Saturday, October 24, 2009

You need to think about capitalism if you want to change the world.

Riane Eisler has written a number of books about personal and social change. The most recent one, published in 2003 is called The Power of Partnership:Seven Relationships that will change your Life. The book is interesting; it makes many important points, chief among them that the world is often run on a domination model and that we want to replace that by a partnership model. Well said, but how do we go about that?
People have thought about that question for centuries and many people all over the world and in the US have tried to do just that. Examples are the coops founded by farmers, or the collectively run workplaces that exist all over the US. Examples are the intentional communities of Amana, Oneida, of the Shakers and many others. These communities were founded as intentional alternatives to the capitalist market place and the dog-eat-dog capitalism often encourages.
But Eisler will have no truck with any of those earlier advocates of cooperation. In a recent article in Tikkun that gives a brief summary of her ideas she writes that we should not talk about capitalism--because that is “yet another old way of thinking.” Considering capitalism is “useless for understanding what a more equitable, sustainable and caring system would look like.”
Is that true?
Eisler makes some really important observations in her critique of economics. As it is practiced now, economics focuses on prices and commodities – things you could sell or buy, that have monetary value. As a consequence family caretakers-- primarily women –do work that is thought to have no economic value in our society. They are said to be “economically inactive.” Even worse is the fact that many destructive activities, for instance, producing tobacco products or cluster bombs, since they involve commodities bought and sold, count as positive values in the gross national product of a society even though their effects are an entirely destructive.
All of this is terribly important and needs repeating. So is her insistence that we move from dominative ways of organizing society to cooperative ones. Many people agree on that: cooperation needs to replace domination. The question of how to move our societies from domination to cooperative structures has long been debated and tried out in different communities. The sad fact is that we have not yet managed it. But Eisler is undaunted. She tells us that we must not pay attention to centuries of thinking about these changes. Forget the Diggers and Levelers in 17th century England, forget Marx and Engels, forget the socialist kibbutzniks or the flower children of the late sixties,and many, many others. Theirs are “old ways of thinking that we must . . . transcend.”
What we must do instead is explained in Eisler's 2003 book The Power of Partnership. We must prevail upon existing enterprises to treat their employees as human beings instead of as interchangeable factors of production. (67) Eisler has many stories of corporations that have done that and have not only, thereby, done the right thing, but also made a lot of money. Doing well by your fellow men and woman and doing well by your bottom line are in Eisler's new economics perfectly compatible.
But things are not quite so simple. One of the companies mentioned in her book, Hyatt Hotels, is cited for treating its employees better than many other companies and being rewarded by employee loyalty. A few weeks ago three Hyatt hotels in Boston laid off about 100 housekeepers – mostly women who make beds, clean floors and toilets –some of whom had been with the company for 20 years or more. These housekeepers had a pension plan and health insurance and made $15 an hour – about $30,000 a year. Hyatt replaced them with housekeepers working for eight dollars an hour without any benefits.
How could Hyatt Hotels, committed to treating their employees humanely do such a thing? When they were criticized for their action, Hyatt Hotels justified themselves as follows: In the present economic crisis, the hospitality business is suffering and so is the hotel chain's bottom line. Hence the firings of long term employees, replacing them with others paid half the wages of the fired workers. As long as we live in a capitalist economy that is a perfectly good justification. Companies like Hyatt are responsible to their stockholders who want their stocks to go up and their dividends to come in regularly. The managers of Hyatt hotels are not the owners; their job is to increase stock value and if that requires cutting their wage bill by firing established housekeepers that is what they will do even if, personally, they really hate doing it.
There is an important lesson in the story: a capitalist economy encourages the spread of domination. Capitalist managers must do whatever it takes to make ever more money, even if that means expanding domination and restricting cooperation. If that is what you oppose, as Eisler does, then you cannot just ignore capitalism as “another old way of thinking.” Replacing domination with cooperation is not merely a matter of trying as hard as you can to be a good person, to change, and to encourage others to do likewise. In our world capitalism promotes domination; it encourages laying off workers, cutting wages, foreclosing on mortgages, denying health care to the sick and to the poor. Capitalism is a serious component of the problem of domination. Yes, capitalism also promotes cooperation—as long as it makes you money. When it is no longer “cost-effective” as the Hyatt case shows so vividly, cooperation goes out the window.
The project of replacing domination by cooperation is a very ancient one. Human beings have tried it in many different ways and found it extraordinarily difficult. It has not become any easier. We must not misrepresent the difficulties of this task. To overlook centuries of thinking about capitalism – about the private ownership of productive resources – and to make the whole project of one of goodwill and personal change does a disservice to all of us. Well meaning reformers, if they believe Eisler, will try to change themselves and others only to find that good will does not take you very far in times of economic crisis. Why do we have almost 10% unemployment--while CEO's get excessive bonuses and salaries-- or a still rising rate of foreclosures? Eisler's followers will, most likely, be discouraged when they encounter capitalism at its most predatory, blame “human nature” and give up trying to change society. Eisler's oversimplification will in the end only produce frustration, cynicism, and political passivity.
Her advice to ignore ideas of past generations, also dishonors many, many generations of persons of good will who have struggled against domination and for cooperation, sometimes sacrificing their lives. It completely overlooks the most striking contemporary efforts to replace domination by cooperation--the Mondragon cooperatives in the Basque country of Spain, or the large and complex cooperatives in of Emilia Romagna in Northern Italy. Mondragon has been providing jobs and decent income to the employees of 150 associated co-ops for 70 years. The Italian co-ops are equally large and well established. These and myriad other cooperatives, here and abroad, function well because they are self-consciously opposed to domination, in the form of capitalism.
Reducing domination and fostering cooperation is very, very difficult. If you are unwilling to think about capitalism, it is impossible.

