Ted Kennedy, Jr. remembers his father, August 29, 2009 (courtesy MSNBC.com)

Ted Kennedy, Jr. remembers his father, August 29, 2009 (courtesy MSNBC.com):

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Patrick Kennedy remembers his father, August 29, 2009 (courtesy MSNBC.com)

Patrick Kennedy remembers his father, August 29, 2009 (courtesy MSNBC.com):

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Obama eulogizes Senator Edward M. Kennedy, August 29, 2009 (courtesy MSNBC.com)

Obama eulogizes Senator Edward M. Kennedy, August 29, 2009 (courtesy MSNBC.com):

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Saudi Tribal Customs, Not Islam, Responsible for Male Guardianship Abuses

The author states that the activists seeking to change or remove entirely the guardianship laws are "contrary to Islam, which requires a mahram for traveling women". While this may be the understanding of Islam in Saudi Arabia, it doesn't seem to be the same understanding in other Islamic countries or among other Muslim groups around the world.



Indonesia has the world's largest population of Muslims, also almost entirely Sunni, and yet they do not have a theocratic, Shari'a-based state, and they allow the open practice of other religions, which Saudi Arabia does not. Women are free to move about without male escorts, and hold major positions of power in both the public and private sector. Though far from perfect, they are an example that what is "contrary to Islam" is actually quite flexible.



So the author is apparently speaking from her own cultural subtext and understanding of Islam, which seems to be the minority view in the rest of the Muslim world. Although Western views of women's rights are the only correct ones, neither are the misinterpretations of the Qur'an perpetuated by patriarchal interpretations which depart from the Prophet's (HNBP) actual, quite liberal, teachings.



The author is arguing for these male-authored, misogynistic interpretations, rather than for the true essence of Islam. But this is also true of Christian and Jewish teachings; there is much of our individual cultures getting in the way of the truth of what we profess to believe, and how we view ourselves in society.
Read the Article at HuffingtonPost

Who You Calling A Fascist?

This was copied from a post by a commenter named "plunger" to ThinkProgress.org, January 22, 2008 @ 5:36 pm. With all the talk about fascism and Nazis and such, I thought this was timely. Though it is describing the Bush Administration and so-called "islamofascism" in part, it is still a very useful analysis of just exactly what fascism is, and how it can be recognized. You will find that much of what is described here is not found in anything the Obama Administration is doing, but in what the leaders and organizers of the far-right are doing. Does a whole lot of this sound jarringly familiar? When corporations are basically in charge of every bit of legislation that goes through Congress, what regulations are enforced, who actually sits on boards and runs for (or at least, wins) elections? Be vigilant.

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"plunger":

As the 1983 American Heritage Dictionary noted, fascism is: “A system of government that exercises a dictatorship of the extreme right, typically through the merging of state and business leadership, together with belligerent nationalism.” (The US dictionary definition has gotten somewhat squishier since then, as all the larger dictionary companies have been bought up by multinational corporations.)

Mussolini was quite straightforward about all this. In a 1923 pamphlet titled “The Doctrine of Fascism” he wrote, “If classical liberalism spells individualism, Fascism spells government.” But not a government of, by, and for We The People - instead, it would be a government of, by, and for the most powerful corporate interests in the nation.

It seems that fascism more resembles Bush policy than Islamic theocracy… Here is the 14-point Britt definition as posted some months ago… Dr. Lawrence Britt has examined the fascist regimes of Hitler (Germany), Mussolini (Italy), Franco (Spain), Suharto (Indonesia) and several Latin American regimes. Britt found 14 defining characteristics common to each:

1. Powerful and Continuing Nationalism - Fascist regimes tend to make constant use of patriotic mottos, slogans, symbols, songs, and other paraphernalia. Flags are seen everywhere, as are flag symbols on clothing and in public displays.

2. Disdain for the Recognition of Human Rights - Because of fear of enemies and the need for security, the people in fascist regimes are persuaded that human rights can be ignored in certain cases because of “need.” The people tend to look the other way or even approve of torture, summary executions, assassinations, long incarcerations of prisoners, etc.

3. Identification of Enemies/Scapegoats as a Unifying Cause - The people are rallied into a unifying patriotic frenzy over the need to eliminate a perceived common threat or foe: racial , ethnic or religious minorities; liberals; communists; socialists, terrorists, etc.

4. Supremacy of the Military - Even when there are widespread domestic problems, the military is given a disproportionate amount of government funding, and the domestic agenda is neglected. Soldiers and military service are glamorized.

5. Rampant Sexism - The governments of fascist nations tend to be almost exclusively male-dominated. Under fascist regimes, traditional gender roles are made more rigid. Divorce, abortion and homosexuality are suppressed and the state is represented as the ultimate guardian of the family institution.

6. Controlled Mass Media - Sometimes, media is directly controlled by the government. But in other cases, the media is indirectly controlled by government regulation, or sympathetic media spokespeople and executives. Censorship, especially in war time, is very common.

7. Obsession with National Security - Fear is used as a motivational tool by the government over the masses.

8. Religion and Government are Intertwined - Governments in fascist nations tend to use the most common religion in the nation as a tool to manipulate public opinion. Religious rhetoric and terminology is common from government leaders, even when the major tenets of the religion are diametrically opposed to the government’s policies or actions.

9. Corporate Power is Protected - The industrial and business aristocracy of a fascist nation often are the ones who put the government leaders into power, creating a mutually beneficial business/government relationship and power elite.

10. Labor Power is Suppressed - Because the organizing power of labor is the only real threat to a fascist government, labor unions are either eliminated entirely, or are severely suppressed.

11. Disdain for Intellectuals and the Arts - Fascist nations tend to promote and tolerate open hostility to higher education, and academia. It is not uncommon for professors and other academics to be censored or even arrested. Free expression in the arts and letters is openly attacked.

12. Obsession with Crime and Punishment - Under fascist regimes, the police are given almost limitless power to enforce laws. The people are often willing to overlook police abuses and even forego civil liberties in the name of patriotism. There is often a national police force with virtually unlimited power in fascist nations.

13. Rampant Cronyism and Corruption - Fascist regimes almost always are governed by groups of friends and associates who appoint each other to government positions and use governmental power and authority to protect their friends from accountability. It is not uncommon in fascist regimes for national resources and even treasures to be appropriated or even outright stolen by government leaders.

14. Fraudulent Elections - Sometimes elections in fascist nations are a complete sham. Other times elections are manipulated by smear campaigns against or even assassination of opposition candidates, use of legislation to control voting numbers or political district boundaries, and manipulation of the media. Fascist nations also typically use their judiciaries to manipulate or control elections.

(Most) Conservatives Aren't Crazy, They're Just Misunderstood

Today's op-ed by Rick Perlstein in the Washington Post really did a wonderful job of expressing the wide chasm between liberals and conservatives. He brings an excellent historical perspective to the whole liberal-conservative argument, and especially to the rage and outcry from the right which seems to liberals to be unhinged craziness. It leaves liberals flabbergasted, unable to respond to the raw emotions and apparently irrational arguments, because liberals and conservatives actually see the world very, very differently.

