All posts by Koli Mitra

Passionate Rationalist. Bleeding-Heart Moderate. Universalist Individualist. Geek. Lawyer. Feminist. Old-Fashioned-Liberal. Afflicted with a "language fetish."

The Fundamentals of Terror

During my month-long visit to India, I have noticed the disturbing trend of “Hindu Fundamentalism,” which mirrors the same sort of culture war incited by all reactionary movements.In fact, there is only one Religious Fundamentalism in the world, designed to cultivate a shared sense of righteous rage at some perceived “enemy” among a certain historically identified group. That group is encouraged to internalize a received set of values purportedly derived from some mythical “fundamental” source of the group’s identity.

Like Christian fundamentalists in the US and Islamic fundamentalists in the Middle East, the new Hindu incarnation (yes, the pun is intended) of Religious Fundamentalism lashes out at an inchoate “liberal” society, allegedly hell bent on destroying their most cherished traditional values.

But what are these values, really? I don’t know very much about Islam, but scholars say that peace and generosity are its cornerstones. You wouldn’t know it from the explosions. At the very heart of Christianity, is the edict that forbids the faithful to judge others (a power that God has reserved for himself alone) and commands them to “love their neighbor.” Yet Christian “fundamentalists” sit in judgment of anyone who violates their interpretation of God’s will and express nothing but scorn for their neighbors who hold a different view.

As far as I know, Hinduism is an organic, flexible, spiritual tradition with no canonical dictates and a rich heritage of strong female deities. Unlike the monotheistic Semitic faiths, Hinduism – the world’s last great pagan religion – has never cast aspersions on sexuality. Sexuality is a deep spiritual phenomenon in the Hindu scriptural tradition (although the practice of the past several centuries has been woefully anti-female and anti-sex). But if you’re going to make claims based on the “fundamentals” of Hinduism, the pro-female, sexually enlightened spiritual tradition is completely at odds with the stance of Hindu “fundamentalist” groups like Sri Ram Sena, whose (male) members recently raided a pub in Mangalore and violently harassed women who happened to be socializing there. They beat them up for socializing in public instead of staying demurely covered and at home, like the Sri Ram Sena thinks good little Hindu women ought to.

In all three of my examples, the “fundamentalists” have taken the most perverted and oppressive social behavior and forcibly endowed them with a religious justification that is the opposite of the truly fundamental tenets of the cited religion.

The real reason behind oppression – all oppression – is the fear of power dilution. Those who have power want to limit access for everyone else. There are a couple of historically tried and true methods of this. 1) intimidate the masses and 2) exploit whatever characteristics you share with a portion of the masses to develop a fear of difference, so that they will focus their energies on hating others, equally as powerless as themselves, and never even realize that the powerful elite egging them on shares with them only some arbitrary and manufactured “values” and some irrelevant demographic characteristics, but none of the power and privilege.

A big tip off that Religious Fundamentalists are really all the same, is that by far the biggest object of condemnation – across the board, for all fundamentalist movements – is cultural liberalism.

Seems odd on the surface. Secular liberalism is no enemy of religion. It may be indifferent to the supernatural beliefs of particular religions, but its “agenda” of tolerance actually helps religions thrive. But, Religious Fundamentalists are right to perceive liberalism as a grave and mortal threat. Because liberalism is the proposition that all individuals should be free to make peaceful choices about their own lives, it becomes a powerful alternative to the narrow ideologies promoted by those who seek to exclude others from gaining resources and influence through a divide and rule strategy.

To anyone who isn’t keyed into the power structure of the society he or she lives in, but has bought into the idea that enforced traditionalism and intimidation form a legitimate and tenable part of his or her religious or cultural “heritage” I say, remember this: your ability to live your own life in accordance with whatever tradition you identify with, without the threat of someone else taking that away once they ascend to power (and let’s be realistic, empires change hands, they have since the dawn of civilization) will be secured by liberalism and only liberalism.