Saturday, October 17, 2009

Paying big business to send jobs off-shore.

Would you believe it? The US government, the government you and I elect, has had a tax policy for 50 years or more that encourages companies to send jobs off-shore. President John F. Kennedy spoke out against it in 1961. But nothing happened.

A company--GE and IBM are examples--may build a plant in Asia and produce products previously produced at home. American workers lose their jobs.

One reason for doing that is, obviously, that wages are higher in the US than anywhere else in Asia. But there are other benefits. The profit IBM makes from its foreign subsidiary are tax free as long as the money remains outside the US. If IBM has a profitable operation in Taiwan or in Thailand, they only pay taxes on those profits if they send them home. If they use them to invest in Taiwan or Thailand or anywhere else outside the US, they pay no taxes to Uncle Sam. Not only is there a tax incentive for producing goods abroad and thus shipping jobs out of the country, but there is also a tax incentive for re-investing their profits abroad and not here at home where it would create more jobs.

USA Today reports that “From 2000 through 2005, U.S. multinationals eliminated 2.1 million jobs at home while adding 784,000 to their payrolls abroad, according to the Bureau of Economic Analysis. At the end of 2005, the most recent statistics available, U.S. corporations employed almost 9 million people outside the United States.”

During the campaign and during the early weeks of his administration, Pres. Obama promised to reform the tax code. Multinational corporations, the US Chamber of Commerce and other have been lobbying furiously against this change in the tax code. So nothing may come of it.

The government--your and my government--will continue to reward large American corporations for job creation elsewhere while taking work from American workers and bread out of the mouths of their families.

Tuesday, October 13, 2009

Private property and common goods: parking vs. children's play area..
Private property is very important. Most people work hard for what they own and it matters to them that they be secure in their possession. They want to be sure, when they go to work in the morning, that they find their car in the driveway where they parked it last night. They want to feel completely safe in their house and not have their yard invaded by drunken party-goers. Owning private property means that one can exclude all others from one's house, one's yard, one's car. It is up to the owner to decide who may enter her house or drive her car.
Not all things in this world can be privately owned. There are many goods from which one cannot exclude other users. Clean air is there for all to enjoy. All breathe the same air. To be sure the air in inner cities tends to be worse than in wealthy suburbs. But within each area, the air is the same for all. No one can exclude others from breathing the same air. Parks and playgrounds belong to all. No one can claim private ownership and exclude everyone else. Some cities are livable; they are clean, their parks well kept and passersby are courteous and helpful. Those characteristics of an urban landscape cannot be privatized. Inevitably they are shared by all. They are a common good.
Sometimes private ownership and common goods conflict. I may own a forest and should, therefore, be allowed to cut down my trees if I so choose. But the trees contribute to clean air which is a common good and cutting down my trees may worsen the air quality for all. Here then some decision has to be made whether private property rights-- cutting down my trees -- should override the common good-- clean air for all, or whether the common good should take precedence.
Here is another example of such a conflict: The former City Hospital in Worcester has been flanked for many years by two or three acres of open space with some majestic old trees. The neighborhood is densely built-up; there are no parks within walking distance. The neighborhood children have played in this open space for generations, thereby avoiding having to play in the streets. A woman I know who is now close to thirty told me about growing up in the neighborhood and playing in the grassy area next to City Hospital. UMass/Memorial Hospital, owners of the building, some time ago decided to pave over this green space and cut down the trees. The planning board granted the necessary permits on the grounds that the hospital owned this open space and therefore had private property rights to exclude other users – in this case the neighborhood kids who had played there for many years.
The planning board refused to see the real conflict between the hospital's private property rights and the common good of the community to have a safe place for their children to play. This conflict confronts us in many different contexts, for instance, when ocean beach front homeowners want to exclude the public from using the beach and swimming in the ocean. We encounter the conflict when drug companies want to have unlimited potential for profits even if that means that poor people may die prematurely because they cannot afford to buy the needed medicines. Private profit is chosen as more important than a full life span for all. Entire cities decay when major industries move offshore. The private profit of the automobile company takes precedence over the quality of life in Michigan cities such as Detroit or Flint. The common good is made to yield to private property rights again and again.
The conflict is a serious one; it is not easy to resolve. But we tend, in too many cases, to sacrifice the common good for the rights of private owners. Because of that neglect of the common good, the quality of life of too many Americans has deteriorated in the last fifty years.

