On Saturday I had just posted a Noticing New York article, almost a treatise, about Occupy Wall Street and how it is confronting the subtractions of free speech flowing from Occupied Wall Street’s declared bane, the increasingly unfair effects of concentration of wealth in this country. In that article I had commented briefly:
Objection to the teaming up of government and monopoly should be common ground for both the Tea Party and Occupy Wall Street activists although I suspect that the proportion of Occupy Wall Street protesters astute enough to realize this may be greater.(See: Saturday, October 22, 2011, Occupy Wall Street and the Banks- Messages From Bonnie & Clyde, “They’ve Got Too Much Money”: Ownership of the Public Forum by the Wealthy?)
The post was hardly up when I heard much the same point made in a very good eleven-minute “All Things Considered” story about what the Occupy Wall Street and the Tea Party have and ought to have in common: Occupy Wall Street, Tea Party: United In Distrust, by NPR Staff, October 22, 2011. (I went back to add a link to it in the article I already had up.) This point, perhaps the strongest part of the story, was in NPR’s audio version of the story (not the written article accompanying it), transcript now available. It is an exchange between All Things Considered host Guy Raz and Harvard professor and activist Lawrence Lessig:
RAZ: In some ways, the Tea Party was a response to the perceived growth and power of government. And, of course, Occupy Wall Street is a response to the perceived growth and power of corporate America. Are those incompatible ideas?The whole story is worth listening to. This exchange occurs at about minute 8:00 if you click below.
LESSIG: No, they're not. Because whether you are upset about the size of government or the size of corporations, one thing everybody should be upset about is when corporations use their power to corrupt the government, to reinforce their size and their influence. A critical change in the way in which we've seen America become much more unequal was driven by changes in public policy that was driven itself by the kind of influence that my book [“Republic, Lost: How Money Corrupts Congress — and a Plan to Stop It”] is trying to attack.
So whether, again, you like big corporations or you like capitalism, you and the right cannot possibly defend crony capitalism. And that's why Cato Institute and every single credible principled right-wing organization or libertarian organization or conservative organization has historically fought that kind of corruption.
Professor Lessig's book suggests one solution he thinks would help: campaign finance reform. Whether or not that would be easy, given such things as free speech issues, it is worth thinking about. Lessig points out that all the money for the nation's political campaigns comes from .5% of the population which means that it is really the .5% vs. the 99.5% that Occupy Wall Street ought to be talking about.
Coinciding Principles Noticed Before
I have been making the point of this obvious common ground for some time now. For instance here:
Noticing New York Philosophy(See: Wednesday, March 23, 2011, Whither the New York Times? Noticing New York Comment Respecting a Manhattan Institute Sponsored Debate.)
Where does Noticing New York stand on the political spectrum? Noticing New York attempts to apply both conservative and liberal tests of what good government should be. They overlap a great deal more than is generally acknowledged. Conservatives may fear big government and liberals may fear big business, but these days the preeminent problem both should unite to oppose is the collusion of big government to give big business the edge
The New York Times is often referred to as a “liberal” or “liberal establishment” newspaper. I think that is inaccurate. I think the Times is more a quasi-Democrat-establishment paper. To me, true liberals have more in common with libertarians than is often acknowledged. The Democratic establishment and the Times have assimilated predilections to unfairly support big business at the expense of the rights of individuals and local communities that ought to be protected. This doesn’t make them different from Republicans: mostly it makes them more like them.(See: Thursday, September 11, 2008, If the Sun Sets.)
A Voice on Eminent Domain
The city needs voices to speak out for "limited government, individual liberty, constitutional fundamentals” and those voices should be speaking out against eminent domain abuse as a foremost concern.
Even though or despite the fact that the Atlantic Yards area was, through natural economic processes, attracting substantial economic capital and creating million dollar co-ops and condos, Atlantic Yards is a supreme example of something with so many bad economic equations it would never happen except for public subsidy. That subsidy is overriding private enterprise in a huge way that ought to be offensive to conservative and liberal thinkers alike.(Sunday, November 15, 2009, Jane Jacobs Atlantic Yards Report Card #30: Avoidance of Cataclysmic Money? NO.)
