Courts and regulatory agencies as markets

For most of us every day folk, courts are places where we want a judgment that says, “We are right.” But courts are also “rules markets.” Rules markets are where frameworks for how we engage each other going forward are produced and depending on how broad the issue is defined, those rules may be forcibly consumed by others who were not a party to the conflict that brought the original rule producers together in the first place.

The recent U.S. Supreme Court ruling in Masterpiece Cakeshop v. Colorado Civil Rights Commission provides an example. While the issue in that case focused on whether Colorado’s equal rights agency applied its civil rights rules in a neutral manner where civil rights violations were alleged, some Americans questioned why the consequences of that case should spill outside of Colorado and impact citizens and businesses in other states. The short answer is that externalities, whether positive or negative, from a court ruling enter society because of the structure of our legal system. The legal structure is centralized and the ripple effect of legal decisions spreads out to more citizens the higher up the legal rule production hierarchy you go. The interpretation as to what the rule should be for governing a relationship or conflict becomes the “law of the land” where the highest court becomes the market for producing legal rules.

I heard some of this concern from every day folk during a CSPAN session the day after the Masterpiece Cakeshop ruling. “Why did this conflict have to escalate?” some asked. It escalated because a centralized legal system provides opportunities for individuals occupying a minority class to extend its views on how society should work to the rest of America by accessing and participating in the rule making process.

Conflict is a high cost for entering this “centralized rules” market, but a higher price is paid by the rest of society where we are subjected to rules produced by a small number of participants seeking to produce rules that favor their behavior and the detriment of limiting or modifying everyone else’s.

In my opinion, the limitation of the behavior of others as a result of rules produced in a centralized market is a negative externality or negative benefit. No matter the noble intent of the rule producers, where the rule produced impacts my behavior, it impacts my liberty.

One way to limit the negative externalities of centralized rulemaking is for parties to enter into voluntary agreements, agreements limited to the parties resolving the immediate conflict. It would be a lot cheaper for parties in actual conflict or anticipating conflict if the rules were produced as a result of voluntary engagement designed to head off conflict versus the other way around. It would also be less expensive for members of society who are not direct parties to the conflict since they would not be subject to rules that they did not produce.

The individual should aim to make competition law inconsequential

This morning between games of racquetball, a conversation among the racquetball posse came up regarding parsing out trophies for non-winners. We expressed our concern that giving trophies to children that finish dead last may be creating a society of slackers; a community of individuals that see no rewards from winning.  In the 21st century, Millennials is the group that has been taking much heat for expressing a value of entitlement based on just showing up. “Your mommy got you to the soccer game. Yeah me!” “We’re giving you an award for good citizenship because you tell everyone good morning while your grades are shitty. Yeah, me!” “You got an award for fourth place because the other guys in your bracket forfeited. Yeah, me!” Where does this attitude come from and should Millennials take the brunt of the criticism?

To the latter part of the question, I would argue that Millennials should not bear any part of the criticism. They are only reacting to a world that older grumps created and playing by the rules the older generation promulgated for getting along in this society.  I see this as a world created by the State and those who control the majority of private capital.  The attitude of these monopolists is that there is only so much of the spoils to share and if society is to maintain any validity, then the masses must believe that their participation in traditions and institutions and compliance with the rules will result in some type of reward, even if that reward cannot be tied to winning the actual prize.

It goes back to the “Logan’s Run Paradox” where if you want to continue life past age 30, you have to grab the crystal ball before being disintegrated by multi-colored lasers. Your aspirations must be encouraged, delusions fed, and your eye distracted from the reality that there is, at least under this current paradigm, only so much spoils to share. For over a century now, America’s paradigm of competition has been built on this lie and it is increasingly reflected in our political economy.

Americans argue that a competitive market structure is good for the economy; good for growth in jobs; good for the spread of economic opportunity. The United States over the past 120 years has crafted a regulatory framework that favors multiple participants in an industry driven by the premise that multiple providers are good for consumer choice and where prices are regulated by the ability of multiple firms to participate, the better. Actions by firms designed to keep other firms out of a market, whether those actions involve predatory pricing, vertical or horizontal mergers, or agreements between firms i.e. collusion, are prohibited by anti-trust law.  American government tries to regulate and create competition but is government’s attempt organic or an ill-fated effort to replace real competition with an artificial construct? In other words, is the State simply trying to make all soccer moms and their kids happy?