[photo by Pixabay from Pexels]

Circumstantial Evidence: a review of Malcolm Gladwell’s Outliers – The Story of Success

 

Malcolm Gladwell takes an engaging and colorful stab at what may be one of the biggest hoaxes of all time: the myth of the self-made success. It’s so entrenched in the popular imagination that Jeb Bush can get away with claiming to be a “self-made man.” According to Gladwell, however, it’s a person’s circumstances – and not some innate measure of his “merit” – that plays the starring role in the story of success.

Did you know that we pick athletic winners and losers by a systematic and irrational favoritism? Before you decide, Gladwell wants you to consider the following: an astounding percentage of the world’s top soccer and hockey stars were born in January.

That’s right, discrimination by birth month.

The typical cut-off date for recruiting kids for all star teams is January 1 and “age” for qualifying purposes is defined by calendar year of birth. For nine year-olds, a few months of growth advantage is huge. Kids born earlier in the year are more likely to make the cut simply because they are further along in their natural physical development, which makes them appear more “talented.” This initial competitive edge, arbitrarily rewarded, is further enhanced by superior training and exposure, thereby growing progressively larger as the myth of their greater talent continues to be reified at every subsequent stage in life. The same principle applies to other types of early advantage – nutrition, family stability, socialization (especially social training in self-confidence), travel, access to learning tools, exposure to ideas – in building the skills one needs for success.

Gladwell doesn’t claim that talent, drive, perseverance, and other personal strengths don’t figure in the equation. Rather, he argues that these qualities are not so easy to tease out from the context of opportunities. Just as being picked for the all stars early in life gives a kid the chance to actually be better at his game, things like health, nutrition, social training, and a supportive, stress-free childhood actually give people drive, perseverance, and even “talent” – which is in large measure a function of having sufficient time and opportunity to practice one’s craft, according to Gladwell (he explains that it takes ten thousand hours of practice to become a world-class expert at something, regardless of how much aptitude you may have started with). He contends that to the extent that such a thing as “innate” aptitude can be determined (IQ, for example), it forms a surprisingly small part of the story of success. One interesting 1920s study by psychologist Lewis Terman, set out to prove the opposite thesis, tracked the lives of a group of high IQ children. To Terman’s dismay, IQ had virtually no correlation with success, while social status and connections did, in a big way.

Gladwell’s side note: two children excluded from the study because their IQs were too low went on to be Nobel laureates.

The biggest overall factor in success seems to be luck. And luck means the right connections, the right socialization, the right training, and, last but not least, the right timing. (I can attest to this. I’m alive today because I was running late for work on September 11, 2001).

The idea is hardly radical. In fact, it’s borderline platitudinous. But sometimes it’s really useful to take a fresh look at an old idea. This particular old idea is one of those pieces of “conventional wisdom” that doesn’t get due consideration in our practical judgments.

It’s the sort of idea that we tend to push to the margin when assessing someone else’s character or potential, choosing to rely almost entirely on what she has accomplished without regarding the context of her life. It has implications not only for parents, teachers, employers, and grant-makers, but also for anyone despairing of life and driving himself farther into failure by doubt, self-loathing, or shame about seeking the support that could make a difference. This only exacerbates the problem. Of course, there are those who don’t consider any of this a “problem.” They would rather let the chips fall where they may, throw up their hands, and say “life’s unfair; it’s a game of luck.” Yet these are often the very same people who are most eager to promote the “by your own bootstraps” theory of success and to vilify the less fortunate as “lazy” or “irresponsible.”

Part of what makes Gladwell’s book so eminently readable is his extraordinary narrative style. He clearly delights in delving into wildly divergent and obscure stories and back-stories. It’s so delicious, you instinctively step back now and again to make sure you aren’t being seduced by a weak theory powerfully framed. And to some degree, you are.

For one, while he certainly gives you some awe-inspiring “data,” Gladwell doesn’t lay out a methodology for arriving at his characterization of them nor for drawing his conclusions from them. He reports, for instance, that 22% of the richest people of all time were born in a single year, 1835. That sounds remarkable! Except, what the hell does it mean? Being the “richest” (unlike, say, “tallest” or “heaviest”) seems to me to be very much a function of one’s era. The definition of “wealth” may vary based on – for example – how much of natural resources are (still) available, how many manufactured goods are (yet) available, and what the buying power of a unit of currency is. Having a million dollars in the height of the second industrial revolution (when people born in 1835 were in their financial prime) could make you a lot richer, by some definitions, than having that amount in any age before or since. Unless we know how the terms are being used, we can’t tell if this factoid is just tautology or if it reveals something more interesting.

