As promised, here is the followup to the Comparitive Government article. When we left off before, we were stuck in the predicament of enduring a few years of hardship in a democracy for great long term gain, no small task considering the majority of the people who decide the fate of a democracy are only interested in and cannot (or will not) see beyond their immediate self-interest.

We in America are infatuated with notions of Jacksonian Democracy - the idea that every man(/woman) from the least to the greatest has an equal say in representative government. But let’s look at where this has gotten us, especially in the media age. We now live in the era of celebrity politics. Politicians have to worry just as much (if not more) about likability as their platform. Real ideas and debate for which the common man has no patience have been cast aside. Instead, platforms are built on cliches and slogans like “Change” (everyone likes change) or “No new taxes” (no one likes those) without the slightest consideration of their content or consequences.

This slogan-driven brand of politics has, by tickling the ears of the unthinking majority who desire at the same time lower taxes and more government benefits and see no conflict between the two, given us an astronomical national debt that will only continue to get worse as long as the same types of people wield voting power. The dollar is collapsing around us, and yet the budget deficit continues its meteoric rise to a record $490 billion because politicians won’t risk offending their constituents either by raising taxes or cutting spending.

The voting test however, though an apparently obvious solution, remains taboo not only because of a strong Jacksonian mindset in America, but also because of its more recent history as a way to keep blacks from voting. This, however, was a flawed implementation and not an inherent flaw in the voting test: it was only selectively applied at the discretion of the voting administrator. A fair voting test would necessarily be administered to every voter. Shall we then exclude the voice of the unthinking from government? Certainly not. To be effective in bringing about change (with the added bonus of quelling political unrest), a voting test must be graded. Though guaranteed one vote by virtue of citizenship, one may earn further votes (with a reasonable cap) by performance on the test. This way it is not an arbitrary line drawn between “thinking” and “unthinking”, but rather a gradient allowing finer tuning.

What would be on such a test? The citizenship test tests only factual knowledge, and thus is a good starting point: basic knowledge of the political structure of the US and basic current events pertaining to the election would be required. But further than this and even more importantly, a critical thinking section. From reading comprehension to logical quandaries, it is paramount that every political faculty is tested and graded, and a certain number of votes from 1 to the maximum is awarded based thereupon.

The results of such a structure would be drastic and instantaneous. Without the burden of reaching the disconnected or apathetic voter, media (the number one campaign expenditure) will become increasingly irrelevant, lowering the barriers to political entry and widening options. Knowing that those with the most voting capital are those who seek information, the entire American political discourse will change. Real issues will emerge to the forefront of political discussion, and debate about content and consequences will flourish. This gives us not only better politicians, but better informed people all around as well. The government will be free to work for the electorate’s long-term best interest rather than quelling every immediate ache at the expense of future prosperity.

It almost seems like there’s no downside to a well implemented voting test. Why then is it so unpalatable? Is there moral justification for the one-person-one-vote principle? Check back soon for why governments founded from moral first principles don’t work, and the last qualms with the voting test may be put to rest.

The news has been filled recently with stories like minimum wage jumping 70¢, or California banning trans-fats in restaurants, all ostensibly for the sake of the common employee/consumer. Things which sound nice and warm and fuzzy on the surface - who doesn’t want to help out the bottom rung of society, or to make Californian children healthier? - until you consider the long-term consequences of this kind of thinking.

Let’s assume that for the foreseeable future there will be legal competition in the world - that is, more than one country. In fact, for the sake of the argument and to make things simple, let’s say there are just two countries: a socialist country with the entire set of touchy-feely employee-and-consumer protection laws, and a libertarian country with a minimalist government and little legislation, a good police force, and (why not) a public school system and antitrust laws. Let’s also assume that these countries are identical in population and natural resources, so that we can isolate how people respond to government. We’ll also assume that both governments are initially well liked and supported by their people, and that immigration is completely open.

Cut loose from these starting conditions, the socialist country would initially enjoy a much better aggregate standard of living. Each person is, of course, guaranteed a job and a minimum wage and standard of living, while in the libertarian country nothing but rule of law is guaranteed. Though everyone is not necessarily perfectly equal, the spoils of the economy are well distributed across the entire population through multitudinous social benefits. Each person is reasonably happy, and the leaders are satisfied at the achievement of their goal.

But as happy as the most people are, all is not well in Socialist land. The more productive among the populace are not happy sharing their spoils with the unemployed and unproductive, and the more ambitious are not happy with all the regulatory hoops they have to jump through with their companies. Two things will soon begin to happen: The egalitarian wealth redistribution in the form of public benefits has created a moral hazard for the productive. Why be productive if I can live well being unproductive? If I’m guaranteed a certain standard of living, why excel? The smart, talented, and hardworking individuals of the socialist country will begin to disappear into mediocrity. The ambitious, meanwhile, fed up with being stifled and lured by perhaps less than altruistic reasons, will begin an exodus to the libertarian country in search of purer profits.