What the State refers to as anti-trust law is simply trade regulation law; regulating otherwise voluntary agreements between individuals to combine as an association that extracts and organizes resources for the purpose and creating and distributing goods and services. The State exercises its monopoly over a jurisdiction by regulating trade thus hoping to ensure that currency flowing through its payment system and the activities that generate tax revenue are left unimpeded. “Protection of the consumer” is a narrative expressed to the masses in order to garner their support for legislation that is onerous to trade.

The individual doesn’t need these laws once he understands self-reliance. The individual producing their own electricity with today’s technology need not worry about a utility’s monopoly. She does need to worry about the State’s invalid argument for helping to maintain it.  The individual using 3-D printing- technology to design and create tools and clothing need not worry about price gouging unless a so- called consumer protection agency extends its jurisdiction by promulgating rules that prohibits said production. The individual that generates valuable information and data for sale and transmits the value of that data via her own cryptocurrency need not worry about fiat currency created and issued by a central bank, unless that central bank and her ally, the treasury, promulgate rules that challenges the issue of an individual’s currency.

The individual, recognizing how inorganic consumer law is, should pursue personal policy that makes that public policy inconsequential.

Morgan Freeman finds out that the internet has turned millions of Americans into lawyers, prosecutors, and jurors

The only thing missing from today’s internet charge, trial, and conviction of actor Morgan Freeman on allegations of sexual harassment at a workplace are the digital eyewitnesses like the ones that caught Al Franken play-fondling Lauren Tweeden’s breasts.  In Mr Freeman’s case, the eyewitnesses were human. The prosecutors, lawyers, and jurors, however, are mostly digitized and charges and convictions merge and rapidly go viral in a globe that is increasingly connected.

My title implies that the number of arm chair attorneys and jurors has increased. Check your Twitter and Facebook timelines and observe your followers and friends opining on allegations by eyewitnesses (allegations not yet entered into any legal record) and an apology issued by Mr Freeman (questionable as to whether it is admissible as evidence and probably meaningless since he admitted to nothing). As to whether the number of commenters contributed significantly to the degree of virility, I would answer that while there was some contribution, the number of commenters was not the significant contributor. The main contributor is the number of online editors or gatekeepers.  There are more people today that are giving a “thumbs up” to posting a story.

If you lived in Charlotte Amalie, U.S. Virgin Islands in the 1970s, you had one newspaper and two television stations providing you news. That meant three editors deciding what local news got broadcasted and back then local TV news coverage was sparse, in my opinion.  Today the internet has changed that.  Alternative online news sites and blogs mean that a non-story to one editor is a scoop to another. It is not that the same level of information is spreading faster. Viral means to increase the amount of available information that gets to more consumers via digital means.

The increase in the amount of information reported is compounded by an enlarged forum within which the public is exchanging ideas. Some net neutrality advocates would call an enlarged forum an example of the openness of the internet where more media consumers can be heard. Hence the millions of armchair lawyers and jurors.

How valuable are these opinions? In a court they don’t mean much. Judges and attorneys would not want juror assessment tainted by uninformed opinion, meaning these days they would have to look under a rock to find people outside an earshot of a podcast on the matter.  To a social scientist the public exchanges online provide some data on attitudes toward the tawdry behavior Mr Freeman is accused of, but as an experiment, as a measure of opinion the public exchanges don’t provide the best data because the collection is not subject to the best controls.

Probably the only benefit that matters is that people can claim that while they are not a lawyer, they slept at a Holiday Inn and the ability to vent support, denial, anger, or frustration en mass is benefit enough.

For the individual, the political economy is micro.

Individuals have to act like foragers even in this technology dependent society. By forager I don’t mean having to grope around in the soil looking for roots, climbing trees for fruit, or hunting for fresh game. I mean that the approach to obtaining and using resources should be a microeconomic approach versus a macroeconomic approach.

The media especially persuades individuals that attention should be paid to the macroeconomy, whether domestic or global. Is national gross domestic product improving? How many millions were employed last month? How many more people applied for unemployment benefits? Did the President’s latest tweeted announcements lead to an uptick in the financial markets?

