1) Everyone Should Have a Real Say
Best way to ensure economy works for everyone is for everyone to have a real say
Vs 1% making decisions in the background
Vs Blanche Dubois’ depending on the kindness of strangers
Best form of “Real Say”? What’s the right mix of individual (choose a car), together (make mass transit an option), groups (Parklets)? No right answer: depends on trial and error (see Part 2 of the framework)

2) Stack the Odds in Favor of the Good Guys
“Market Failure” VS Rise of modern consumer-based, credit-based economy
Ask bigger, deeper questions
As a counter to “it’s all corrupt so in between as little as possible”
Liberals/lefties can’t just say “all corporations are evil”

3) You Can’t Succeed Until It’s Politically Sustainable
Need to reinforce the system (e.g., Wall Street reform: second the laws were passed, started fighting to gut it)
More regulators vs Movement Perspective
Institutions: build power, foster engagement & mobilization
Your individual actions can increase/decrease % of folks who get engaged

4) Spiderman’s Dad: With Great Power Comes Great Responsibility
Create spaces to foster real conversation
Hard to have a real conversation if you think you will get stepped on
Checks & Balances

What Would a New Framework Have To Include?

1) Power at the Center
– More Regulators vs. Movement Perspective
(Institutions –> Build Power, Foster Engagement & Mobilization)
– “Tax the Rich” vs. Reducing Inequality
– EX: Failure of European Social Democracy (Solidarity)
– “Job Killers” vs. “Market Efficiency” of Layoffs

2) New Goals for the Economy: Sustainable Economy, Less Human Suffering, More Room for Everyone’s Creativity & Innovation to Flourish, More “I Am My Brother/Sister’s Keeper”

3) At the Same Time, Financial Sustainability/”Making Payroll” at the Core

4) More Matter-Of-Fact about Fundamental Uncertainty
(”We Aren’t As Smart As We Think We Are”)
–“Market-based” solutions screw up as much as “government bureaucrats”
– With 1000 Eyes, All Bugs Are Shallow (if everyone has a real say)
– Encourage lots of small scale innovations & experiments to learn from
– Harness decentralized, bottom-up — from everyone, not just those who have resources/privilege
– Holding Accountable: does increasing savings –> increased investment –> good jobs? Or just outsourcing, downsizing, and big fat bonuses?
– Fail forward, catch problems early — 1000 eyes instead of canary in coal mine
(dovetails with Everyone Has a Real Say — and are accountable/responsible for that say)
–Stack the Odds in Favor of the Good Guys: allows for flexibility — rather than just specific rules — that helps with uncertainty and at the same time keeps accountable

5) Taking Responsibility – E.G., Not “Corporations Are Evil”
– Spiderman’s Dad: With Great Power Comes Great Responsibility
– To have a Real Say, need to create space for Real Conversations
– Hard to have a real conversation if you’re sure you’ll get stepped on (e.g., climate tax)

6) What’s the Right Balance?
– Market Vs. Nonmarket
– Competition Vs. Cooperation
– Centralized Vs. Decentralized
(theory vs. reality: e.g., South Korea/Japan/etc. Industrial policy)

So I was happy when I found this quote from international development economist Dani Rodrik that nicely sums up the verbal dance done by many economists.

Let a journalist call an economics professor for his view on whether free trade with country X or Y is a good idea. We can be fairly certain that the economist, like the vast majority of the profession, will be enthusiastic in his support of free trade.

Now let the reporter go undercover as a student in the professor’s advanced graduate seminar on international trade theory. Let him pose the same question: Is free trade good? I doubt that the answer will come as quickly and be as succinct this time around. In fact, the professor is likely to be stymied by the question. “What do you mean by ‘good?’” he will ask. “And good for whom?”

The professor would then launch into a long and tortured exegesis that will ultimately culminate in a heavily hedged statement: “So if the long list of conditions I have just described are satisfied, and assuming we can tax the beneficiaries to compensate the losers, freer trade has the potential to increase everyone’s well-being.” If he were in an expansive mood, the professor might add that the effect of free trade on an economy’s growth rate is not clear, either, and depends on an altogether different set of requirements.

A direct, unqualified assertion about the benefits of free trade has now been transformed into a statement adorned by all kinds of ifs and buts. Oddly, the knowledge that the professor willingly imparts with great pride to his advanced students is deemed to be inappropriate (or dangerous) for the general public.