Thus the dichotomy between the two systems emerges. Nature itself favors the ambitious and productive, and the libertarian government even more so, because it takes out much of the element of uncertainty with rule of law. The socialist country favors the common man. Thus just as the ambitious flee from the socialist nation to the libertarian, the unambitious and impoverished will flee to the socialist nation in search of benefits and an easier life. The libertarian country will have a perpetual labor shortage, while the socialist will have a perpetual labor surplus.

At this point, the socialist government has several options. With its jobs leaving, it can do one or more of the following:
1) Nationalize all industry and become fully Marxist, thus preventing the further flight of industry.
2) Lock down the borders, preventing the ambitious from leaving and the freeloaders from entering.
3) Cut social benefits. Because the freeloaders now so outnumber the ambitious, there is less productivity and thus less money to hand out.
4) Go into debt and keep the benefits coming.

Each of these is strongly undesirable. Nationalizing industry removes the element of competition, making everyone less productive and further diminishing economic growth. Locking the borders creates political unrest, which could potentially be more damaging than anything economic. Cutting social benefits defeats the purpose of socialism, and could also potentially lead to political unrest. Finally, going into debt is unsustainable, and because there’s only one other country, it means their fate is in the hands of the other nation.

Meanwhile in libertarian land, the cutthroat Capitalist environment has settled down. Because of the labor shortage and the flock of new industries moving in, businesses must give benefits in order to attract employees - benefits comparable to those handed out by the socialist government. Because of the flock of new industries, competition is high, thus productivity is high, and thus the standard of living continues to increase as the socialist government collapses under the weight of its handouts.

But how does this stack up to reality, you ask? Has any of this ever happened? Certainly industrial flight wouldn’t happen on such a devastating scale. Rewind to the Soviet Union of the 1980s and 90s. After a series of Gorbachev’s reforms denationalizing government industries and opening the borders for trade, this is exactly what happened. The ambitious either sold the industries to foreigners or moved themselves, leading to the collapse of the Soviet Union.

The United States is facing a choice between options 3 and 4 right now with the social security predicament. No one will talk of cutting benefits, so we continue to rack up astronomical debt to countries all over the world, with whom our relationship is becoming increasingly strained. Furthermore nearly every country in the world restricts its borders to some degree, from both incoming and outgoing immigration: much of the immigration debate in the US comes from the flood of alleged freeloaders coming in.

Marx was more correct than modern Communists give him credit for in that socialism can only exist if the entire world is socialist - that is, if there is no competition. People respond to incentives. Though it is obviously better in the long run to reward productivity and ambition than complacency and laziness, no one is willing to try a pure libertarian system, because the intermediate years of weaning society from the government’s teat would be much too difficult.

Coming soon: How to accomplish weaning without being voted down, or, how to protect a Democracy from its people.

This time I’ll give the answer first and explain it later: Groupthink.

Why did Mitt Romney’s campaign fall apart? Because no one believed him when he said he was conservative. Despite having made a living off of rescuing companies from debt and being one of the most economically conservative of the bunch, his socially liberal record as governor of Massachusetts was used against him in such a way as to paint him as a flip-flopper and panderer.

Romney prior to his campaign had been in the unfortunate position of having to choose between switching his positions on several issues mostly social in nature (gay marriage, abortion, etc.), and being unpalatable to the Republican party. Ultimately he chose the former, and while the latter probably would have worked even less well (just ask Rudy Giuliani), he still got hammered by Huckabee in several races he should have won, all else equal.

McCain was in much the same situation. With a reputation as a maverick who didn’t mind working with Democrats to push through certain bills and an unpopular (among Republicans) stance on immigration, it looked like McCain would suffer the same fate as Romney (or that he had suffered the same fate as Romney would, McCain’s collapse coming well before Romney’s). But McCain had a distinct advantage over Romney: as a war hero, people trust him far more than a businessman. He practically oozes trust, the reserves of which have yet to be depleted.

The groupthink of the Republican party was made evident in Huckabee’s victories in several Republican primaries. As the only viable candidate who could claim “conservative” values where the others lacked (namely in the social arena), people flocked to him in droves despite each of the others (with the possible exception of Fred Thompson) having far more credentials, experience, and substantiative ideas than he. But McCain, solely by virtue of his war hero status it seems, managed to pull out ahead.

What is baffling now is that only since his presumptive clinching of the nomination has he been most vocal about his conservatism. He has even switched convictions on several issues (Bush tax cuts, for example) in order to be more palatable to the Republicans, despite that same strategy being behind his campaign’s original collapse as well as Romney’s collapse. McCain’s strength is in his independence, not in toeing the party line, especially now that he already practically has the nomination. Espousing his conservatism can only damage him in the long run. Despite what Rush Limbaugh and Ann Coulter may say about him, when faced with the alternative - Obama or Clinton - even the most conservative McCain hater must eventually vote for him (unless, heaven forbid, Ron Paul keeps going as an independent). When sticking with one or two unpopular opinions (regardless of their wider popularity outside the party) makes a candidate so unpalatable as to force him to change them - especially completely irrelevant meta-issues such as party loyalty - it’s time to rework the way parties do business.

So McCain, keep flouting the Republican party, and for heaven’s sake stop whoring yourself out to a base with so many people who probably don’t even know what “conservative” means but will vote as long as you are one. Your strength is the independent base - embrace them, and keep thinking for yourself.