On the ground, particularly within the black population, I don’t hear chatter about the illusionary macroeconomy. The chatter is about the nominal prices faced by a shopper, whether the costs of food fits their budget, whether an employer has reduced a consumer’s work hours, and whether a family member can help out with a few extra bucks. People are preoccupied with managing the resources that are actually on hand.

It’s probably why macroeconomists sound so ivory tower, their policy proposals so pie in the sky. The average person in my population couldn’t relate to them if they tried because the positions of the macroeconomist sound so detached.

The late James Gapinski wouldn’t take kindly to hearing one of his former students writing off his branch of the economics profession so brusquely and being a fan of Diane Swonk (yes, some economists do have groupies), I cannot say that as people or professionals that macroeconomists don’t empathize with the everyday person. I believe most do. At best they present data about changes in the prices of commodities i.e. copper, corn, wheat, cocoa, oil, etc., that directly impact an individual’s microeconomy, but if global trade were curtailed would that mean the end of my existence or simply mean seeking alternative resources within closer proximity?

So where does the “foraging” come in? What do we mean by foraging? It is my term for self-sustainability. We should consider producing our own energy at a minimum, enjoying the benefit of less reliance on the grid along with lower costs per kilowatt hour of consuming electricity. Supplementing our food purchases with food that we can grow at home would provide an additional benefit of lower food costs.

The self-sustainable approach also makes us less susceptible to not only changes in the macroeconomy, but less susceptible to the transmission of macro rhetoric. Media and politicians would have less fear and uncertainty upon which to leverage their narratives and messaging. The political landscape would either be less noisy or we may see political packages that better align with the increased freedom garnered from self-sustainability.

The second scenario is less likely, unfortunately, because providing political packages that enhance personal freedom is out of sync with the goals of the State which is to create and maintain a dependent collective. Self-sustainability and certainty is a potent competitor to fear and uncertainty and the State would rather not aid the former.

Toward a New Political Market: Rewiring Democracy to Make Entry More Expensive

Democracy has created a political market where prospective providers of political packages challenge each other for the vote and indirect control of society. The perception that democracy is about equal expression of multiple voices within society creates an opportunity for prospective providers of political packages to delineate the market by creating different packages for a variance of voter: marital rights for the LBGTQ community; increased funding for and an increased number of social welfare programs; or progressive changes in affirmative action programs where greater access is created for middle to upper income white women. The reality of democracy, where democracy is an institution that allows more factions to vie for control of society in a bloodless transfer of power, would still result in factions delineating political markets and offering more packages only because the pot has to be sweetened to garner voters into a faction’s camp.

Is this expansion of the supply-side and demand-side of the political markets a bad thing? I believe the answer is yes for the following reasons.

First, the suppliers of political packages and the voters that demand them are creating an ever increasingly expanding State.  As an instrument of the State, government has expanded way beyond what the framers of the Constitution intended.  Article I, Section 8 of the U.S. Constitution provided limited duties for the government; limited duties that included providing post offices, a national defense, the regulation of domestic and foreign commerce, the coining of money and protection against counterfeiting, the regulation of bankruptcies, the promotion of science and useful arts, and establishing courts. Any other police powers would be left to the individual states.

Today, the federal government is involved in many parts of the individual American’s personal life. The federal government has weighed in on abortion; the regulation of marriage; on the use of contraceptives; the amount of privacy for sexual acts between consenting adults; the use of radio frequencies by individuals; who a proprietor may serve or not serve in her store; whether an individual must enter the markets to buy health insurance; the amount of information businesses must share with consumers; the amount of information companies must share with investors; and the manner in which a private corporation must manage its communications networks.

For the individual who is best able to determine and promote her personal and economic self-interests, this expansion comes with administrative rules and procedures. It comes with limits on individual experience, growth, and decision-making. It comes with limits on freedom.

The mention of freedom provides a segue to the second reason: taxation. Among Congress’ powers is the power to lay taxes. Even with the limited powers of the Congress, I would expect the amount of taxes levied and collected from Americans to grow along with the population of the United States and the infrastructure and other needs the government would be expected to provide. But along with extra-Constitutional supply of political packages comes the additional costs of supplying those packages and a heftier tax bill to go along with it.