Ditto for the other place many folks encounter economics: intro economics courses.

In our zeal to display the profession’s crown jewels in untarnished form – market efficiency, the invisible hand, comparative advantage – we skip over the real-world complications and nuances, well recognized as they are in the discipline. It is as if introductory physics courses assumed a world without gravity, because everything becomes so much simpler that way.

Part of the reason why economists play this game is because it’s a hell of a lot harder to come up with a coherent framework if you take all of the non-market cheerleading facets of economic theory seriously – especially if you’re not comfortable doing economics without lots & lots of math.

But it’s also part of a larger ideological play. I don’t mean that somewhere there is a small cabal of high priest economists plotting world economic theory domination as they stroke the cat sitting on their lap. But if you’re going to push for a myth about how the economy works that is so obviously not true, you do need some way to accommodate that reality. And treating reality as if it’s too dangerous for lesser mortals is a damn good way to do it.

“It is tragic what we do in the poorest neighborhoods, entrapping children in, first of all, child laws, which are truly stupid.

“You say to somebody, you shouldn’t go to work before you’re what, 14, 16 years of age, fine. You’re totally poor. You’re in a school that is failing with a teacher that is failing. I’ve tried for years to have a very simple model,” he said. “Most of these schools ought to get rid of the unionized janitors, have one master janitor and pay local students to take care of the school. The kids would actually do work, they would have cash, they would have pride in the schools, they’d begin the process of rising.”…

“What do we say to poor kids in poor neighborhoods? Don’t do it. Remember all that stuff about don’t get a hamburger flipping job? The worst possible advice you could give to poor children. Get any job that teaches you to show up on Monday. Get any job that teaches you to stay all day even if you are in a fight with your girlfriend. The whole process of making work worthwhile is central.”

Let’s put aside for the moment that, as Corporation for Enterprise Development’s Andrea Levere pointed out, “in many low-income families, not only do their parents work one job, but many of these families work two jobs and three jobs.”

And let’s put aside what message our society sends poor kids when many have parents who have the phenomenal work ethic to work two or three jobs and yet are barely keeping their heads above water.

If you were worried about society’s values, why at a time when everyone but the 1% are struggling to find a job if they’re out of work would you be focusing on poor kids?

Put it another way: is it Harlem’s or Wall Street’s values we should be trying to fix right now?

I think Gingrich has the right general idea. It just needs a little tweaking. Instead of improving poor kids’ values by having them clean toilets, let’s make bankers and hedge fund managers do it.

But we don’t want to take away jobs from janitors. So instead of cleaning school toilets, our morally bankrupt friends could go to the homes of elderly janitors and housekeepers and clean their toilets.

Because right now there are an awful lot of elderly janitors and housekeepers who make places like New York City run smoothly that could really use some help — they can’t afford to retire because of what Wall Streeters and Banksters did.

Think of the moral and spiritual message President Bush could have sent in 2008 when he bailed out the banks. He could’ve told the banks that they wouldn’t be getting a free ride. They would have to earn it by cleaning toilets in the poorest working families’ apartments so they could see firsthand the damage they had done to our communities. Talk about cleaning up your moral hazards.

We could even use it to help revitalize poor neighborhoods. If we are providing all of this valuable moral training, why shouldn’t morally fallen pay for it? For every session hedge fund managers and banksters spent cleaning elderly janitors and housekeepers bathrooms, they could pay these hard-working folks for the privilege. And they could pay clergy in the neighborhood to meet with them after each session to talk about how to rebuild their moral values and live a more righteous life. In doing so they would not only rebuild their moral core, they would also infuse a much-needed stimulus into poor communities and the overall economy. And taxpayers wouldn’t have to pay a cent.

If Newt wants to send a clear-cut moral message to poor kids, I can’t think of a better way to do it.

 
P.S. Newt, if you need more help with fleshing out this idea, including a valuable historical perspective, my rates are very reasonable.

Most people feel like big corporations and the rich have been doing great while the rest of us are struggling to keep our heads above water. But can we do anything about it?

Establishment framework: this is just the way it is — and if government bureaucrats try to “pick winners and losers” or otherwise meddle, they’ll just screw it up.

Reality: lots & lots & lots of pieces of economy shaped by decisions made by big corporations and the rich — either using the government or direct economic power. But what decisions are being made and who make these decisions are hidden from the public.