I'm no psychologist, but I've done a lot of study of this seemingly impassable divide in the way liberals and conservatives think. I wrote a blog post a couple of days ago that tried to explore this divide, and I think I illustrated some good points, but I also think I let myself get caught up in the name-calling a bit there as well; I fell into the trap that so many liberals do, in believing that conservative thinking is simply irrational. True, it seems irrational on the face of it to angrily argue to keep government out of people's lives because it can't do anything right, while at the same time driving on the roads, using the electricity, relying on the fire department, or drinking the clean water that government provides quite efficiently. My post focused on how liberals and conservatives view taxation, and what that money actually does, but I believe there is much more to it than I covered there.

My own view is that liberals by and large have a natural tendency to see the "grey areas", to purposely try to grasp the "big picture", and to seek out alternate perspectives to help them think things through. They are libertarian in the sense that they prefer to make up their own minds, distrust authority, and like to look at all the facts before choosing a particular viewpoint on an issue. Though liberals as much as anyone tend to disregard information that doesn't fit their preconceived belief system, they tend to be more willing to accept a reasonable argument and are much more likely to change their views when the facts go against their preconceived belief systems. In extreme cases, some liberals will be so entrenched in their "grey areas", however, that they will view any attempt to nail something down to a right-wrong, yes-no answer as suspect and authoritarian (ie. people who insist that anyone who practices any form of organized religion are dupes and tools of the power-elite).

Conservatives, on the other hand, tend to be more accepting of authoritarian thinking, in the sense that they prefer to have issues boiled down to yes-no, good-bad siimplicity. While still claiming to be making up their own minds, in fact they are more likely to discard provable facts that disagree with their existing belief system. They dislike "grey areas", seeing people who are more comfortable with ambiguity or who change their minds on review of new information as "flip-floppers". To a conservative, issues are not subject to interpretation or ambiguity; it is either right, or it is wrong. It takes an enormous preponderance of evidence to the contrary to alter this kind of mindset; in extreme cases, even when handed proof-positive, unassailable evidence, some conservatives will prefer their own worldview (ie. people who dismiss the fossil evidence and have to come up with incredibly creative ways to twist the laws of physics to explain their belief that the earth is only 6,000 years old).

Conservatives sound alarm at these kinds of comparisons, claiming that liberals are insulting their intelligence, and are being snobbish and elitist to dare suggest that conservatives are less than open-minded. But this isn't snobbish or elitist; there is no aspersion against their basic intelligence. Conservatives and liberals share the same range of IQ's, and have the same ranges of test scores. And to be perfectly fair, conservatives and liberals are basically equal in the areas of stupidity and ignorance, just as they are in compassion and love of country.

It is basic psychology. This has been shown time and again through study after study: liberals and conservatives have very different "wiring", and see the world very differently. There are actually neurological and biochemical differences in the brains of conservatives and liberals, which theorists believe are brought about by a combination of genetics and environment. All humans share some aspects of both conservative and liberal thinking in varying degrees; when a person holds very strong opinions about this or that issue, it is because they have a mentality that is much more predisposed towards one side or another.

Those who have no particular leaning either way ("moderates") tend to have a more equal balance between the liberal and conservative psychologies; those who lean one way or the other have a preponderant strength in either conservative or liberal psychology, and less of the other side (much like people who are left-brained vs. right-brained; in fact, conservatives tend towards being left-brain dominant, while liberals tend to be right-brain dominant... a reversal of their political spectrums, but I doubt evolution planned it that way). Thus, things that make perfect sense to a conservative are baffling and infuriating to a liberal, and vice-versa.

For instance, where a conservative may believe that stiff prison sentences will reduce crime, a liberal sees enormous incarceration rates as a waste of taxpayer money and a breeding ground that reinforces criminal behavior. The conservative sees a simple solution: lock them up, keep them away from society; punishment should be enough motivation to prevent crime. The liberal sees the broader issues of rehabilitation as reducing recidivism and working on the root causes of crime (income inequality, educational attainment, and cultural and social factors).

So it comes down to this: how do we communicate with each other?

Liberals who denounce conservatives as stupid or ignorant are not only misguided and hypocritical, they are drastically hurting their cause. Yes, it is true that many people may indeed be ignorant of certain facts or lack certain information that liberals consider "common knowledge". But calling an opponent stupid immediately shuts down any chance for dialogue; entering into dialogue with the viewpoint that the opponent is irrational and crazy because they do not conform to the liberal concept of reality is just as pointless. No, for dialogue to exist, there must be an understanding of how the other person thinks. As painful as it is for both sides, it requires getting into the other side's heads and understanding what drives their interests, fears, desires, hopes, and expectations.

As Rick Perlstein says in his excellent op-ed, this dichotomy is nothing new, and tends to flare up most dramatically when liberals are in charge. This is largely due to the, well, conservatism of conservatives: change is suspicious, reforms are mistrusted, and things that happen rapidly (as they often do when liberals seek to right the wrongs they see in society) offend the very idea of conservatism, which prefers slow, moderate change over time.

Conservatives, seeing liberal efforts to ram their agendas down their throats, cry out and (from a liberal's perspective) actively work to defeat efforts at change that in every regard would probably benefit the opponents just as much as the proponents. This apparently irrational behavior is at the root of liberal frustration with conservatives, and is what often devolves into name-calling. But from a conservative viewpoint, their outcries are perfectly rational; they see rapid change as disruptive and an intrusion into their private lives, as well as possibly unnecessary: sometimes, things fix themselves if you let them be.

Getting into the heads of conservatives does not necessarily have to be painful for liberals. The key is to actively work to drop the assumption that conservatives are acting irrationally. A conservative is anything but irrational: to them, it is the most sensible thing in the world to resist disruptive, revolutionary changes in society, because maintaining stability and a sense of security in society is paramount to our freedom, progress, and long-term growth. Even liberals will have to agree that this outlook has merit; stability is essential to every society, for without it markets could not function, communities would break down, basic infrastructure would collapse, and trust in a better future goes out the window. But liberals moreso than conservatives see that sometimes rapid change and reform must occur in order to set right something that is wrong, and are willing to risk some temporary instability in order to bring about this change.

What then behooves liberals who wish to bring conservatives on board is to limit the scope of the desired changes to minimize the scale of the inevitable instability. Does this mean that liberals must give up some of their grandest ideas? Of course not. But liberals who wish to work with, rather than against, their fellow Americans who happen to be conservatives, must be willing to accept a middle ground, work to achieve their changes through cooperative means, and convince conservatives that the changes are necessary, will not disrupt society inordinately, and is in their best interests as well. If liberals can demonstrate, through incremental changes, that conservatives have nothing to fear and much to gain from these changes, they will be much more willing to work with liberals to achieve them.

Liberals have a real tendency to act like spoiled brats when it comes to their agendas: "We want change, and we want it now!", while conservatives have a real tendency to act like old fogies about their agendas: "These darn kids and their long hair and wild music!" But liberals do not live in a vacuum, and despite holding both the legislative and executive branches of national government and a majority of state and local government offices, we still must learn to work with, and not in spite of, our conservative neighbors.

Make no mistake: conservative politicians will continue trying to use scare tactics and corporate-sponsored talking points in a cynical bid exploit their constituents in order to block liberal political agendas (no matter what they are), and we should consistently speak out against these power-grabbing tactics. And yes, there are actually quite a few (both on the left and the right) who would be considered by the majority of society as irrational and "crazy" enough to believe some of the most outrageous lies, conspiracy theories, and propaganda out there. These are issues that must be acknowledged, and we must all make efforts to reduce the damage caused by the cynics and the crazies on both sides.