Also, the bulk of the book’s persuasive power comes from anecdotes. Anecdotes are not necessarily poor in evidentiary value, but they do need to be subjected to more rigorous scrutiny than Gladwell gives them. What makes these narratives form a collective dataset rather than a series of discrete phenomena, each comprising a sample size of one? It would be helpful to know.

Still, you have to give him this much: he punches some serious holes in the “bootstrap” myth simply by exposing many, many, little-known-facts about some of the most celebrated examples of alleged bootstrapping. Ultimately, I don’t think his book needs to push a grander vision than that to be relevant, and for that reason I find its other failings to be largely forgivable.

The great thing about being sold an old and relatively modest idea by Gladwell is that he doesn’t just repeat the idea, he gives you fresh and peculiarly entertaining bits of evidence that it just might be a more compelling old idea than an alternate – and bolder, more popular, and perhaps more insidious – old idea.

He takes case after case of real-life Horatio Algers and shows that extraordinary opportunities played a much bigger role in their successes than extraordinary talents. The more spectacular the success, the more jaw-droppingly serendipitous the confluence of events that lead to it. Bill Gates had access to a computer and was allowed to program on it when he was in the eighth grade – in 1968! He was very likely the only eighth grader in the world to have had such luck. That was the first of ten astonishing – way beyond the normal distribution curve – pieces of good fortune that came his way. Bill Joy (co-founder of Sun Microsystems) had unlimited access to a computer lab in college, thanks to a bug in the time-sharing system! Each of these men, like many other “geniuses” whose careers Gladwell examines, started on his craft early enough in life to put in his 10,000 hours of practice by a relatively young age. And by the way, they all had safe, stable support systems that sustained their training routines. In other words, it may just be that a “prodigy” is groomed, not born.

Gladwell also tells two versions of his own family history. In one, they lived out the vintage American immigrant story of making it from “nothing” in a new country. But in the other version, his Jewish ancestors happened to find a niche market for a trade they already knew well (and had practiced in the old country) and his Jamaican ancestors lucked out when an influential Englishman took an interest in the island’s education system.

I really wish Gladwell would just stick to this kind of single-minded telling of these sometimes quaint and always riveting, bootstrap-bubble-bursting, tales. When he gets more ambitious, things start to fall apart. He makes broad cultural assertions that neither hold up nor illuminate his argument. For example, he gives a tortured explanation of how wet rice paddy management in ancient China led to more abstract mathematical thinking than in European societies. This is puzzling, since the historical reality does not really place China ahead of Europe in the development of mathematics.

He also makes much of something called “Power Distance Index” (PDI) – purportedly a culturally transmitted measure of how much deference a person is willing to accord to those perceived as powerful. It apparently accounts for why pilots from hierarchical societies like Korea crash more planes than those from individualistic societies like the US. It’s a tantalizingly suggestive idea.  Trouble is, PDI is inferred from the same social behavior whose effectiveness is supposed to be measured as a function of PDI. It’s just so much intellectual bootstrapping (pardon the expression) that leaves me unconvinced.

One feature of “Outliers” that moved me deeply and genuinely, is the story of Chris Langan, a man with not just an extremely high-IQ but demonstrably well-developed intellectual skills, who repeatedly tried but failed to make it in the world. He is a man who had precious little of that key ingredient of success: luck. His early life was fraught with want, neglect, violence, and uncertainty. Even when an opportunity or two came his way (as it did on occasion), he didn’t have the personal resources to take full advantage – resources like confidence and finesse, that only a stable, supportive environment during one’s formative years can engender. The irony is, a person with few material resources really needs more personal resources to survive. I think what sometimes people don’t get is how tenuous “one lucky break” is for someone who has nothing else. Maybe he doesn’t have a regular home from which to do whatever it is the break lets him do. Or the people in his life – if he has any – are either abusive and stress-creating, or are looking to him for support, rather than providing any. A guy like this is going to need superhuman amounts of self-confidence and assertiveness, just the qualities that guys like these have never had a chance to develop.