Sunday, October 11, 2009

Who is the enemy?
This morning's Boston Globe reports that an intelligence expert in Washington DC denies that the enemy in Afghanistan are the Taliban ”ninety percent [of the enemy] is a tribal, localized insurgency... ten percent are hard-core ideologues fighting for the Taliban.” The 90% “use the threat of force to further their own economic interests – extorting payments from people shipping goods through the mountains...” According to this expert ninety percent of the people we are fighting in Afghanistan are nationalist bandits.
That is utterly astonishing. It shows what a strange war it is we are fighting in Afghanistan. The wars I have known are between different countries. One identifies which side someone is on by their uniform or the markings on their vehicle. The object is control over territory; the method is killing. But this war in Afghanistan is very different. We do not know who the enemy is. We are not very sure why we are fighting them, or they us.
Is this expert telling us that we have been shooting at the wrong people, or is he telling us that the people we were shooting at were not who we thought they were? We thought we were fighting religious fanatics, but it now turns out that they are bandits who do not like Americans and other foreigners.
If this expert is correct, the solution to the Afghanistan puzzle is very simple. They are shooting at us because they want us to go away. We do not want to be there in the first place so why not leave and avoid further unpleasantness?
But, you say, what about Al Qaeda? And that is, of course, the key question. The Taliban are of no interest to us. The central question is whether we need to remain in Afghanistan in order to increase our safety against further terrorist attacks? One-way of increasing our safety is through law enforcement agencies that find persons who appear to be plotting to bomb something. An example is the young man recently arrested in Denver after long surveillance by the FBI. Other examples are arrests made in Britain in recent years. I have not seen any evidence that the war in Afghanistan enhances the ability of law enforcement to protect us against potential bombers. What is more, if we left Afghanistan, we would have a lot more money to do careful surveillance.
Al Quaeda appears to be a shadowy network of desperadoes much like organized crime. There are international networks of drug dealers, of traffickers in women, young girls and boys. There are international traffickers in body parts. They kidnap children and adults in the Third World, take out their cornea or kidney and sell those and then release their victims. No believes that military attacks on the Taliban or on other nationalist insurgencies are helpful in stopping this trafficking. Mexico is currently using its military in its struggle with drug cartels, but only to take the place of corrupt or under manned police forces. In addition, the Mexican military has so far not made a dent in the international drug traffic. If Al Quaeda is really like an international crime network, we stop fighting the Taliban in Afghanistan and leave.
One thing is clear: if Pres. Obama decides to keep our troops in Afghanistan he must provide to us with reasons that remaining there is essential in order to neutralize international terrorism. There is no point in continuing to shoot at people and to be shot at by them, as long as we do not know who these people are. If all they want is for us to leave, let's by all means do that.