But we must also reach out to our own communities, talk to our neighbors, friends and families, and offer them far more credible sources of information than Beck and Hannity, Coulter and Malkin. We must reassure them that liberals are not all wild-eyed crazy hippies who want to turn society on its head or take away their guns and God. We do have common ground in these debates, in healthcare, climate change, and all the rest: for instance, pretty much everyone, conservative or liberal, agrees that medical costs are too high and that having anyone unable to receive medical care based on their ability to pay is simply wrong (whether you think it is 50 million or 8 million). Here, both sides agree that immediate change is needed.

The challenge then is to find those things we agree upon, build on them, discuss ways that substantive change can be achieved, back up our arguments with facts, statistics, and solid evidence, and work to keep the emotionally-charged rhetoric and name-calling out of the discussion. Only then can we either join together to enact a compromise that we all support, or if conservatives will not join us, then at least work to enact changes that will receive the tacit and grudging acceptance of our conservative fellow Americans.

The Finest Law Firms in DC

There are a number of excellent law firms in Washington, DC. Many fine political leaders have joined their ranks after their tenures serving our country. Some of the finest are:

"Dewey, Cheatum & Howe"

"Friskem, Bendover & Ramit"

"Loekker, Titzer, Zho-yeng & I. Gotthardt"

"Yu, Gouda, Becket, Ying-Mai & Noeschitz"

These are only a few, but very representative of what you'll find there!

Why Government Can't Do Anything Right (Really?)

Howie Klein got this in his email the other day; I couldn't help but share:

This morning you were awoken by your alarm clock (powered by electricity generated by the public power monopoly regulated by the US Department of Energy). You then took a shower (in the clean water provided by the municipal water utility). After that, you turned on the TV (to one of the FCC regulated channels) to see what the national weather service (of the National Oceanographic and Atmospheric Administration) determined the weather was going to be like (using satellites designed, built, and launched by the National Aeronautics and Space Administration). You watched this while eating your breakfast of (US Department of Agriculture inspected) cereal and taking your blood pressure medication (which have been determined as safe by the Food and Drug Administration).

At the appropriate time (as regulated by the US Congress and kept accurate by the National Institute of Standards and Technology and the US Naval Observatory), you get into your (National Highway Traffic Safety Administration approved) automobile and set out to work (on the roads build by the local, state, and federal departments of transportation), possibly stopping to purchase additional fuel (of a quality level determined by the Environmental Protection Agency), paying in cash (legal tender issued by the Federal Reserve Bank). On the way out the door you deposit any mail you have to be sent out (via the US Postal Service) and drop the kids off at (public) school.

After spending another day not being maimed or killed at work (thanks to the workplace regulations imposed by the Department of Labor and the Occupational Safety and Health Administration), enjoying another two meals (which again do not kill you because of the USDA), you drive your (NHTSA) car back home (on the DOT roads), to your house (which has not burned down in your absence because of the state and local building codes and fire marshal's inspection, and which has not been plundered of all it's valuables thanks to the local police department).

You then log on to the internet (which was developed by the Defense Advanced Research Projects Administration) and post on www.freerepublic.com, www.redstate.com and Fox News forums about how SOCIALISM in medicine is BAD because the government can't do anything right.

The only reason government doesn't work is because conservative Republican administrations defunded and/or patronage staffed them with people with ties to special business interests: to wit the last FDA, Dept of Interior and Agriculture under Bush. No one seems to have a problem with pumping over $500Bil to the Defense Department, which last I heard is a socialized entity.

Whole Foods Boycott: One Insiders' Viewpoint

I am participating in the Whole Foods Boycott. This isn't easy for me, because I love roasted salted pecans, and that's the only place within reasonable driving distance to get them. I know, this seems like a small sacrifice, but you don't know how much I love my pecans! Anyone want to open a Trader Joe's in the Highlands Ranch area (or heck, anywhere near Denver) I'll be eternally grateful!

Anyway, while I was commenting on a Facebook boycott group (located here; you must have a Facebook account to open the link), I ran across the comments of an actual employee of Whole Foods. She never actually asked that people not boycott, but she does bring a good alternative perspective to the matter. I'm still boycotting until either the CEO is gone, or they come out in favor of universal healthcare, or at the very least they issue a really, really good apology (and not the halfway apology offered by their PR team today). Despite all this, you might want to give this a read, just to remember that corporations are not all made up of suits and fatcats:

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Comments of Linda Hery Lackman on Boycott Whole Foods (Facebook group, located at http://www.facebook.com/group.php?gid=119099537379)

"As an employee of Whole Foods Market I would like to respond to all the backlash toward them. First of all WFM happens to be one of the best places I have ever worked. While they do have a deductible for their health coverage they also give you a visa card for the deductible to use as you wish for medical expenses including alternative care. I think that is very generous. They also provide health insurance for partners, regardless of sexual orientation. I think this is way ahead of other companies. And to say that they do not care about their communities they are the main supporter for raising funds with Chef Ann to replace food in the Boulder Valley Schools with natural and organic foods so our children are given the right to eat healthy. They are cooking all food on site with real ingredients not processed. While I agree we should have universal healthcare in this country, John Mackey is entitled to his opinion. I thought that is what a democracy was."

"One of the things I hated about George Bush, and there were many things, was that we were not aloud to have a difference of opinion. He stripped us of engaging in a dialogue about anything. I applaud Obama for trying to get us universal healthcare but it is everyones American right to disagree with him and have different ideas so we could have the best plan possible and he would say the same."

"One more thing, John Mackey does not decide what kind of health ins. the employees get, the employees do. Every three years the employees are given the choice of several different benefit packages and the employees vote on which one they would prefer. Again nothing I have ever seen with any other company."

Why We're Fighting Over Universal Healthcare: Conservatives Don't Understand Taxes

I recently had an online conversation with an avowed conservative (and medical doctor), and the topic turned to paying taxes. Specifically, about not wanting to pay taxes for any kind of public healthcare plan. "It's not a question of whether we should give health care to people. The question is: who is going to pay for it? . . . The Democrats want to TAKE what is NOT RIGHTFULLY THEIRS, and use it as they wish", he told me.

And then it hit me: this isn't selfishness; there is a very real psychological disconnect between liberals and conservatives as to what taxes DO.

As citizens, we as a country pay our taxes for roads, bridges, fire departments, military, police, basic and applied research, and all the other services people expect in any funcitoning country. These are examples of STRUCTURAL capital investment, and that money is returned multiplied many times over through jobs, services, and productivity. In addition, our taxes already go for HUMAN capital investments, such as education, medical and social services, and support of the arts and cultural history (museums, etc.). These also repay the money spent multiple times over.

Some conservatives hate paying any taxes at all; I find these to be outliers, not normative; in fact, they are irrational, because they are essentially saying they don't want a functioning society. No, most conservatives believe that taxes must be paid, but seem to be disconnected from a full understanding, not so much consciously as unconsciously, of how tax money is used. The arguments I hear most from conservatives concerning "good" taxes are those that pay for roads and bridges, fire departments and police. Structural capital investments. Things they can see, touch, use.

The arguments concerning "bad" taxes are for education, healthcare, social services, and arts and culture. Human capital investments. Things that they can't directly see, touch, or use.

To a conservative, the "good" taxes have tangible effects, and it is obvious on the face of it how they benefit society,and have a multiplier effect on the rest of the economy. The "bad" taxes have an intangible effect, and it is less obvious how they benefit society, if at all.