For obvious reasons, Chris Langan suffered from debilitating anxiety, self-doubt, defensiveness, social tentativeness, and extreme risk aversion, for which an extreme IQ was no match. He was easily intimidated by “authority” – including student services clerks – and unable to deal calmly and firmly with those whose decisions had enormous impact on his life. He had (and has) plenty of analytical intelligence, but he had not learned the “practical intelligence” that comes almost entirely from social instruction and a deep internal conviction, gleaned from experience, that you can usually count on things to turn out ok.

But Langan’s life kept teaching him that he could count on absolutely nothing turning out ok. “Every experience he had had outside of his own mind ended in frustration. . . . He had to make his way alone,” and, as the book’s one ultimately persuasive argument urges us to remember, “no one – not rock stars, not professional athletes, not software billionaires, not even geniuses, ever makes it alone.”

Republic Day

January 26 is “Republic Day” in India. It’s the day their constitution was ratified and it is celebrated with almost as much fanfare as the day they got their independence from Britain. People — some people — volunteer to register voters in remote villages. Kids enter essay contests. In Calcutta they have cookouts (it’s actually mild enough in January to do that!) and, of course they blast the Bollywood songs on loudspeakers.
Why don’t we do this for our constitution (Bollywood songs optional, of course)?

Come to think of it, why don’t we READ our constitution? Every middle school teacher and parent should require their kids to read it and write an essay about it.

Instead of Grand Theft Auto (or whatever the kids are playing now), why don’t we give them copies of the constitution for their 10th birthday? Am I saying that only because I am not a parent and I just don’t know what misfortune would befall me if I did that?

Maybe, but it could be, if nothing else, the perfect lesson in the idea of Sovereignty. Tell your kids that without the republican system, they would live in a world where the powers that be decided what they played, read, ate. . . .

Up With America!

It’s weird to be abroad this week. I must admit, I am missing the around the clock coverage American media must be giving to the transition in Washington. Of course, the whole world is watching – and I’m thankful for the unique perspective I’m getting (especially since I’m in a country where the Bush administration was not universally detested – more about that later). But the media here (including the regional BBC and CNN outlets) have many other priorities, naturally.

Incidentally, I am not currently able to get constant access to NPR and PBS online here as I’d planned to do when I came to India. My broadband connection has been spotty and is completely out this week. I’ve been going to an “internet café” to get online. It’s not the most convenient way to do things, but a great way to feel a part of local culture, which is a surprisingly different experience from being a part of a local family (which I am).

I met some twenty-somethings who are in a band called the “Hool” (it means something like a needle or pin prick) – they have an exciting sound too, and not free from the New-New Wave craze sweeping their generation (and making mine nostalgic).

These boys are (as creative youth everywhere tend to be) politically left leaning, but fond of America and Americans for our ideals of freedom and individual rights and respect for the rights of others – especially the equality of rights. These are the things people the world over tend naturally to ascribe to America’s essence, as strange as we ourselves may sometimes find it (either because we can’t separate it from the disapprobation we face from non-Americans when we abandon our own ideals and behave like tyrants or because we have bought into a craven view of American values as beginning and ending with the pursuit of material gain).

Members of Hool know an awful lot about American history – which impressed me. I know kids their age back home who know nothing about Indian history (or American history, for that matter). And these are ordinary middle class kids, going to public schools in what is still a relatively poor country, who don’t have internet access at home!

I could analyze the socio-political causes of this difference. I could lay out some policy direction for improving global and historical awareness among our youth. But you know what? I don’t feel like it. I just feel like savoring the feeling that there are people in the world, even among people far worse off than we are, who manage to know more than we do (if you’re comparing knowledge per unit of opportunity among similarly aged people) who nevertheless admire us. Openly admire us for all the right reasons.