The limited enumerated powers afforded to the U.S. government per the Constitution do not support social welfare programs such as social security, Medicare, or Medicaid, yet programs like these account for a significant and growing portion of federal government expenditures.

According to the Center on Budget and Policy Priorities, in fiscal year 2016, the federal government spent $3.9 trillion.  Social security spending accounted for 24% of federal budget spending. Together, Medicare, Medicaid, Children’s Health Insurance Program, and other medical aid subsidies accounted for 26% of federal budget spending. Safety net programs such as refundable portions of the earned income tax credit, the child tax credit, supplemental security income, food stamps, school meals, and low-income housing assistance contributed nine percent of federal government spending.

For those believing that defense expenditures and aid to foreign governments take a larger share, think again. Military spending accounts for 16% of the budget. In addition, according to the Center on Budget and Policy Priorities, interest on money borrowed by the federal government amounts to six percent of the federal budget.

Approximately 84% of the fiscal year 2016 budget was financed by government revenues including taxes. Whether debt financing increases or not, Americans will still be on the hook for paying federal outlays or paying the debt as increased burdens due to increased programs and policies are crafted.

And the burdens will increase. Analysis by the Committee for a Responsible Federal Budget estimates that the federal debt load as a percentage of gross domestic product will increase from 77% today to 96% by 2029.  Spending is expected to increase over the next ten years, from 20.8% of GDP in 2017 to 28.6% of GDP in 2027.

We have a political market place that is delivering tyranny. By creating more market participants, more issues are being spawned that lead to more expensive solutions chasing in some cases problems that do not exist. For the problems that do exist, the solutions that political packages promise are not blossoming. Democracy is failing. It is creating a society built on burden creation. A growing number of individuals no longer wish to carry the financial burdens the current representative democracy creates, especially when they are seeing no returns from their expenditures.

I propose one solution here for now: reduce the number of voters which will lead to a new voter base that providers of political packages will have to adjust to. The United States should require states to impose voter registration requirements every two years, with the registration closing one year before the midterm and general elections. Just like new immigrants are required to take a civics test in order to become naturalized citizens, Americans should be required to take a rigorous civics test in order to vote. Such a test will meet three goals.

First, a civics test will move the U.S. closer to ensuring a better-informed voter is entering the voting booth. In theory, a voter becomes a more effective citizen when they stay abreast of current political events and can apply critical thinking skills to assess those events. Today, this is just not happening.

Second, the required time to prepare and take the exam along with paying a nominal fee for taking the exam will leave the door open to only the most serious and informed voters. If democracy is to have any validity, shouldn’t participants demonstrate the concept’s importance by investing the time into taking the exam? Is this not the type of voter you want making decisions on leadership and issues placed in a referendum?

Last, a civics test challenges the very notion of democracy itself. I take to heart the following quote from Winston Churchill:

“The best argument against democracy is a five-minute conversation with the average voter.”

In today’s social media world, that argument extends into perpetuity given the overwhelming level of misinformation regurgitated by users of Facebook, Twitter, and other platforms. I at times wonder why these individuals are allowed into a voting booth and indirectly cause the creation of policies that for the most part work against my freedoms and liberties.

Democracy needs a reboot. It might just need to be tossed, at least on the national level. ….

 

The Politics of the Disassociated Man

Much to the chagrin of the anarchist, politics will always exist. Politics supersedes government. By definition politics is the conflict over the leadership, structure, and policies of government.  Government is the institutions and procedures through which a territory and its people are ruled. The mistake most make when analyzing politics is to confine the concept to the power struggle for control for government. There is plenty of political theater to keep us preoccupied.

Yesterday’s vote in the Senate to reverse a repeal by the Federal Communication Commission’s net neutrality rules is an example of such political theater where congressional Democrats hoped to leverage a vote for the return of net neutrality rules into an appeal to 86% of Americans who support the open internet principles to remember the Left during this coming November’s mid-term elections.

In this case the ripple effects of the attempt may be short-lived. The House now has to take up the resolution that vacates the repeal and even if the House passes the Senate’s resolution, there is the threat of a veto by the President and given Republican control of the House, both passage or an overturn of a veto is highly unlikely.