And here is the realization I came to: conservatives tend to dislike paying for human capital investments, because they have intangible effects, and thus are harder to measure. They're too "fuzzy", too hard to pin down, not concrete. And yet, these same conservatives will readily acknowledge that a good education system is good for society, that the arts are important for the whole community, that medical care is essential, and social programs to help the needy are necessary for a healthy and functioning society.

There is a very real psychological disconnect there. Structural capital investments are good because they benefit society, but human capital investments are bad, because... they benefit society. Oops. Malfunction. Computer crash.

I believe that's the real difference between conservatives and liberals. Liberals see human capital investments as concrete and measurable, long-term investments that pay off both today and down the road. The "fuzzy" is completely rational, not something to be distrusted or ignored. They can see the benefits to society, and realize that just like structural capital investments, you have to cough up the money to pay for them.

A liberal understands that government is the only way to make sure we have good roads and bridges (the laissez-faire capitalist isn't going to build a road, unless it directly benefits his business), and government is the only way we will have public education, cultural museums, and healthcare that benefits everyone, not just those wealthy enough to afford it or lucky enough to have a gold-plated plan through their employer.

The free market works wonders in some areas, primarily consumer goods and services; it works horribly when it comes to capital investment, whether structural or human, on any scale other than that which directly affects a given company or industry.

Railroads were subsidized by the government; they would have only been built short distances, and between factory and resource supplies and distribution centers, without it. Same goes for any road you want to name; no government, no road, unless a company wanted it for their own purposes.

Schools would not exist were it not for public taxes, with the exception of private schools, limited to those who could pay. Can we say 15th Century, anyone?

And healthcare that benefits all in society, not just the wealthy or the lucky, requires government, which requires taxes. The free market just doesn't serve the public good. And unless you want to live in a version of a Mad Max movie, the public good is what it's all about, for all of us.

And that's why I am perfectly sanguine about paying taxes. And making darn sure that EVERYONE who benefits from the system pays a fair, progressively-indexed share of taxes to support it. Yes, that means people earning more pay more, and those earning less pay less. How, given this argument, is it "unfair" (or God forbid, "class warfare") to say that those who make more should pay more? After WWII, and well into the 1950's until Kennedy reduced them, the highest tax bracket was 90% on anything over $3,000,000 per year. That's NINETY PERCENT. During one of the most productive growth periods in our country's history. So stop the bull that high taxes on the richest will harm the economy; it was when the taxes were lowered on the rich, and raised on the middle class, that the economy started hitting the skids. And when things like schools, roads, bridges, hospitals, and the rest of our nation's structural and human capital started to erode.

In a very real sense, the "cut taxes" crowd are indirectly responsible for crumbling and overcrowded classrooms, outdated schoolbooks, inadequate quality and quantity of teachers, and an overall quality of education that is a disgrace by comparison to just 50 years ago, when our country topped the world in student achievement. And it's not a far reach from there to lay indirect blame on the same conservative voices for the collapse of the bridge in Minneapolis in 2007. One is human capital, the other structural, but when the money isn't there because some wish to avoid taxes, it affects both kinds of investment. Because conservatives can't see the logical fallacy inherent in trying to prevent the government "TAK(ING) what is NOT RIGHTFULLY THEIRS", they continue to fight to lower taxes, especially on the wealthy. And just like not paying enough in taxes to keep bridges maintained kills people, so too does relying on profit-driven, private insurance for your healthcare expenses instead of having a publicly-run, non-profit universal healthcare system.

That's why when Sarah Palin (followed by thousands of others, including Joe the Non-Plumber) laughed at and mocked Obama for saying that paying taxes was patriotic, claiming that such a sentiment was un-American, I found that grossly offensive. I love this country deeply, and I am not some pie-in-the-sky free-markets-yay! person who thinks that government is nothing but an inefficient behemoth that just sucks up my hard earned money and blows it on waste and graft. I understand that NOTHING we take for granted in this country, the museums, the roads, the schools, the fire departments, or the medical care, would exist without paying a good amount of taxes.

If you consider yourself a conservative, then the next time you want to complain about the government "taking" your taxes and say it is not "rightfully theirs", stop and think about what you just said. If you really believe that, then act on it. C'mon, don't be a hypocrite. You're a conservative! You're no wussy liberal!

Here's all you have to do:

Don't call the fire department when your house catches on fire. You're not paying for that communist apparatus any more!

Don't call the police when you have a break-in. None of that socialized protection service for you!

Don't drive on the roads or walk on any sidewalks. As a good conservative, you don't mind walking through mud and brambles.

Don't use the Internet. Lots of tax dollars went into creating that hummer!

Don't cash your paycheck. Your employer probably benefits from some kind of government program or funding. Traitors!

Don't call a lawyer, doctor, or other professional. (A) the phone lines were paid for by taxes and (B) they probably got part of their education on the public dime. Commies!

Don't eat food from a grocery store. Those sneaky FDA guys use tax money to make sure it's clean and disease-free. Real conservatives like dirt, fecal matter and bug guts in their sausage!

Don't water your lawn. Everyone knows that the government puts flouride in the water to brainwash conservative into thinking that water pipes are paid for with tax money, instead of laid by mole-creatures late at night like any sensible person would believe.

Don't read a book or newspaper, or watch any kind of educational TV program. (A) your education was paid for by taxes and (B) that book was made possible by government programs subsidizing the paper industry and (C) broadcast media are made possible by taxpayer money and managed by the FCC. And besides, there's nothing good on TV because it's all liberal media anyway, and Ann Coulter is looking pretty wrung-out these days on Fox since you got HDTV.

Don't take any medications. That FDA again! Gotta keep their commie hands outta your life! Plus, a lot of those meds only exist because they were largely funded by basic research dollars provided by government grants.

Don't use any electricity. Another socialist conspiracy; government pretty much runs that whole show.

And I'm sure you'll find more things you need to divest yourself of in life, as you realize how many other things are being paid for with your tax dollars.

Oh, yes, here's another: Don't breathe the air. Billions of dollars a year goes into limiting pollution and keeping the air clean. As a good conservative, it is beholden on you avoid breathing at all costs. I know, but think like a Patriot here, a good Patriot who doesn't pay taxes!

Oh, don't worry. As a liberal, I tend to be more generous-minded than that. I might tell you to keep away from my national parks, forests, rivers, and streams, but by all means, enjoy the air. I paid for it, so I have the right to share.

The Minimum Wage: A Conservative Boogeyman, Redux

In June I posted a paper I'd written called “There’s a Monster in My Closet!”: The Minimum Wage Boogeyman. Now that the July minimum wage increase has gone through, it seemed appropriate to revisit the topic in light of the new unemployment numbers that came out immediately following the increase. Unlike my last post on the topic, this isn't a wonkish, technical paper; just my own take on the meaning of the numbers, and what it means for the minimum wage argument overall.

The minimum wage is and has always been a political football, pulled out to play whenever politicians need to drum up support for, or action against, their particular constituency’s goals. For liberals, the minimum wage is a tool to appeal to the masses, many of whom are low-income or impoverished. They see a minimum wage as a way to lift people out of poverty, to even the playing field, to give everyone a fair shake, and to reduce income inequality and increase fairness. For conservatives, the minimum wage is a foil to drum up anger from their supporters, most often businesses. They see it as an artificial price floor, which drives good businesses out of the labor market by raising payroll costs so much they can’t hire new workers, or must let some workers go to stay in business, and think that the open market is the best way to ensure wages are fair and full employment is maintained.

