Is America a socialist country? And if it is, so what?

Lawrence O’Donnell, host of MSNBC’s The Last Word appeared on C-SPAN’s Washington Journal this morning. One of the callers chastised him and Alexandria Ocasio-Cortez for supporting socialism. Ms. Ocasio-Cortez last week defeated Representative Joseph Crowley in the primaries for the 14th district. The 14th district is heavily Democratic, having favored Democratic presidential candidates all the way back to William J. Clinton. Sixty-one percent of the 14th district’s voter population is black or Latino. Ms. Ocasio-Cortez is favored to win and Establishment Democrats are not too excited about a Bernie Sanders supporter (Ms. Ocasio-Cortez worked on Senator Sanders’ campaign) infiltrating the halls of Congress.

Republicans may see this single win as a virus that is about to spread through the Democratic Party and may position themselves as the cure. While Nancy Pelosi may express outwardly a lack of concern about a democratic socialist win in a single district, democratic socialism has attracted more attention since the November 2016 election as an alternative to a Democratic Party that has been enjoying a quarter of a century of corporatization.

No doubt Establishment Republicans are enjoying the schism being caused by a socialist insurgency, but I sense run-of-the mill conservatives within and outside the Republican Party like the C-SPAN caller are concerned that a seemingly increasing number of young people are moving toward socialist philosophy. Mr. O’Donnell adroitly addressed the caller’s vitriol arguing that the United States has a political economy that mixes certain aspects of market and centrally planned economies. Conservatives tend to focus on the anti-freedom approaches of socialism such as limited speech, and a lack of universal suffrage at the voting booth. They focus on the brutality of a socialist State toward dissidents, currency manipulation, and closed access to economic markets. They assume that socialism is the only top-down, lock down system on the planet.

They are wrong.

Just one look at America’s monetary system alone should tell a critical thinker that the economy of the United States is top-down and centrally planned. Most people do not issue their own currency. That job is for America’s central bank, the Federal Reserve. See mortgage rates going up and you can reasonably tie some action by the Fed to your pain. And while Republican members of Congress scream about free markets and alleviating the tax burdens of entrepreneurs, they add to the entrepreneur’s burdens by increasing budget deficits creating spending gaps that have to be filled by more borrowing which increases demand for loanable funds which leads to higher interest rates which leads to businesses facing increased barriers to entry into the credit markets. This is top down, centrally planned, oppressive economics in American form.

And let’s not forget our tax system. Talk about centrally planned. Have you ever been asked to give direct insight and opinion on whether your marginal tax rate or effective tax rate should be increased? Of course not. America’s version of the National People’s Congress does that, with the only difference between China’s legislative body and America’s is the frequency of meetings and the amount of checks they place on their executive.

Conservatives would argue that the American electoral system is indicative of an open democracy. That fallacy has been exposed twice in the past eighteen years where the “people’s choice” lost because a small body of unknown electors decided five weeks after a presidential election who the winner was and had that decision certified three weeks later by members of Congress. Top-down. Centrally planned.

Lastly, if Obamacare didn’t convince you that your healthcare finance system is centrally planned, then the history of Medicare should inform you as to the impact and influence the federal government has on the insurance industry. Medicare opened up two markets for the private insurance industry: the administrative services market, where private insurers invested in and provided the administrative infrastructure for serving an influx of newer patients, and underserved market of people over the age of 65 and medical insurance supplemental market, where insurance services gaps in Medicare are filled by private insurers. It is hard for conservatives to argue that the free market met these needs when on the contrary government action created the markets and the opportunity for private insurers to increase revenues.

You can probably find more examples, but the point here is that too many Americans express their lack of economic literacy when wailing about the ills of central planning. While I don’t want to give liberals credit for much, they do make a point when clarifying that the United States’ economy is a mixed one and expose the irony that many critics are likely enjoying some of these socialist programs themselves.

When asked to choose an “ism”, my response is either one, whether socialism or capitalism, represents top down suppression of individual choice because government exercises an inordinate amount of influence under either paradigm. The individual has no say in the crafting of policy in either framework. It is a take it or leave it scenario either way. The questions conservatives should be asking themselves is, can I create a better benefit for myself on my own terms?