Whether voters even inject into their decision matrix the Democrats’ net neutrality vote, I believe, given increases in oil prices and the threat of inflation that net neutrality will be the last factor to be considered in the voting booth.

The importance of politics exceeds dramatics on C-SPAN. When you replace “government” with the word “society”, politics takes on a clearer and probably scarier meaning. Politics is really about the conflict over how society is structured and led, including the decision on how resources will be used, where ownership of resources will be directed, and the values that society will follow.  Government and the types of government available for use are merely tools for managing the conflict including managing resources and value.

Government rises to the top of organizing options when there are too many conflicting values. The United States is an example. I like to argue that the United States stopped being a country when it attempted the incorporation of non-European people into society. During the era after the American civil war, the United States embarked on becoming a nation-state, becoming too diverse and too large to organize itself organically based on traditional values. As a democratic nation-state becomes more diverse in part because its political leaders recognize that to maintain market share they must attract more voters, ironically, there is an increase in marginalization. There is only so much room under the tent that one can occupy without getting wet.

For the marginalized group or individual that prefers avoiding the rain with their own umbrella or poncho, navigating the politics is typically a non-option. They see government’s rules and initiatives as having failed them so participating in the conflict to control government is a waste of time. They would rather practice societal politics sans government participation. Getting others in society to get them what they want, when they want it, and how they want it may be achieved through voluntary exchanges of value outside of government rules and institutions. And given the over ninety percent of property is in private hands and when combined with digital communications technology, renewable energy, and shared transportation, the ability to become disassociated increases.

For the politician that wants to increase her market share in the political market place, disassociation creates a dilemma.

Abandoning the philosophy of inclusion

Inclusion as a social or public policy goal is a decrepit substitute that favors blacks that already have university educations or networks to the white majority. As political philosophy it transmits a false signal that the best way to construct and manage society in the United States is to ensure that all citizens, no matter their lineage or creed, are integrated into the American social fabric and that this integration will trickle down into economic opportunities and infrastructure that transports and connects commercial activities.

Many in the black populace take the position that government is some guarantor of equal treatment and that government is needed to enforce equity and justice. But is that government’s prime mission or are attempts at enforcing equity, justice, and equality merely ancillary to a more basic objective: the day-to-day maintenance of a tax and customs jurisdiction that calls for effective management of the jurisdiction’s human occupants.

The inclusion narrative may be just that, a doggy bone that keeps blacks at bay so that the conduits of commerce are protected from attack. The last 55 years have seen the doggy bone effectively tossed at blacks in the form of civil rights legislation, an increased number of political appointments, and greater access to government jobs. The black middle class saw improvements in its income status between the mid-1960s into the mid-1980s, but for decades this collective has been facing increased competition from other marginalized groups, i.e., gays, women, Latinos, Asians.

There are only so many inclusion slots to go around which means continued entry requires compliance with rules and standards of entry that remain in flux, making entry more difficult and the cost of entry higher in price.  The pursuit of inclusion also keeps blacks in “begging mode”, using every opportunity to ask government agencies and large corporations to throw another doggie bone or two toward the black community.

Unfortunately, these doggie bone requests are made by the black elite on behalf of their black elite partners. Last month I watched a congressional hearing where a leading black congressman asked the CEO of a social media company what efforts were being made to add more blacks to the board of directors of his company. The CEO gave the standard canned response, that they were looking diligently for the opportunities within which to plug any potential black directors. I was not phased by the answer. I expected it. I was more phased by audacity to ask the question, one seemingly unrelated to the topic of the hearing. But that is what happens when a group is in constant begging mode. It can’t see beyond the short term.

In addition, the average black person doesn’t have the credentials to sit on a corporate board of directors. The average black person, with real wealth hovering close to zero, is balancing the day-to-day needs of family and does not have the experience, education, or time to sit on a corporate board of directors. This is not the average black person’s definition of inclusion.

The black elite understand that their constituents are a different breed of barbarian at the gate. They leverage the past pain of slavery (a pain no living black has endured but it makes good theater) and the pain of job and housing discrimination into a narrative that says dependence on government and more inclusion in society should do the trick.

But this narrative has done nothing for blacks. It requires coming back to the trough every two years and threatening political parties to appease a narrative of weakness in exchange for votes.