FINDING MANAGEABLE CHANGE FACTORS

Change, what an elusive event.  Yes, life is full of change, for example, one doesn’t wear the same style of clothing each day.  But significant change, change that reflects changes in values, attitudes, and/or beliefs happen very seldom.  Perhaps the reader can think of his/her own past and try to think of such a fundamental change.  This writer can probably number on one hand the times he has experienced such changes in his life.  He admits, among friends, that he did go through two changes in his basic outlook concerning values.

          One might ponder this general state of affairs when considering change over some relatively important institutional norm.  While this writer finds it difficult to admit, most Americans do not find civics education as that important.  But if one were to suggest a line of instruction that most Americans might deem were un-American, that might engage their interest.  The writer is reminded of how the fear of communism stirred in the 1950s and 1960s a popular change.

          He remembers how due to this fear, through the leadership of conservative politicians, but was easily supported among the electorate, the state of Florida instituted a new course of study.  That is, to earn a diploma, a Florida high school student had to pass an American-vs.-Communism course.  The thing is, teachers were forced – in most cases without objection – to teach the course but with little supervision.  Yes, at university, they had to take a special course to prepare them for this assignment, but seemingly that is where supervision of the effort ended.

This writer was one of those affected teachers and he taught the course from a more open-ended approach and steered it away from being a propaganda exercise.  The textbook he was assigned to teach the course was published by Time-Life and that publisher was noted for having, through their publications like Time magazine, a conservative bent.  But it still ascribed to general, objective journalistic standards and, in the opinion of this writer, the textbook was very informative and did not approach the subject in a propagandistic way. 

Using for the most part a discovery approach, this writer feels he provided a useful course of study.  In any event, he enjoyed teaching it, believes his students did not find it a waste of time, and hopefully they learned something about another system of governance with its faults and perhaps some advantages.  He did not sugar coat the more brutal aspects of that totalitarian system.

The point here is, given the goals of the conservative politicians, what was provided in the state’s classrooms was a far cry from those goals.  If anything, young Floridians were exposed to a curriculum choice far from any cartoonish take on the attributes of soviet governance which, given their rhetoric, was probably the goal.  Change is difficult.

In that, a current book sheds light on the change process.  Headed by Leslie R. Crutchfield, a team of researchers took it upon themselves to find what the elements of successful and unsuccessful national movements are – movements that called for meaningful change.[1]  This is a very important area of concern unless one thinks the nation has already achieved perfection.  Chances are the reader does not.

This posting will serve as merely an introduction to this study.  It identifies some overarching factors that affect change, mostly those that serve as the background context to change efforts and in which a change agent has little to no control.  That is, it asks:  what are the elements of a social/political/economic landscape in which a change effort is attempted?

Admittedly, the Crutchfield book does not spend much ink in addressing these contextual factors.  They are mentioned toward the beginning of the book and then the text goes on to highlight those factors that are subject to being manipulated.  But they – the contextual factors – are important and the right mix of them can doom a change effort no matter how well the other factors are addressed.

They are luck, misfortune, timing, and changing cultural attitudes.  Just to mention the strength of one of these, cultural attitudes, one can easily cite the above historical example.  That would be the effort of the conservative politicians that succeeded in getting the Americanism-vs.-Communism course added to the Florida state curriculum, but not much else.  They could not have foreseen what the growing effect of the Vietnam War would have on the psyche of Americans. 

As the legitimacy of that war became questioned – to ever increasing levels – the whole anticommunism bias, even in conservative Florida, could not continue to be unquestioned.  In short, if those in power were lying about Vietnam, what else are they lying about?  For those who had high hopes for the new course of study, they did not count on this type of fundamental questioning, especially among the young.

Nor could they have done much about it.  The political landscape was changed by exterior forces way beyond the control of Floridians – be they part of the power structure or not.  What occurred was a societal/political shift over a relatively short span of time.  Within ten years, the whole communism fear idea changed drastically.  But Vietnam is an extreme case, one that probably only happens once or twice within the course of lifetime.  What of other changes, ones that happen not as quickly perhaps but still within the memory of a lifetime?