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.

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.

A reining in of the political media should be expected under a nation-state model

Forbes reported today about a statement of work issued by the U.S. Department of Homeland Security on 3 April 2018.  The statement of work seeks prospective vendors capable of providing the Department’s National Protection and Programs Acquisition Division with the capabilities to monitor traditional and social media. The specific objective of the services is:

“Services shall enable NPPD/OUS to monitor traditional news sources as well as social media, identify any and all media coverage related to the Department of Homeland Security or a particular event. Services shall provide media comparison tools, design and rebranding tools, communication tools, and the ability to identify top media influencers.”

The statement of work does not get into any specifics as to why the Department would need such a program. It could be one of three reasons. One reason could be a push back by the Trump Administration on what it calls “fake news.” Mr Trump has shown a disdain for what he terms as unfair reporting typically from media perceived to be left leaning. He has no love for CNN, a lack of love expressed with so much disdain that he came out against the Time Warner-AT&T merger, one that is now being challenged by the Trump Justice Department.

The second reason for the proposed statement of work may be to create another tool for dealing with the media attacks a Russian troll service has been accused of. By monitoring media influencers, the United States could make a preemptive strike against journalists, bloggers, broadcasters, etc., that spread fake news and set the stage for divisiveness in American politics.

The third reason I see is that the political media has to be reined in by the nation-state. Part of the nation-state’s political ordering of and for society should include keeping the collective in order by controlling the messaging. While some spin is allowed in order for news organizations to establish some type of brand differentiation, i.e., MSNBC leans liberally forward while FOX is conservatively fair and questionably balanced, the general messages issued by the nation-state via the political media must be uniform enough to keep the masses in line or distracted. Too much spin to the left or to the right creates chaos in the collective, a disturbance in the force that the nation-state cannot afford.

I believe reason three is the purpose for the Department’s statement of work. Some Americans may see the proposal as an attack on a free press, but has the press ever really been free? Except for the occasional “breaking news” (which amounts to a press secretary given their favorite reporter or a reporter they can use the first shot at a story), most political news is initiated by a state actor with the media being tasked for commercial and political reasons for distributing it.

Probably over the weekend we may see some discussion on the meaning of a “free press.” Given that this story is not even trending on Twitter anymore has me wondering how seriously the media is taking the Department’s action.

The new cyber society will see the poor pay more for government

I sense a major “cost shift” for tax payers over the next twenty to fifty years as the more affluent of United States citizens move more of their survivability activities into cyber society versus current brick and mortar society.

I believe one key will be the use of cyber currency by an increasing number of service providers and producers. Less dependence on fiat money and more reliance on a block chain that cuts out the middleman providing for faster payment systems. In addition, the affluent are re-imagining the use of public infrastructure by using it less frequently or more efficiently. Think drones, driver-less & fuel efficient vehicles, or the delivery of groceries via Instacart.

The affluent will also find more innovative ways to provide security, from improved security technology to private police forces. In short, as the affluent pursue an increasingly self-sovereign approach to life, they will make the case for dishing the traditional services of the State while arguing that their tax burdens should be less. Why support police and road services that hey hardly need. If anything, they will argue, let us reduce our tax bills by the amount that we spend on providing these services for ourselves.

For low income individuals and a large proportion of communities of color, they will experience the burden of the “cost shift” as tax jurisdictions pass on the costs of providing traditional State services to these communities. These communities will not be able to bear the burden given their low incomes. Services will be reduced as traditional government finds itself facing competition from non-State actors financed by the more affluent.

The State will react violently at first. It will create laws designed to slow down the affluent’s abandonment of the traditional State system. It may, ironically, use net neutrality laws to slow down deployment of the advanced networks necessary for delivering services to taxpayers leaving the system. It will further reduce renewable energy subsidies to residents that generate electricity at their residences.

I don’t expect the State’s attempts at holding sovereign individuals hostage will be successful. The attempts will invalidate the State’s arguments that it represents democracy when the actions to squelch freedom are the furthest from the truth.