A Speech For One Age

Barack Obama’s “first” inaugural address was no speech for the ages.Where was the precise distillation of some elegant truth (about the better angels of our nature or the only thing we have to fear)? Where was the stirring call to meet the great challenges of this moment in history?The call was there, of course. But it wasn’t particularly stirring. . . .

All the mundane policy references really belonged more in a state of the union speech. Worse, it sometimes sounded like a campaign speech about the “changes” that we need. As my sister said, “stop running for the office. You’re here already.” But I wonder if it isn’t ultimately a good thing that our new president sounded smart but ordinary and workhorse-like. In fact, the most “inspirational” point of the speech was not lyrical rhetoric à la “audacity of hope” but rather, “pick ourselves up, dust ourselves off, and get down to work.”

Befits the moment. No?

And thank you, thank you, THANK YOU, new guy, for promising “to be held to account and to do our business in the light of day.” This, more than any particular thing government does or does not do, preserves the integrity of popular sovereignty.

I didn’t even mind that he and the chief justice flubbed the oath. It’s in keeping with the dialed down pageantry of this inauguration day. I like this president, but I like seeing him demystified. I’ve been uneasy with the pedestal quality to the place many have bestowed on him, apparently forgetting the work he has cut out for him and the fact that he’s just a guy. A super smart guy, with great political instincts and, I believe, really good intentions. But just a guy, after all.

And by the way, if you still have any doubts about how hard this is going to be, remember that the market fell by more than 300 points, an inauguration day record.

Still, he managed to move me with his homage to our “patchwork of heritage” and his articulation of “the price and promise of citizenship” and his promise to our enemies that “we will extend our hand if you will unclench your fist.” Best of all, he quoted Thomas Paine, my favorite Founding Father.

So, maybe he is striking the right balance (deliberately or inadvertently) between getting us charged up and keeping it real. And while it was no speech for the ages, perhaps it was one for this age.

Checking In

Sorry to be MIA, I am out of the country.

I am spending a few weeks in India, where, although it’s a democracy (and not one of those sham ones with just one party), there’s actually a province where the communist party has held power for three decades (they’ve been elected)! Interestingly, these “communists” don’t seem to mind privatization (“liberalization” as they call it here) of any industries. At least from what I can tell (I don’t claim to be an expert).

But there are plenty of Indian communists who do seem to have traditional communist preferences (they tend to be from regions where communists are out of power). I heard one of them say that the current global economic crisis “proves everything we’ve been saying for years.”

Wow. It’s hard to believe otherwise intelligent people really think the failures of capitalism is an argument for communism. That’s like saying because beans give you gas, you should be eating poop instead.

On that classy note, I’m going to rush away. I will check back soon. I hope you do too.

Happy Birthday, Thought Oven!

One year ago today, I first fired up this oven. It was, as it is tonight, New Year’s Eve. Here’s what I had to say about that.

In a few minutes, I will fly off to the ancient, exotic land of my ancestors. So, you could say I’m traveling to the past this New Year’s Eve. On the other hand, since I’m flying east, technically I’m accelerating to the future!

Either way, I’ll get through the year.

It’s been a strange, painful, joyful, beautiful year. I’ve grown and decayed. I’ve acquired new memories. I’ve had my heart broken and my funny bone tickled. I have made new friends and rediscovered some old ones. I’ve lost some pieces of myself and found others I never knew I had. I’ve shed some cherished illusions and built some new dreams to chase.

I haven’t reached any new destinations in 2008, but I sure have found my way.

Thanks for reading and I hope you’ll keep coming back.

Happy New Year.