An Odd Couple: Like the Tea Party and Occupy Wall Street, More In Common Than They Think
Author and columnist Amity Shlaes, whom most would consider to be at the conservative or libertarian end of the political spectrum was one of the principles involved in running the now defunct newspaper the New York Sun written about in the “If the Sun Sets” article linked to above was. Nobel Prize-winning economist Paul Krugman who writes for the New York times si what many would consider a liberal. Much was made of a supposed feud between Ms. Shlaes and the Nobel Prize winning economist Paul Krugman at a time when you could find at front table of Barnes and Noble new books that each of them had written analyzing Depression economics. Ms. Shlaes’ late 2007 book was “The Forgotten Man: A New History of the Great Depression”; Krugman’s book, “The Return of Depression Economics and the Crisis of 2008” came out in 2009 and was a reworking of a 1999 Krugman book.
Each of these books endeavors to inform the reader about where the dangers lurk respecting what can send a country into a downward economic spiral, either an economic depression or a severe recession like the Great Recession we are now experiencing. Ms. Shlaes’ book, which I previously wrote about in a Noticing New York article (Wednesday, February 11, 2009, A Brooklyn Paper Editorial & Atlantic Yards: With Nothing Else Good To Say, We Are Stimulated To Say. . . ), is clearly focused to a large extent on finding fault with the Franklin Roosevelt administration’s handling of the Great Depression. It seeks, if you will, to bust the myth that Roosevelt handled it with aplomb. Krugman, on the other hand, would argue that, in big-picture terms, that the FDR administration acquitted itself well by having government step in to stimulate the economy in a Keynesian way, spending when private enterprise was failing to so.
One thing Shlaes’ book makes clear is just how free rangingly Roosevelt was reaching to experiment as he was trying to address the Depression. While the Milton Friedman/Richard Nixon “We are all Keynesians now” statements of 1966 and 1971 secured in economic convention the importance of Keynesian thinking when Roosevelt was president, that thinking was brand new and everything associated with it just an experiment. Shlaes is clearly preoccupied with the lines that should not be crossed, or are not beneficially crossed, when a subsidizing government steps in to take over enterprises that she thinks should be done independently by the private sector.
Shlaes’ criticisms of the fuzzy cost calculations and empire building associated with the Tennessee Valley Authority (TVA) sound reminiscent of Jane Jacobs’ criticisms of the TVA in her “Cities and the Wealth of Nations,” where Jacobs points out how the TVA (financed with what she describes as capital imported into the region by the government) with the assistance of tricky (government program) “advantageous accounting,” went astray from its original clean, healthy environment and low-cost power goals, once involving hydro-electric power, to provide subsides, ultimately, for uneconomic coal-fired and nuclear plants. Jacobs always endeavored to think freely, refusing to be tagged with political labels such as liberal, conservative, libertarian, Democrat or Republican.
Shlaes’ concepts of the multitudinous things she thinks government should not be spending on may make counter-cyclically Keynesian government spending a greater challenge but oughtn’t to preclude it. That being said, Krugman and Shlaes are both opposed to “crony capitalism.”
Krugman on Crony Capitalism
Krugman brings up the topic using the term a number of times in his “Return of Depression Economics.” For instance, as many are doing these days he compares current problems in the United States to Japan’s crisis of long lasting economic doldrums and says this of the Japanese economy and its “distinctive characteristics” once mistakenly associated with prospects for success (p.60):
Only much later would those same distinctive characteristics– the cozy relationship between government and business, the extension of easy credit by government-guaranteed banks to closely allied companies– come to be labeled crony capitalism and seen as the root of economic malaise.On page 82 he revisits this in connection with the Asian economic bubble:
What should have been noticed was that he claim that Asian borrowing represented free private-sector decisions was not quite the truth. For Southeast Asia, like Japan in the bubble years, had a moral hazard problem– the problem that woudl soon be dubbed crony capitalism.This leads in to a description of the necessary job the Asian banks were consequently not doing and why they were not directing “funds to their most profitable uses” (p. 83);
The answer, basically, was political connections– often, indeed the owner of a finance company was a relative of some government official. And so the claim that the decisions about how much to borrow and invest represented private-sector judgments, not to be second-guessed, rang more than a bit hollow.There is more and the entire book is worth reading.
