  To return to Anatole France, “It is human nature to think wisely and to act in an absurd fashion.”

Perhaps that’s a maybe?

Michael Liss (Moderate Moderator)

Questions or comments? Email

And join us on Twitter @SyncPol