I see both arguments, and I cannot help but be more attracted to the argument of the liberals. The conservative argument not only lacks a sense of basic humanity towards others (as do quite a few other conservative arguments about economic matters), but from a purely empirical standpoint, the argument of the conservatives that a minimum wage will kill jobs and is sure to drive some businesses to ruin simply doesn’t pass muster; historically, neither is true.

From the groundbreaking study by Card and Krueger in the mid-90’s, to more recent studies and discussions by Shipler, Waltman, Ehrenreich, and many others, the evidence to support the idea that the minimum wage is a job-killer simply doesn’t exist. The conservatives make a good, common-sense argument; it makes sense when you think about it. The problem is, something is being left out of their argument, because that’s just not what happens when minimum wage increases occur.

Take for instance the most recent jobs report. On Friday, July 31, 2009 the minimum wage increased by another 25 cents. By conservative standards, businesses would have been cutting back employment drastically in anticipation of such a sharp increase. Business planners large and small would have seen this coming months ago, and kept their workforces intact until the last possible minute, then dropped the least productive (ie. minimum wage earners) from the roles. Instead, after months of increasing unemployment, July saw the first drop in unemployment in months, by 0.1%. The studies by Card and Krueger show this same kind of correlation (or perhaps it would be better to say, lack of correlation). So where is the conservative argument in light of this evidence? It seems that the argument is at best microeconomic in scope (which makes it an excellent tool to drum up votes and campaign contributions from frightened small-business owners) but on the macroeconomic scale any actual job losses are tamped out in aggregate. So the conservative argument appears to be so much hot air.

What of the liberal argument, then? Simply because the conservative argument is demonstrably wrong, or at best, inaccurate, does not mean the liberal argument is therefore correct. However, it has a lot more merit than the conservative one. Indeed, having a minimum wage does ensure a measure of fairness, in that there is no chance that someone working at a job will be paid less than this minimum; also, it assists those who would otherwise fall into abject poverty avoid such, but only barely. However, the minimum wage has some shortfalls, often caused by conservative efforts to limit or abolish it, which minimize its ability to address the income inequality issue in and of itself.

In my opinion, until the minimum wage is (a) raised to a point where a two-adult family with two children, where the adults both make the minimum wage, can raise their family without additional government assistance in the form of Food Stamps or other welfare, and (b) when it is tied to the periodic rate of inflation, say on an annual or semi-annual basis, then the minimum wage is arguably ineffective at combating poverty and income inequality, and thus, the poor shall always remain with us.

References:

Card, David E. and Alan B. Krueger. (1995). Myth and measurement: the new economics of the minimum wage. Princeton, NJ: Princeton University Press.

Cline, John S. (2009, June 14). “There’s a Monster in My Closet!”: The Minimum Wage Boogeyman. Author's blog post, at http://lovelifelightlaughter.blogspot.com/2009/06/theres-monster-in-my-closet-minimum.html

Ehrenreich, Barbara. (2001). Nickel and dimed: on (not) getting by in America. New York, NY: Henry Hold and Company.

Shipler, David K. (2004). The working poor: America's forgotten workers. New York, NY: Alfred A. Knopf.

Waltman, Jerold L. (2000). The politics of the minimum wage. Board of Trustees of the University of Illinois. Chicago, IL: University of Illinois Press.

OK, Now What? – A call for a new Economic Theory of Everything

John S. Cline
July 30, 2009

Abstract

Classical economics theory, founded in rational markets, is limited in application due to its inability to account for irrational behavior. Keynesianism, which takes human psychology into account, is despite of its ability to predict and prescribe for real markets similarly limited by its inability to affect the root cause of economic instability: income distribution. Neoclassical Synthesis was an attempt to use classical theory and Keynesian theory together in an uneasy macroeconomic alliance; however, by giving insufficient attention to finance economics, we have seen this alliance crumble into dust as the Crisis of 2008 swept much of the synthesis theory aside. What is needed now is a new economic theory which uses the most workable elements of Classical and Keynesian thought with real-world social and psychological theory. This time, a New Synthesis, combining proven economic methods with behavioral economics, dignitarian theory and inequality studies, and international institutional reform and infrastructure improvement, will be required to transcend the worst effects of free-market capitalism.

Introduction

Classical economics theory, with its simplicity and ease of modeling, held sway for 140 years since the days of Smith and Ricardo. Then during the Great Depression, all of this great body of theory seemed to fall apart as no model could be produced to describe what was happening, much less prescribe a solution. Then in 1936, John Maynard Keynes rocked the entire economic community with the outlandish idea that government intervention in the economy could be beneficial, if not vital, and we entered the Age of Keynes. However, not all has been rosy in these many decades since, and Keynes ideas have been lauded, reviled, modified, turned on their head, and now seem to be on the resurgence.

In this paper, we will examine Keynes influence on economic thought in the 73 years since he published The General Theory, describe the limitations of Keynes theories, demonstrate why his theories are not fully applicable to today’s economic crisis in their original or even modified forms, and finally we will discuss the need for a completely new approach to economic thought and policy, with possible applications.

Keynes Influence on Economic Thought

John Maynard Keynes was the perfect man for his times, and a man before his time. A product of classical economics, his deep understanding of the economic theories of his day allowed him to examine them closely, interpret them in the light of what was happening in the Great Depression, and completely turn most of them on their head. From wage flexibility to the role of monetary and fiscal policy on the marketplace, his book, The General Theory of Employment, Interest and Money, forced economists the world over to re-think their understanding of prevailing theory and shaped the economic world we live in today. Even the growing field of behavioral economics stems from his General Theory where he playfully and artfully challenges decades of belief in the rational marketplace by introducing the concepts of confidence and psychological factors (his animal spirits) in consumer and business behavior (Keynes, 1936, pp. 161-162).

Perhaps Keynes' most important contribution to modern economic thought is his complete withdrawal from the classical economic principle of Say's Law, stemming from Ricardian economics, which states that economies can never experience a gain or loss of demand; the supply will always equal demand, and any imbalances that occur will quickly smooth themselves out (Keynes, 1936, pp. 18-22). Malthus, who influenced Keynes' thinking in this area, strongly disagreed with this Ricardian principle, pointing to objective, obvious examples of lack of demand; unfortunately, the Ricardian perspective won out and barely a mention of Malthus' views were to be found in classical economics textbooks (pp. 363-364). This puzzled and annoyed Keynes, and with the advent of the Great Depression (the epitomy of a loss of demand across the entire economy), set him onto a wholly unthinkable quest: to demonstrate that an economy, left to its own devices, could be in equilibrium without full employment (pp. 25-30, 280-286). Further, he showed that governments could intervene both fiscally and monetarily to manage the economy, especially during recessionary times, to maintain full employment and maximize potential production (p. 378).

The well-known "45-degree" curve describing this equilibrium tendency actually never appeared in The General Theory as such; it was graphically represented by Paul Samuelson in 1948 (Krugman, 2006), but is based on equations found in Chapter 3 of The General Theory as Keynes describes in detail how the aggregate demand depended on aggregate income, bringing his nascent behavioral economics to bear in the form of the marginal propensity to consume (MPC) (Keynes, 1936, pp. 29, 115). He maintained that aggregate income depends on the level of employment, so demand D is a function of labor N, and as employment is high, so too is the MPC, and therefore demand increases. When demand is small, producers cut back production and reduce staffing, increasing unemployment. Due to less than full employment, consumers spend less and therefore demand and supply reach a new equilibrium level far below potential.