Misplaced Demands: The Bridge Loan and Wage Cuts

Yesterday, I posted an entry questioning whether a bridge loan/ rescue package from the federal taxpayers to the auto industry giants was warranted. Grace from Michigan commented that ordinary people in Michigan, who work for these companies and have essentially been struggling through a recession for several years, really could use a hand. Moreover, she pointed out, what they are asking for is a loan, not a handout. I promised to consider the “pro-loan” side of the issue today. It’s going to be a pretty sparse examination. Because honestly, the “need” appeal that Grace was making, is the ONLY point I can see that has any merit at all. It’s the crucial point, of course, and I wouldn’t be a liberal worthy of the label if I didn’t believe in citizens seeing each other through tough times. But my questions still stand as to whether this strategy will work. I just don’t see any evidence that it will. On the other hand, I do keep hearing that apparently we eventually made a “profit” on the 1979 Chrysler deal, so who knows?I turn now, to the real focus of this post: the “wage” issue. In the Senate bill, there was a tolerably fair provision limiting executive compensation, including a freeze on bonuses for those making over $250k and a moratorium on golden parachutes (although it did include an “incentive” exception that raised a bit of a red flag for me).

But the biggest controversy seems to be over the issue of workers earning union wages. That’s the problem? Really? Those guys making working class wages with their hands and sweat and didn’t mismanage their companies into a 5-year loss-cycle, THEY are the ones whose ass we’re going to get “tough” on? They are the ones who have to “give something” so that the guys who did run the companies into the ground can keep more of the $14 Billion that they get from taxes we all have to pay? Bob Corker of Tennessee has outdone himself in forthrightly “demanding” the auto exes trim the fat by slashing their workers’ wages and benefits. Yeah, that’s been their big indulgence, overpaying their factory workers! You GET ‘em Corker! You get ’em good!

Beyond lip service, there has been little in the way of substantive objection (addressing the kinds of questions I raised yesterday). All the sticky “free market” convictions seem to have been easily surmountable when it came to agreeing to give away taxpayer money to big corporations. “It’s not the time for ideology” as President Bush said a few months ago. [One wonders what use “ideology” is, if it must be abandoned to solve real-life problems, but that’s a different post]. However, when it comes to working stiffs, suddenly all the righteous wrath of fiscal responsibility is unleashed. The way Bob Corker is practically frothing at the mouth with indignation at the hourly wages negotiated by union laborers, it’s almost hard to believe that he’s not a cartoon or an archetype in a morality play. This is where I am simpatico with that “why didn’t you ask this of Wall Street” chorus that I criticized on the broader issues.

You know, I keep hoping that there really aren’t people like Corker, who fit those horrible caricatures of Republicans that are dreamed up by extreme partisan leftists. I keep thinking, it’s just not possible that there are people whose agenda really is just straightforward patronage for the wealthier classes at the expense of working people. It’s like they were looking for an excuse to pull off one more reverse-Robin Hood act and this was it.

I know I’m not really making a cool-headed argument at this point and that my rage is showing; but this is so ass-backwards it makes you almost apoplectic.

This whole strategy probably won’t do much good in the long run, but if we are going to do it, for whatever short-term benefit the powers that be are persuaded we will see, then requiring a gratuitous punishment clause against workers just adds insult to injury. I have no great love for socialists (because everything they fear from corporations, they end up letting governments do), but happening upon the World Socialist website, I saw an interesting comparison of the current bailout proposals to the Chrysler deal in 1979. A bit of unusual insight regarding the windfalls made by Chrysler and Lee Iacocca while workers were asked to “sacrifice.”

Auto-Destruction-Sequence?

It doesn’t matter, ultimately, that the bridge loan failed in the Senate. Looks like the White House will come through for the car makers. But is it a good idea?

I know it’s hard to swallow that the finance industry, which caused the economy to crumble while paying its top execs handsomely in the process and creating nothing of value at all (more on that next week) gets a 700+ billion dollar bailout with hardly any strings attached, even as the auto industry, which actually makes a product and didn’t cause the economy to blow up) is denied a $14 billion loan. It offends an innate sense of fairness. Especially stinging was the government’s demand, ultimately leading to the plan’s failure, for compensation limits for autoworkers of the kind never required of the finance industry employees, whose incomes are incomparably higher and who, as it turns out, got bonuses from the bailout money. This is making some people fume with appropriate righteous rage. Although I have many questions and doubts about bailing out the auto industry, I share the sentiment regarding the double standard (captured most poignantly by Jon Stewart, as usual).

However, I think it’s important to parse this into (at least) three pieces and assess them separately.

First: the bailout itself should be evaluated independently of the compensation cap question.