Bubble Popped on Crony Capitalism
Crony Capitalism makes it possible to go hugely into debt without getting corresponding assets in return. It means that society's investments aren't productive. If you pump money into a country without getting value in return you get a bubble economy* which shouldn't be good for anyone. But if a crony capitalism economy is going to be good for anyone it is probably going to be the cronies in whom such cronyism is concentrating the wealth.
(* Although John Maynard Keynes played speculatively as a mind exercise with the notion of government’s generating economic growth simply by hiring people to dig holes and fill them up again, he pointed out how wastefully nonsensical the notion was, even though it would have a stimulative effect. He did not address the bubble-inflating aspect of such conduct if it is paid for with debt and an expanded money supply. One thing to be wary of: Construction worker unions will support projects that are the conceptual equivalent of digging holes and filling them in again. Example: Atlantic Yards' tearing down of newly renovated top-of-the-market condominiums.)
Shlaes: Find and Reward Success, Not Government Connectedness
Even though Shales never once uses the actual term “crony capitalism” or a variant thereof in her own book, this kind of analysis is quite consistent with the kind of thinking and the many situations she presents with a mind to arguing that there were government practices on the part of the Roosevelt administration that unnecessarily prolonged the Depression, how not everything that was done in the name of lifting the nation out of the Depression was serviceable in doing so and how much of what government did was unwittingly counterproductive.
What Shlaes keeps returning to as her central vision for the kind of workable capitalism for which she argues is establishing a cycle of finding and rewarding economic success, rewarding such success not political connection. Crony capitalism, with its assets that don't produce, is the opposite of that and leads, overall for a country as a whole, to failure. Crony capitalism leads to a downward spiral, a cycle and ever-increasing concentration of power as political connection is rewarded instead.
(For material on the Krugman/Shlaes feud/debate here are some links, although what you will find discussed are their differences not the commonality discussed here. The last two links attempt some reconciliation of their viewpoints: November 19, 2008, 3:22 pm, Amity Shlaes strikes again, By Paul Krugman; Shlaes Back to Krugman, Posted on Monday, November 24th, 2008, by Amity Shlaes, November 29, 2008, Changes in money-wages and Amity Shlaes, Opinion November 29, 2008 The Krugman Recipe for Depression, Massive government spending is no solution to unemployment; The Leonard Lopate Show / December 01, 2008 / Paul Krugman on Depression Economics; Krugman vs. Shlaes — Not A Fair Fight, by Marion Maneker - November 29th, 2008; and My take on the Shlaes/Krugman debate, by Adam T, Sun Nov 30, 2008.)
Common Ground of Occupy Wall Street and the Tea Party Not Shared By Crony Capitalist Bloomberg
What does the Tea Party think about the fact that they may have common ground with Occupy Wall Street? Well, some Tea Party spokespersons have been commenting that the difference between the Tea Party and Occupy is that te Tea party believes in process and the Constitution and the Occupy Wall Street protesters don’t. Really? Where did that come from? Where that comes from and what Occupy Wall Street protesters think about this and the potential for common ground will have to be the subject for a later article.
As for why there was a picture of Bloomberg’s two Labradors Photoshopped to show them joining the Occupy Wall Street demonstrators, two things:
• Occupy Wall Street and the Tea party might have reason in common to oppose crony capitalism but Bloomberg is a man in favor of crony capitalism and practices it
• To read about the way that crony capitalism is concentrating wealth at the top and thereby putting in jeopardy your free speech rights to protest that very fact, (AND what the New York City real estate industry has to do with it), you’ll have to read my above-mentioned Noticing New York article about why Bloomberg’s dogs, Bonnie and Clyde, should perhaps be joining the Occupy Wall Street protesters. (See: Saturday, October 22, 2011, Occupy Wall Street and the Banks- Messages From Bonnie & Clyde, “They’ve Got Too Much Money”: Ownership of the Public Forum by the Wealthy?)