Keynes' solution in this instance was for government to take up the slack in consumer spending by injecting money into the system. Through tax breaks and direct spending, government could boost production and thus raise employment. With increased employment, demand levels would increase, and a return to equilibrium at full capacity would be achieved (Keynes, 1936, p. 378).

The Limitations of Keynes

Although this methodology worked well during the Great Depression, and provided a means for economic stability for many decades, in the 1970's and 1980's Keynes fell out of favor with economists because they felt his models did not adequately account for "stagflation", which was the glut of overproduction combined with high inflation due to the rise of post-WWII European and Japanese industrial capacity (Krugman, 2006; Bello, 2009). Classical economists hailed the end of the hated Keynes, and Keynesians began trying to piece together models and theories that would account for this unaccountable economic morass. Neo-liberalism and New Keynesianism were two of many schools that flourished, most often using tools from both Classical and Keynesian economics in what is known as Neo-Classical Synthesis. This is a somewhat uneasy truce between two warring camps more than an actual synthesis; the Monetarists on one side, ideologically content with the idea that monetary methods were sufficient to keep an economy on track, the Keynesians on the other ready to flick the switch on fiscal intervention when necessary, and the New Keynesians in between moderating between monetary and fiscal policy. This macroeconomic catfight spun off many useful tools and theories, just as in war there are technological breakthroughs despite the awful destruction. The growing new field of behavioral economics, social applications of chaos and games theory, newly-refined and data-backed social theories in inequality studies, egalitarianism (now dignitarianism), and new thought in encouraging institutional reform abroad have all been the result of successes and failures of Neo-Classical Synthesis. For the most part, however, these have been ignored or considered interesting but ultimately fringe elements.

Until now. With the advent of the Crisis of 2008, new attention is being given to the defects of current economic thinking, and this is exposing to the daylight many of the theories and results of these exciting new fields. Before we get into these, perhaps a brief revisiting of Keynes is in order.

What the Keynesians Missed in The General Theory

The policies and methodologies employed by Keynesian economists that led to stagflation and also to our current crisis resulted from a misreading of Keynes, and a historical blind-spot. Keynes more than adequately explains the role of monetary and fiscal policy in his General Theory, and highlights very clearly that his was a limited case; his purpose was to diagnose and propose a cure for the Great Depression. Perhaps one great failing in The General Theory is that Keynes expected the economic conditions of the Great Depression to continue: only modest growth, limited available channels for entrepreneurship, and an industrial base that had essentially mapped out all available resources and thus had nowhere else to turn for expansion (Krugman, 2006). He did not foresee (nor in all fairness, did anybody else in his day) the boom years following WWII, the technological explosion following the invention of solid-state electronics and computers, nor the interlinking of globalized markets. Therefore, his solution applied to a static model, not a dynamic one. The Great Depression was a problem of wage-price equilibrium far below full employment, and his prescriptions worked quite well to resolve those problems.

Unlike the wage-price issue of Keynes’ day, however, we are now faced with a credit-value issue (Scot, 2009). As in his day, interest rates are near zero, but banks are refusing to lend because of massive amounts of toxic debts on their books and on those of other banks. Homes, previously the public's common currency of stored wealth, became artificially inflated in value and when that value dropped, even homeowners who had put in sizeable down payments found their equity upside-down. An enormous crisis of confidence ensued, leading to even further deflation of home values. These mortgages had been securitized and resold on the open market, often bundled and re-bundled to "spread the risk" until it was virtually impossible to know who held whose paper. As more and more defaults occurred, these formerly AAA-rated securities quickly turned toxic, worth cents on the dollar or even completely without value. Firms that had invested heavily in securitized mortgages began to face bankruptcy, and some like Lehman Brothers were indeed allowed to fail. Others, like AIG, were saved by government intervention in a move following Keynes script. But the problem remains, and unlike Keynes’ Great Depression and the wage-price issue, the credit-value issue is as yet unresolved.

A government injecting money into the economy, creating a deficit and raising employment by spurring demand, would today be considered a practical means of achieving the Keynesian full-employment goal during an economic downturn. However, though we are not by any means at full employment (and getting further from it with each passing day), the underlying problem is not wages or employment. It is confidence (Gross, 2009; Bello, 2009). And this is what Keynes was most passionately trying to get across in The General Theory. Confidence, both in the consumer and the producer, is required for a market to perform efficiently. With credit essentially tied up in Gordian knots, and a Damocles sword of currency devaluation and depression dangling from the frayed ends of the rope, simply spending more money in the public sector to boost employment will not free up the economy, and it will continue to only increase deficits without spurring production in the private sector. Lending, the lifeblood of the private sector, is languishing due to trillions of dollars in toxic assets which cannot simply be "forgiven" or written off the books. Overconfidence led to over-speculation and Ponzi schemes, which when confidence collapsed, took the global economy with it (Minsky, 1992, p. 8). This isn’t Keynes’ Great Depression, nor is it any longer an economic landscape Keynes would likely recognize.

Keynes lived and worked in a closed world, still enmeshed in a colonial mentality and with clear national borders and demarcated lines of international concourse. He saw the world as the developed and the colonized. His theories, therefore, work best in closed societies (Bello, 2009). But with the advent of globalization, Keynesian methods simply are not sufficiently effective. Money, trade, labor, and resources are internationalized; jobs previously performed in domestic markets are now performed for a fraction of the wages in developing countries, and enormous trade deficits are now considered the fair price of a consumerized economy. Debtor nations hang on with bated breath to the every whim of the creditor nations, for fear of having the debts called in, resulting in overwhelming economic uncertainty. There is an unprecedented amount of U.S. currency held abroad, and today’s economy dwarfs that which existed in Keynes’ day. Due to these factors, Keynesian economics alone will at best have a modest effect on a globalized international economy, with a multiplier close to, or even less than, one for any “normal” Keynesian methods (Bello, 2009). Keynes signature prescription will help more people return to employment, and bring about a temporary relief, but it will not help the core of the problem: income disparity, both domestically and abroad. With this still in place, and growing daily, this Crisis of 2008 will be only one of many down the road, perhaps leading to a systemic and catastrophic collapse of economies worldwide. What is needed is not just more Keynesianism, but a complete overhaul of economics theories and practices for a new kind of economy (Fuller and Scheff, 2009).

Keynes Points the Way

One of Keynes most often-missed contributions to economic thought was his insistence that international egalitarianism was a vital component of any economic policy. In his view, the key driver of economic turmoil was only partly due to the business cycle; the business cycle itself was directly influenced by income distribution (Keynes, 373-377). As long as large disparities in income distribution existed between the richest and poorest in society, a swing in the business cycle would be amplified and hamper the smooth functioning of the entire economy. Though no socialist, Keynes felt that income inequality should be addressed: rich nations should put more effort into helping poorer nations, because reducing income inequality not only at home but also abroad was key to prosperity for all.

To some degree, his advice was heeded after WWII, as evidenced in the Marshall Plan and increases in foreign aid that occurred in the following decades. This new internationalism had mixed results: in the former Axis countries of Germany and Japan, where a complete overhaul of the economic and political infrastructure ensued, there was great success. In countries that received foreign aid where institutional reform had not occurred, often there was little or no change in income equality; at times, situations became worse, as the aid was confiscated by corrupt regimes or badly distributed by inept ones. Often, the main problem was one of a lack of sufficient institutional and social infrastructure to adequately meet the needs of their populations (Heilbroner, 238-258; Gwartney, Stroup, Sobel, and Macpherson, 2009, p. 341-342).