 

Skyrocketing macroeconomy. Massive production glut. Artificially low wages. Déjà Vu?

American businesses in the 1920s caught a wave of technological advance. Ford’s assembly line technology was catching on everywhere, and workers were becoming more and more unnecessary as automated machines replaced humans in all sorts of sectors. With this key new technology arriving from the automotive sector, the auto industry is in fact strikingly parallel to the American economy on the whole.

Ford Motor Company, the pioneer of the assembly line, had a strikingly progressive mindset: In 1914, Henry Ford cut the labor hours of his workers, as many other companies were doing in light of new automated capital expenditures, but in doing so, did not cut their pay. In fact, Ford for a long time was a leader in the automotive industry in wages. After all, without money, how would his employees buy his cars?

If only the rest of the industry had such a long-term outlook. GM under the leadership of Charles Kettering took the view that “The key to economic prosperity is the organized creation of dissatisfaction“. This, along with the short-term profits mindset, led GM and most heavy industries to replace workers with machinery, pay as little as possible to stay competitive in the job market, and watch profits soar.

Now look at China. Vast, austere and impersonal, the average Chinese corporation has the cost-cutting, profit-maximizing mindset of the 1920s American corporation taken to a ridiculous extreme. With little regard for even the lives of the consumers, Chinese corporations unscrupulously substitute cheaper parts and ingredients to shave costs. Wages are suppressed far below any standard ever held by Americans, and they, like America of the 1920s, produce far more than their population can absorb.

So what’s the difference? Why did America crash, and will China do the same?

As Federal Reserve Chairman Marriner Eccles put it, “mass production has to be accompanied by mass consumption”. Because wages were kept low, companies like GM tried to force out mass consumption in a massive advertising blitz according to the aforementioned Kettering philosophy. Consumers were forced to buy on credit, which was in the long run an unsustainable income supplement for such a large number of people. Now China would certainly be in a position even worse than we were; the income disparity has been consistently rising since 1985, and their population has far less purchasing power on a whole than the American population of the 1920s. The difference, however, is that China’s production glut is not intended for its own population.

Now that we’ve established in economic terms what everyone already knew, we can look at the consequences of China’s structural choices. While they will continue to grow as long as the West - the primary absorbent of their overproduction - does, if the West ever runs out of steam or if China somehow catches up economically, China will have nowhere to go. Their continued growth depends on our continued consumption, and if we for whatever reason stop absorbing their glut, then China will be in exactly the same situation as America of October 29, 1929.

Mitt Romney’s speech on religion last week was a missed opportunity. He took the occasion to posit some feel-good Universalist theology that, frankly, there’s no way he actually believes, when he could have turned it into a major advantage over every one of his opponents. His goal should not have been to convince the Christian Right that Mormonism is an acceptable religion, but rather to prove that he himself is a qualified and capable candidate to lead the country. And that task is, or could have been, much easier.

Firstly, we are not electing a religious leader. Even given the Christian Right’s agenda to legislate morality, how different could the legislative agendas of the Mormon Church and the wider Christian Right be? As great as the doctrinal chasm between Mormonism and Orthodoxy is, no difference between his position and the goals of the Christian Right can be attributed to his Mormonism. Of course, the Christian Right’s agenda is dubious at best anyway (I’m looking at you, Huckabee and supporters). Though Romney actually is in line rhetorically with a lot of it, the main thrust of his campaign is elsewhere - fiscal policy, for example.

But the Mormon issue is not necessarily a campaign detriment to be neutralized, as he has so far made it out to be. Mormonism is a demanding religion, requiring intense self-discipline. In everything. From wider personal moral conduct to little things like diet, every aspect of life is strictly self-controlled. Now compare to Giuliani, now on his third marriage, or Clinton, who was recently caught planting reporters in her press conferences. The thought of the words “Romney” and “scandal” in the same sentence is almost ludicrous, because people know him as a sober and self-controlled guy.

But enough about personal lifestyle. The real question is how this discipline translates into job performance. The answer, as it turns out, is stunningly well. As governor in Massachusetts, he reengineered the healthcare system from wasteful and incomplete to lean and complete. And he did it without incurring exorbitant deficits, all because he had the tenacity to look over the numbers and draw ambitious but realistic conclusions from them. As CEO of the Salt Lake Organizing Committee for the 2002 Olympics, he took a $379 million revenue deficit and restructured the entire hierarchy to produce a $100 million profit. And as far as the nation has fallen into debt, we need now more than ever not only fiscal responsibility, but ambitious cost cutting and a massive waste-cutting government restructure if we are to reclaim for the long-term the value of the Dollar.

Fiscal responsibility isn’t the only effect of Mormon self-discipline. Foreign policy will benefit from his propensity towards impossibly ambitious yet always pragmatic approaches. Such competence could only serve to quell the vitriol increasingly coming from places like Europe and Asia (but don’t expect Venezuela to quiet down anytime soon regardless of what we do). In fact, there’s hardly a function that the President serves that wouldn’t benefit from a disciplined and phenomenally competent bearer.

I just hope that he can capitalize on that in time for Primaries.