Liberal/moderate economic framework: Market basically works, we just need to fix “market failures.” Otherwise we end up with “command and control,” which communist countries have shown doesn’t work.

Reality: Given how much “market failure” & resulting government intervention there is, the idea of “market failure” obscures more than it reveals. Also obscures that someone makes the decisions about what counts as a “market failure” (e.g., is the “market failure” just the 2008 crash, or is it the insane power Wall Street now has, the fact that homeownership became unaffordable for new homeowners & the fact that the housing market was turned into a casino, etc.?), “consent,” etc. — and who benefits from these definitions.

At the same time, Establishment and Liberal frameworks do have a point: although we have and use a lot more influence over the economy than we admit, we can’t control the economy. In the long term, not clear what’s possible. In the shorter term, also not clear what’s possible (e.g., Alta Gracia anti-sweatshop experiment).

The real question: how do we create a more just economy when we’re not sure what’s possible?

My Answer:

1) Change the Balance of Power so Everyone Has a Real Say

a) What is a “Real Say”? Electing the president & the power we have as consumers? Joining a union to build power in the economy? Worker ownership?
When does “Real Say” mean Choosing Together and when should it mean individuals or small groups choosing (centralized versus decentralized)?

b) What is “Changing the Balance of Power”: how to ensure actions build & maintain power
Movement Perspective
Institutions –> Build Power, Foster Engagement & Mobilization
Occupy Wall Street and alternative banking — depending on how you do it, may or may not create more power

c) Spiderman’s Dad: With Great Power Comes Great Responsibility
To have a Real Say, need to create space for Real Conversations — tough trade-offs (not the so-called tough choices of “entitlements” where somebody else’s grandma will be eating cat food)
Hard to have a real conversation if you’re sure you’ll get stepped on (e.g., climate tax)


2) We’re Not As Smart As We Think We Are
Starting point: why do folks get into trouble now?
Market myth obscures reality of how often “market-based” solutions screw it up now

Strategies for Dealing with Uncertainty:

A) Everyone Has a Real Say
All the rest is irrelevant if you don’t focus on building & maintaining power — won’t get to actually try & learn if you don’t have power
Open Source Motto: With 1000 Eyes, All Bugs Are Shallow

B) Prime the Pump
Encourage lots of small scale innovations & experiments to learn from
Harness decentralized, bottom-up — from everyone, not just those who have resources/privilege
(dovetails with Everyone Has a Real Say)

C) Feedback Loops/Accountability
Did you do what you said? Ex: does increasing savings lead to increased investment which lead to good jobs? Or just outsourcing, downsizing, and big fat bonuses?
Fail forward, catch big problems early — 1000 eyes instead of canary in coal mine
(dovetails with Everyone Has a Real Say — and are accountable/responsible for that say)

D) Stack the Odds in Favor of the Good Guys
Pulls together much of the other three strategies
Allows for flexibility — rather than just specific rules — that helps with uncertainty and at the same time keeps accountable
To help catch mistakes: “How Do the Good Guys Make Payroll?”
3 core strategies for stacking the odds:
* Level the Playing Field
* Make It Easy
* Create Markets
Ex: Justice for Janitors & Level the Playing Field. Difference between this & just a rule: thought about what small janitorial services & property managers could afford if all other players can’t compete by cutting wages & benefits

If our economy isn’t “natural” and wasn’t inevitable, then what is the alternative? How do we create a more just economy that actually works?

3 Pillars:
1) Changing the Balance of Power
2) Tangible Dreams: “Stack the Deck in Favor of the Good Guys”
3) Uncertainty: “We’re Not As Smart As We Think We Are”

1) Changing the Balance of Power
Power is inextricably part of markets
Power sets the agenda — if we don’t have it, others set what’s “inevitable,” what “market failure”
How the economy is structured: strengthens/weakens power
You haven’t really made a change unless it’s politically sustainable
Individual choice versus power together Consumer choice versus organizing together
Making decisions together versus Parklets
Power: necessary, but not enough

2) Tangible Dreams
Don’t Think Small
“All Corporations Are Evil” won’t work — Need a Yes, not just a No
To have real power, Vision needs to have “Good Guys”
Ex: “How Do the Good Guys Make Payroll?”