Thursday, October 8, 2009

One perswon's private property is another person's unemployment

Many people believe that it is free enterprise – the single-minded pursuit of private profit-- that makes our country great, that gives us a high standard of living.
But along comes the Simmons Mattress company forced into bankruptcy by several private equity firms. A sad story that shows that pursuit of private profit is often ruinous for workers and owners both.
For 133 years Simmons has made exceptional mattresses. In the 1990s it was bought out by a private equity firm. These are private financial firms that buy out a business mostly with borrowed money. The equity firm borrows money to buy a company. Once it owns the company, it borrows large sums against the company's assets and uses that money to pay of its own debts. The company purchased ends up paying off the debt incurred by the equity firm.
The private equity firm buys a company in the hope of being able to sell it fairly quickly and at a higher price. It therefore tries to improve the profitability of the firm. Sometimes that involves appointing new management and making them more efficient – a clear benefit. Sometimes it involves firing employees, closing plants that are unionized and moving production to plants that are not. The company becomes more profitable but its workforce loses a lot of money. The company becomes more profitable at the expense of its workers. The private equity firm makes a whole lot of money; the executives of the company may also profit handsomely. Unionized workers lose their jobs and are replaced by non-unionized, poorly paid women and men.
This is what happened at Simmons. Bought and sold several times by private equity firms since the 1990s, being forced to take on new debt with each sale, losing its established and unionized workforce, the company is finally forced into bankruptcy. Several private equity firms have profited handsomely. Some of the executives received generous pay, free memberships in country clubs and captains for their private yachts paid for by their company. The workers received pink slips.
A number of financial institutions profited handsomely. A much larger number of ordinary loyal Simmons employees were left confronting serious financial crises. After having worked for Simmons for 20 or more years, now in their 40s or 50s, they were facing a bleak future.
A number of other financial institutions also suffer. When Simmons goes bankrupt, its debtors loose. A company goes into bankruptcy in order to make a deal with the people it owes money to. It emerges from bankruptcy when it has managed to persuade its debtors to settle for less than the total money owed them. When private equity firms make a bundle by pushing a company like Simmons into bankruptcy they earn their profits at the expense of other investors.
Imagine you invent a better mousetrap. Motivated by the desire for private profit you produce and sell that mousetrap and-- lucky for you – you make a lot of money. You also create jobs. As time goes on, still wanting more money, you streamline your operation, improve your product, lower your price. Perhaps you do that by making production more efficient. But perhaps you do it by moving production to Thailand. Your American workers are now unemployed. The pursuit of private profit for you did not profit them.
Private Equity firms and other financial institutions do not produce any goods. They buy and sell businesses that do. Sometimes they make a profit by improving the business; sometimes, as in the case of Simmons, they make a profit by running the company into the ground. Its all the same to them as long as they get theirs.
The next time you would agree that private enterprise is an unmixed blessing, think of the workers at Simmons, or the American workers who produce your better mousetrap before you moved your factory offshore.

Thursday, October 1, 2009

What to do in Afghanistan?

No one seems to know what to do in Afghanistan. There are huge debates within the military. The White House is thinking about the options. More and more voters oppose sending more troops. No doubt the situation is very difficult. But one difficulty most of us have is that we have very limited information about Afghanistan and the situation there.
Every now and then, though, we get a glimpse of the reality of Afghanistan and what we see is a mixture of Alice in Wonderland and Gilbert and Sullivan.
A recent newspaper report relates how the Afghani constitution provides for provincial councils. Every province is supposed to have a council elected by the inhabitants of the province. These councils were elected when the people voted recently. There is only one problem. There is nothing for these councils to do. Every province is run by a governor appointed by the national president. The provincial councils may neither pass laws nor make decisions about spending money. They have no function. Some of them never meet.
The same Constitution provides for the election of district, municipal, and village councils. But villages and municipalities are run by village elders who consult with the male leaders of the locality after Friday night prayers at the mosque. These local councils, supposed to be elected later this year, promise to have the same future as the provincial councils; they will be completely useless.
How did Afghanistan get this Constitution that clearly does not fit its actual institutions? After the fall of the Taliban in 2001, a conference was held in Bonn, Germany under UN auspices to discuss the future of Afghanistan. The conference picked Afghani leaders who would write and later approve a new constitution. This constitution was written, supposedly, by Afghani experts but you need not look very closely to see that a lot of American “ experts” had significant influence on the process. The Afghanis voted for the Constitution and then proceded to govern themselves pretty much as they have done for a long time.
But every step they take is, apparently, closely supervised by a long list of American nongovernmental organizations. The article mentions the Feinstein International Center at Tufts University, the National Democratic Institute, USAID ( which pays for a significant portion of these useless elections), there is the Afghanistan Research and Evaluation Unit and the Aid- Effectiveness Program of Oxfam (usefully located in Boston).
Most members of the Provincial Councils are twiddling their thumbs after spending money and effort to get themselves elected. One notable exception is the brother of Pres. Hamid Karzai, who “made a reputation for himself by holding news conferences denouncing ineffective international aid.”
What a story! We try to establish democracy in Afghanistan by participating actively in writing their constitution for them. The constitution we write elects many people who would have no job to do. Many NGO bureaucrats anxiously watch over this constitution adopted by Afghanistan for the sake of American support and approval. In the meantime, the people in the provinces, towns and villages of Afghanistan continue to follow their established forms of government including their own forms of local consultation.
One of the two goals of American policy in Afghanistan, according to Gen. McChrystal, is to strengthen the Afghan government. Which government is he talking about – the government we imposed on Afghanistan or the government that actually governs the country?