Another area of concern was foreign business investment. Private businesses that invested in poorer countries often took advantage of loose or non-existent regulation, rarely used profits to provide direct investment in infrastructure or institutional reform within the host countries, and often exacerbated the disparity in income between the richest and poorest in those nations. Various trade agreements and regulatory efforts, such as GATT and later the WTO, have reduced these harmful effects to some extent, but depredations still occur and in most cases, meaningful institutional reform and social infrastructure is still lacking.

Obviously, it is not feasible (or wise) to overthrow entire countries to rebuild them from the ground-up as was done in post-WWII Europe and Japan, or in modern-day Iraq and Afghanistan. Nor is it effective to simply pump more money into foreign governments that are often corrupt or that have inadequate means to fully translate funds into institutional or infrastructure improvement. And expecting corporate largess to rescue developing, and especially failed states, from extremes of poverty and income inequality is an exercise in folly. Even social entrepreneuring, a promising new area of entrepreneurship which seeks to promote social welfare and environmentally-sound practices in business, are not in the business of radically reshaping entire nations of people.

We know that income inequality effects a country’s ability to maintain a stable economy; we also know that strong institutions, such as a good educational system, a foundation in the rule of law, and a reasonably corruption-free political system combined with a modern physical infrastructure such as roads, bridges, Internet access, telephones, cellular service, and clean food and water are vital to ensure a country at least has the opportunity for economic growth. So what can be done to bring about institutional and infrastructure change while at the same time reducing the harmful effects of pronounced income inequality?

Failings of Current Economic Theory

To bring Classical and Keynesian economic theory into harmony with political and social reality, we must first identify the key factors which modern economic theory lacks:

First, as mentioned above, Classical economics relies entirely on rational markets, while Keynesian economics takes the psychology of both the consumer and the producer into account but only in limited ways. Further, even New

Keynesian theories fail to provide predictive models of irrational behavior; instead, they seek to describe such behavior and analyze its effects after the fact, much like a sports commentator describes a botched quarterback “fake” as dependent on a prior knee injury. It is instructive to be able to describe what caused what, but this does not necessarily allow us to predict future events. Knee injury or not, the next time the quarterback tries to fake a pass, he may succeed.

Second, no current economic theory addresses the underlying problem of disproportionate income distribution, which is largely seen as a political and not an economic problem, or is seen as a microeconomic issue rather than macroeconomic.

Third, there is a very real disconnect between theory and practice, despite decades of policy prescriptions based on apparently sound economic models; often, theories are supported or discarded based on observations of crises like the one now facing us, rather than on any kind of formal or empirical studies. In essence, this means that macroeconomic theories are for the most part tested in a macro-laboratory, without controls, and the success or failure of a particular policy prescription is determined by the volume of human suffering it either eliminates or causes (Economist, 2009).

And fourth, the economics profession teaches every first-year student that economists must avoid normative arguments, such as “The minimum wage should be higher” or “There are too many poor people in the country”. Although on the face of it, this is a perfectly reasonable and scientifically sound condition (is there a mathematical operator for “should be”?), it also has a serious flaw: people are normative, not positive by nature. Since people make up the body politic, economics is driven by normative public policy, not positive rationalist planning. Therefore, any economic theory (or policy derived from such) which does not take normative arguments into account is unable to satisfy two basic human psychological needs: fairness and an individual’s sense of self-worth (recognition) (Akerlof and Shiller, 20-21; Fuller, 2009).

The Missing Element: Social Equity

This last deserves a bit more explanation: recognition is not mere fame or public acclaim, nor does it involve equal pay; perhaps a better way to describe this desire for recognition is through the concept of social equity. Social equity is that quality intrinsic in each human being in which they provide some value to society as a whole. Measured in the usual thinking of modern economics, a doctor is more valuable than a ditch-digger; anyone in decent health can dig a ditch, whereas a doctor takes years of training to acquire the skills needed to perform medicine. Additionally, the conditions of birth statistically prescribe the likely outcomes of two children; by age 35, a child born in a slum is far more likely to become the ditch-digger, while a child born in a middle-class suburb is far more likely to become the doctor. In social equity terms, however, every human being has an equal measure of social value; at birth, all children are the same. What determines the child becoming a doctor or a ditch-digger is environment, not intrinsic value, rank, or station of birth. Modern economics has not yet divorced itself from its Malthusian past; we still think that a poor person is somehow inferior to a person of means. This misconception is called rankism; an abuse of natural rank differences leading to malrecognition and disconnection of those abused from society. This creates an atmosphere of distrust: those of higher rank fear those of lower rank, and those of lower rank resent those of higher rank due to perceived abuses (Fuller, 2009).

Therein lies the problem; because rankism exists, social inequality exists, and perverse income inequality follows. Distrust naturally heightens problems of confidence during economic downturns, and is exacerbated by an income distribution which is considered “unfair”. Of course a doctor must be paid more than a ditch-digger; skills and training must be rewarded, and the ditch-digger having his broken arm set does not consider it unfair if the doctor treating him makes ten times as much in compensation. However, if the ditch-digger observes a cosmetic surgeon who works twenty hour weeks dealing only with Hollywood stars and makes fifty times what they make, they will find this unfair. In isolation, this would not be much of a problem; however, when this is repeated multiple times across society in many different arenas a general sense of unfairness sets in among the lower-ranking members of society, leading to further drops in aggregate confidence which multiplies during economic downturns. As Akerlof and Shiller point out, just as there are multipliers for consumption, investment, and expenditures, there is a confidence multiplier (2008, pp. 14-16). It is this that modern economics theories fail to include.

Therefore, economics theories must include a place for normative arguments in their models, because the underlying problem in society is a normative one, not a positive one: too many people are living in societies with radically disproportionate income inequalities, being (or feeling) abused by rankism, perceiving society as unfair, damaging confidence. This normative argument affects all the others, and it must be addressed.

Behavioral Economics

As demonstrated here, the economics profession must strive to include normative decision-making, the concept of fairness, and the harmful effects of rankism in their prescriptive models for economic policy. Additionally, a focus on institutional reform both domestically and abroad combined with infrastructure improvements that allow dissemination of economic benefits to a wider audience also needs to be incorporated as part of economic policy.

The rapidly emerging field of behavioral economics provides solutions for many of these issues, and often tests its theories in real-world socio-economic experiments. Building on Keynes “animal spirits” ideas and various attempts to fit irrationality into utility maximization models (ie. Palley, 2005, 13-14), behavioral economics seeks to combine economics with psychology; to determine how human minds actually work when making economic decisions. The work of Richard Thaler and others has been nothing short of startling: where Classical economics holds that people will always tend towards rational decision-making, and even Keynesian economics holds that although individuals will act irrationally but in aggregate, they will trend towards a rational outcome, behavioral economics shows that even in aggregate, markets can be totally irrational (Thaler, Mullainathan and Kahneman, 2008). Our current economic crisis bears this thinking out quite nicely; irrational exuberance, combined with decisions based on emotions rather than logic, inflated a bubble economy which soon burst.