Second: the compensation question should be considered, not in light of Detroit vs. Wall Street, but in terms of Executive vs. Regular Worker compensation.

Third, Detroit vs. Wall Street, a double standard, yes. But whether and to what extent that double standard is warranted, is extremely, extremely gray. There are arguments (for and against) bailing out each industry that simply don’t apply to the other. Let’s be honest, this is really not about “fairness.” We don’t “owe” it to the auto industry to help it survive, any more than we owed the finance industry. When did corporate welfare become a moral imperative? The finance industry bailout was, in its terms, simply obscene (more on that next week). But as your grandmother used to say, two wrongs don’t make a right. My point is not to excuse the Wall Street bailout or sweep it under the rug. On the contrary, I would’ve filibustered it if I were in the Senate; it was a travesty that we should be investigating, discrediting, and hopefully fixing, rather than relying on it as precedent for future measures.

Here are some doubts I have about the pro-bridge-loan arguments (framed in admittedly simple terms) considered without irrelevant references to the finance industry bailout (some references are, of course, relevant).

• Bankruptcy doesn’t necessarily drive a company out of business. If the car makers actually are turning the corner in terms of product improvements (as they are claiming in support of their creditworthiness), then shouldn’t they be able to survive a reorganization? Better yet, shouldn’t they be able to get a loan in the market (“relevant reference” alert: isn’t this why we gave money to the banks)?

• An “industry” doesn’t die just because some inefficient monoliths go down (if they do). Small, trim, innovative companies are much more likely to form, thrive, etc. in an environment where established companies don’t effectively become cartels by growing “too big to fail” – that’s a dangerous philosophy (as I’ve discussed here). Furthermore, precisely because a car is a real product with a real function and value, someone will move in to fill the void, if free to do so and if capital is available (again, what the hell happened to our $700 billion, I wonder). Truth is, the Big-3 are failing because they’ve been making cars that consumers don’t like. It’s been happening for a long time, well before the general economic downturn. Propping them up might just mask the problem and allow bad business models to fester instead of dying. That’s just not smart.

• Isn’t it a little inaccurate to equate the “industry” with the largest American companies? Profitable “foreign” companies operating in the US (employing and doing business with American assembly workers, mechanics, dealerships etc. as well as supplying American consumers with desirable products) are very much part of our domestic economy. They pay corporate taxes. They generate and support the same kind of satellite businesses that the Big-3 do (which they are pointing to as further evidence of the far-reaching consequences of letting them fail). These “foreign” companies may not be union shops, but they comply with our wage, hour, and benefits laws. I hear Toyota offers pretty good compensation (including profit sharing) to its workers. Does it really even make sense to talk about multinational corporations as if they were really tied to their countries of origin, when they (including the American ones) operate wherever the rules are favorable and are essentially free to go domicile-shopping? If Congress wants to address any inequities in that regard (and I’m not necessarily suggesting they should), then that’s a whole other legislative package that should not be confused with this bridge-loan deal.

• The idea that our economy would collapse if the Big-3 went into bankruptcy is highly questionable. Ron Gettelfinger of the UAW said that the “auto industry” (by which he means the Big-3), must not be allowed to fail because “it’s the backbone of our economy; we need this industry to survive.” By “we” he means the entire American economy. That’s just – and there’s no kind way to say this – drivel. It’s not 1950.

• Also true: domestic car production accounts for a small portion of the GDP (it’s been hovering around 4% for some time now, even the Chicken Littles – or is it Chickens Little? – generally agree with that figure). That might be bigger than many industries (not as big as others, e.g., the information technology industry) but in any event, not a large enough chunk of the economy to warrant some kind of mortal fear.