3) Uncertainty/Humility
Economy: wasn’t “inevitable,” but also isn’t controllable
Bridging the Chasm — Ex: Alta Gracia
“We’re Not As Smart As We Think We Are”

[the book] uses examples as diverse as Zipcar, Wikipedia, open-source software, and Chicago’s community policing to contend that cooperative systems often outperform the competitive and hierarchical ones of free-market theory….

Reviewing reams of experimental studies…, Benkler finds that the economic paradigm misconceives human nature: “In practically no human society examined under controlled conditions have the majority of people consistently behaved selfishly.” We’ve all behaved reciprocally or done altruistic things, he writes, “because we knew intuitively that they were simply the right thing to do.” Happily, Benkler adds, “the Internet has allowed social, nonmarket behavior to move from the periphery of the industrial economy to the very core of the global, networked information economy.”…

For Benkler, the Leviathan of his title refers to both the bureaucratic state and the internally authoritarian corporation. The superior alternative to both is collaborative enterprise, symbolized by Tux the Penguin, the mascot and logo of Linux open-source software.

Kuttner points out that although “Benkler’s parallel universe [is] immensely appealing,” Benkler is way too optimistic that “the sheer logic of collaborative enterprise will transform the distribution of political power.” There’s nothing inevitable about it.

The ground rules of commerce can foster or strangle more collaborative forms of enterprise—and these rules are fruits of political power….

Long before its debut on the Internet, we’ve seen this movie. Half a century ago, America was far friendlier to credit unions, mutual insurance companies, nonprofit building-and-loan societies, farmer and worker cooperatives, and nonprofit hospitals and health plans. In the 1970s, authors were writing hopeful articles and books about worker-owned firms. This sector, which once accounted for a much larger share of American commerce, has mostly been bought out or crowded out by conventional business thanks to changes in rules promoted by economic elites. For example, Blue Cross in most states converted from nonprofit to for-profit because its executives saw a chance to make a buck and had sufficient influence on state governments to get the necessary permission. All the big mutual insurance companies save State Farm have likewise become stock companies. This is less about efficiency than profit and power to set the rules….

Political decisions will create the regulatory framework that allows the collaborative model to flourish or founder.

Although Benkler may be Pollyannish — and may not take seriously enough the critical role of the state (hello? Creating the Internet?) — it sounds like his book points to a lot of good hard evidence about the economic power of cooperation. Definitely something that any serious economic framework should figure out how to incorporate.

1) “We just need the right policies” (a.k.a. no power)

2) “We just need more democracy,” a.k.a., our only real problem is evil corporations and the profit motive (all power)

3) “We should let the markets do their job — efficiently using our resources. All we need to do is just to fix ‘market failures’ and ‘negative externalities.’” And to fix these problems, use “market-based solutions.”

4) “The economy is too complex to spell out solutions — ’specific instructions in the form of regulations’ mostly can’t cut it.”

 
These are simplified perspectives, of course — almost no one believes in them exactly. But as counterpoint, to help me figure out what I think and how the pieces of my responses to these perspectives fit together, I’m it’s good enough.

But it’s not. The economy we have today wasn’t natural or inevitable — and it was better before (”the middle-class was no accident”). The only reason we think it’s natural or inevitable is because the rich and big corporations want us to think so — if we pretend decisions aren’t being made, nobody asks why corporations and the rich are getting to make them.

The next part — we have the power to shape the economy, but only if we {understand its limits/embrace its tensions/embrace uncertainty/??} — is where it starts to get wobbly.

I think I’ve figured out why. It’s a symptom of the underlying problem: how I’m talking about the 3 principles.

I could be kidding myself, but I don’t think the problem lies with the principles themselves. I think Stack the Odds in Favor of the Good Guys, We Aren’t As Smart As We Think We Are, and Use Checks and Balances (or how ever I end up talking about power in the economy) are pretty solid intellectually. And I think they’ve got the potential to be really useful. But when I get to them, the anger and energy of the beginning of my argument peters out. It feels dry, mechanical, like a PowerPoint slide in a boring policy wonk presentation.

So what I need to do next is figure out how I pull out the emotions buried in the three principles and connect it back to the beginning.

Many people think, “the world sucks: the rich and big corporations are doing great, and the rest of us are struggling to keep our heads above water. But that’s the way it is. It’s the law of the jungle.”

I need a response that gets us out of the “inevitable” game but also acknowledges that there are serious limits to what we can do.