To explain how economic decisions can be made on emotional, irrational grounds, let us look at the concept of fairness. In Classical economics, this is completely missing; it has no influence on decision-making. If I wish a glass of milk, I would rationally choose to pay the lowest price I could for it, maximizing my expenditure, while the marketplace will price that milk at a value I am willing to pay, maximizing their profit. In behavioral economics, this plays out completely differently (and as we shall see, in a completely recognizable way) (Akerlof and Shiller, 21-22).

Now consider this same glass of milk, but in a real-world scenario. I am home-bound, and wish a glass of milk. A friend is going out for an hour, and offers to get the milk. I give him a ten-dollar bill. In the first instance, my friend is going to meet a business client at a fancy hotel restaurant for lunch. He goes to lunch, and returns with my milk, and five dollars in change. Knowing beforehand that he was going to a fancy restaurant, having paid five dollars for a glass of milk seems fair. In the second instance, my friend is going to a grocery store. He returns with my milk, and five dollars in change. Knowing beforehand that he was going to the grocery store, having paid five dollars for a glass of milk now seems unfair. In Classical economics, the glass of milk should have cost the same; in behavioral economics, paying the same price at a grocery store versus a fancy restaurant places a different cognitive frame around the purchase (Worch, 2006, pp. 3-5). I expect to pay more for milk from a fancy restaurant than I would from a grocery store, because in my mind there is a frame containing “fancy restaurant” and a frame containing “grocery store”. This is an example of irrational decision-making that goes beyond the microeconomic; entire populations make similar framing judgments daily, resulting in economic decisions that are unpredictable with either Classical or Keynesian methods. Behavioral economics models can both describe and predict for this irrationality in aggregate markets by applying known psychological principles (Akerlof and Shiller, 169-171).

Dignitarianism: the Science of Egalitarianism

In addition to behavioral economics, a growing body of theory has developed around the issue of rankism (Fuller, 2009). Previous economists and philosophers have discussed the need for egalitarian social models to offset abuses of rank in society, such as poverty, income inequality, fairness issues, access to food and healthcare, and educational inequality. Modern thinking has advanced egalitarian ideals in the form of “dignitarianism”, or the promotion of dignity within a society. Unlike socialistic theories, dignitarianism regards differences in rank within a society as a natural human construct; it is not the differences in rank, but the abuses of rank (whether actual or perceived) that harm society as a whole. Therefore, institutions and the overall social structure must be organized in such a way that abuses in rank are less likely to occur. This includes eliminating perverse income inequality, providing a price floor on wages (a “living wage” indexed to inflation, not simply a static minimum wage), ensuring social safety nets are ample in extent and efficient in outcomes, providing universal healthcare for all citizens regardless of ability to pay, and ensuring that all members of society are able to obtain an equal quality of education if they so desire (national or international curriculum standards, funding for schools, teachers and materials, and ample financial aid for students to attend college are some examples) (Fuller, 2009).

To get an idea of how this affects a society and that society’s economy, let us return to the doctor and the ditch-digger for a moment. In a society that has no rankism, the ditch-digger is there by choice, and is not resentful of those who have more lucrative positions. Why? Because all means are available to him to change his rank in society. He is not digging ditches because of lack of available education, or because he belongs to the wrong caste, or because he married the wrong family. Further, he is not worried about his future, because he knows that should ditch-digging no longer provide employment, a safety net exists to help keep his family fed and housed. In addition, he is not worried about his health, because he has excellent healthcare whether he is currently employed or not. The incentive is still there to work and achieve more, but the psychological and physical harm that worry and stress causes is diminished. The ditch-digger is able to lead a happier life because of less stress, and is more productive in the process. Even if he is the lowest-ranking member of society, his social equity is recognized, and he retains his dignity.

So how does the doctor benefit from a lack of rankism? In our rank-less society, the doctor is free to practice wherever and however she chooses; she is not tied to the whims of insurance companies or corporate hospitals. She can treat patients as people, not as parts on an assembly line. In addition, and perhaps most importantly, she is able to earn her large pay without feeling guilt, which is also a stressor. She knows that her higher income is due to her higher skill level and demand for her expertise, not because of an artificial rank distinction. Without this rank abuse, the doctor is better able to perform her duties with less need to justify her salary or social position. This reduces her stress levels, improving her health and productivity as well. Her social equity is recognized, and she retains her dignity.

It should be obvious, then, that in a dignitarian society higher worker productivity results because of less stress, and also less friction between ranks in society. In addition, less stress results in less stress-related illness, reducing healthcare costs and lost work-days (Fuller, 2009). The economic benefits may be obvious, but achieving a truly dignitarian society is decades away at best; a combination of political will and economic incentives such as those listed above must be put in place over time to gently guide society in this direction.

Institutions and Infrastructure

Two means to achieve these ends include institutional reform and infrastructure improvements. Both are nothing new; it is common sense that when you have a society with poor infrastructure and inept institutions, all sorts of economic instability occurs, and sometimes disaster follows. One has only to look at the tragedy of the Ethiopian famine of 1984: in a country where over one million people starved to death in the northern provinces, the southwestern provinces were yielding surpluses of food, and in fact crops were in such abundance they were left to rot in the fields. Where less than two hundred miles separated them, inadequate infrastructure and governmental institutions and the depredations of civil war resulted in a failure to connect the food to the people (Cycles, 1988).

As previously mentioned, direct aid to developing countries has had mixed, and often counterproductive, results. For the United States, the solutions here are obvious and directly actionable; rebuild crumbling roads, extend broadband Internet to rural areas, develop nationally-recognized curriculum standards and properly fund schools, restructure political incentives to ensure politicians act for their constituents rather than moneyed special interests, etc. But how to enact such reforms and improvements abroad? International institutions are already in place that can aid in such efforts. Three of these include the International Monetary Fund (IMF), the United Nations Economic and Social Council (ECOSOC), the World Bank, and a large variety of Non-Governmental Organizations (NGOs) (IMF, 2009; ECOSOC, 2009, World Bank, 2009). Much has already been done to tie economic aid to real institutional reform, and more needs to be done. Further, international legal protections for NGOs needs improvement, perhaps by allowing NGOs to operate under a non-fiduciary arm of the UN charter and thus gain the same protections as UN operations. Expanding the reach and targeting of social entreprenuering programs such as “microloans” is also a proven method of increasing prosperity in developing nations (Sama, 2009). Finally, developing an international fund for an expanded International Peace Corps to help build roads, bridges, and telecommunications lines as well as agricultural technology also needs attention.

In Conclusion: The New Synthesis

One of the motivators in physics is a development of what is often called a “Theory of Everything”, that takes the theory of quantum electrodynamics and finds a way to incorporate the theory of gravity to produce one overall synthesis theory. Modern economic thought must also seek its own Theory of Everything, by incorporating the Neo-Classical Synthesis with behavioral economics, dignitarianism, and commitments to domestic and international institutional reform and infrastructure improvements, as a formal model of economic policy prescription. Only then will social ills ignored by Classical economics or inadequately handled by Keynesian economics be addressed. The opportunity to finally drive a nail in the coffin of the economic causes of poverty, perverse income inequality, insufficient or non-existent social safety nets, and discrepancies in educational equality and opportunity, is to be found in a New Synthesis, with behavioral economics at the core, not the periphery. Libertarian and Classical economists believe that a rising tide will lift all boats; Keynesians argue about the best way to stir the ocean; New Synthesis economists will recognize that most of those boats are leaky, and will work as much on repairing the boats as on raising the tide.

Citations

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