• As for satellite businesses that would also suffer along with the Big-3. I don’t really accept that as an argument for why we “can’t afford” their demise – at least not as being uniquely relevant to this industry. EVERY industry, indeed every thriving company, touches off some peripheral economic activities that “depend” on that industry or company. In this economy a multitude of companies are threatened with hard times or even failure, which will all have indirect impacts on other businesses (vendors and suppliers, communication service providers, transportation, utilities, service industries catering to an employed workforce). We can’t prop up all of them. We simply can’t. I’m not even going to argue that point. And if we prop up only the big guys, then what we do is subsidize those who are failing despite having had huge advantages. In other words, we shore up the worst elements in the economy and effectively preclude the rise of anything more vibrant or efficient. We let the “Too Big To Fail” become a parasitic, government supported aristocracy, living by the wealth generated through our work, and for what? For the opportunity to barely eke out an existence in “their” businesses? As I said yesterday, that’s feudalism.

Tomorrow, I’ll consider some pro-bridge-loan points but mainly discuss the autoworker compensation question.

Bailouts and Neo-Feudalism

I know that the failure of the auto-industry bailout will hurt a lot of people. More precisely, it will fail to mitigate (in the short term) the hurt a lot of people will experience as a result of other factors.

But can we really save ourselves by simply propping up every company or industry that’s doing poorly in this less than stellar market? Not to be too academic, but that would suck. Although I  am critical of the most purist forms of free-market dogma and I favor the idea of some public watch-dogging, I think we should review closely and critically any attempt by government to become too much more than a watch-dog for the people, when it comes to interference in the market. [Amity Shlaes’s The Forgotten Man: A New History of the Great Depression is pretty instructive on this point. While I don’t buy her entire argument, I think she raises important questions about the assumptions historians frequently make about the government’s role in economic recovery in the past.]

Ok, so what if we prop up only those that are “too big to fail”? See my comment above regarding government interference? Let me add: we should be especially horrified by government interference on behalf of tremendously wealthy and powerful segments of society attempting to maintain their positions. This is what the Bush Administration has been doing (despite shameless pretenses to “free-market” and “small government” ideologies). [Check out Naomi Klein’s The Shock Doctrine — I am not endorsing all aspects of Klein’s perspective either, but I think she does a great job of pointing out the fallacy of the big/small distinction (or, more to the point for me, the primacy of that distinction) and she asks the right question: on whose behalf and to what end should government act?]

Although over the last century, “small government” has become (I think cynically) the battle-cry of the privileged, historically, the call for limited government had grown as much out of opposition to the entrenchment of privilege. Read Thomas Paine’s The Rights of Man, if you don’t believe me. I realize that English constitutionalism (from which most modern “limited government” philosophies are at least partially derived) was a way to manage aristocratic property rights against a sovereign monarchy. But the success of the idea of limited government in democracy movements is based on the recognition that through most of history, intrusive government was almost universally a tool of aristocracy, the class whence “government” hailed. Government had been practically synonymous with aristocracy and its exercise of social control.

Any political order that requires us, the middle and working class tax payers, to toil to bail out the auto industry and the financial industry (who are today’s aristocracy) — and makes us accept punishing pay cuts, as the Republicans were demanding in the auto-industry case — all ostensibly in order to preserve the privilege of continuing to toil, is nothing short of a new feudalism.

Note that I’m not commenting specifically on the merits of the auto-industry loan package. More on that tomorrow. But before we get to evaluating any particular proposal, we have to disabuse ourselves of this “too big to fail” premise that is silently turning into conventional wisdom with little examination beyond essentially marginal arguments about what to demand in return for rescue packages. This is frighteningly reminiscent of the early Iraq war bandwagon.

My view on the “Too Big to Fail” doctrine can be summed up this way:
If something can get so big that it requires us to collectively absorb its losses (either by bailing it out, or by letting its demise infect the entire economy), then it should have been prevented from getting so big in the first place, or at the very least, it should have been prohibited from accruing to itself all the benefits of an endeavor for which it would ultimately not have to bear the costs. This is privatization of profit and socialization of loss. As we know from the history of the finance industry, repeatedly bailing out institutions in hard times, without requiring anything in return during flush times, is the surest way to guarantee it will happen again.
And again. And again.  

Lest I sound glib, let me clarify: just because I’m questioning the wisdom of corporate welfare packages that give lip service to working-class anxieties, it doesn’t mean I don’t understand or sympathize with those anxieties or that I wouldn’t support effective government intervention on behalf of working people.