These are the change examples the Crutchfield team studied.  She writes:

But we also recognized that significant societal shifts do not occur at random … [Like reduction in smoking, increase in gun ownership, acceptance of same-sex marriage] … These changes occurred because of the relentless advocacy of vast networks of individuals and organizations, campaigning in the face of seemingly insurmountable obstacles and often against entrenched, powerful opponents.  In spite of it all, they prevailed.[2]

It is these examples that future postings will address.  That is, not from the inter-personal dynamic perspectives, but from a stage where one can observe the more political interactions among the various players in such change efforts.  The research of the Crutchfield team offers telling stories from which political strategies can be derived – savvy strategies that have been successful and imprudent strategies that have proven not to work.

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[1] Leslie R. Crutchfield, How Change Happens:  Why Some Social Movements Succeed While Others Don’t (Hoboken, NJ:  John Wiley & Sons, Inc., 2018).

[2] Ibid., 4 (Kindle edition).

WHOM TO BELIEVE?

On more than one occasion, this blog has cited Lawrence Lessig.  He, in 2011, came out with a book that had a dire message.  That is that the nation’s republic is endangered.  “But the feeling I am talking about today is different:  not that we, as a people, have lost anything of our potential, but that we, as a republic, have.”[1] 

          As most good writers do, he proceeds, in his book, to provide evidence for his major argument.  This posting picks up on this message.  The reader might reflect:  does Lessig, after these many years, still have a point?  What would indicate that he does?  After all, the nation is still functioning, its major institutions are still operating, and social life still progresses with a general air of cooperation. 

When this writer leaves the front door of his abode, he does not expect to meet chaos out there.  Yet, is there an accompany air of everything not being the way they should be?  And if so, isn’t that just part of living.  In the conscious decades he has lived – from the fifties to today – each set of years seems to have had its set of “doomsday” concerns. 

The complacency of the fifties, the rebelliousness of the sixties, the malaise of the seventies, the “Me-ness” of the eighties and nineties, the global challenges of the “ought” years (punctuated by the 9/11 attack), and now the set of unprecedented politics one observes emanating from the nation’s capital seem to be an unending movie.  But is there something more fundamental today that was pre-envisioned by Lessig at the beginning of the current decade?

What one hears today on the media is that the nation is having an attack on its basic institutions.  Perhaps, one should give Lessig more of a listen.  He begins by citing an institution that has been questioned all along, that of the markets.  It’s not so much that the markets themselves are corrupt, but what transpires within them is prudently questioned.  At the time of Lessig’s book, a question bandied about was:  are cell phones safe? 

Americans were subject to reports from industry studies that they were.  There were other independent studies that said they were not; that they emitted harmful, cancer inducing “rays.”  Well, with the advent of earplugs, that worry seems to have passed.  Yet, while the controversy progressed – and what probably encouraged the industry to develop a solution – average consumers were apt – or at least in sufficient numbers – to believe independent studies.

Why? Well, they, the independent studies, were likelier unaffected by the profit motive.  Afterall, the cell business by 2011 had grown to be a multi-billion-dollar concern.  People hesitant to use the product because of independent studies would have translated into significant loses.  In addition, industry studies were likely to be held with suspicion.  If money is at stake, people recognize that and are biased to believe those who have no or little skin in the game over those who do.

To place more context to this, one should consider Lessig’s words:

Across all three domains we tested, the mere suggestion of a link between financial incentives and a particular outcome significantly influenced the participants’ trust and confidence in the underlying actor or institution.  Doctors’ advice was judged to be less trustworthy if the procedure they recommended was tied to a financial incentive.  Politicians were judged to be less trustworthy if they supported a policy consistent with the agenda of contributing lobbyists.  Researchers for consumer products were judged less trustworthy if their work was funded by an agency that had a financial stake in the outcome.  And most surprisingly to us, these variations in the hypotheticals we presented also significantly influenced the participants’ judgments of their own doctors, politicians, and consumer goods.  Even the suggestion of one bad apple was enough to spoil the barrel.[2]

But, unfortunately, it is not that simple all the time.  What if one side has no profit angle – they can call it either way with little to no financial consequences – but they discover a relevant fact or issue that the general population does not want to hear or if they hear, do not want to believe?  Here, what Lessig says in his book, can take on a more relevant quality.  It can gather a relevancy not only for a tendency to undermine general trust levels among the population but to interfere with devising and implementing extremely important policies.

And if the issue under consideration, promises to have a one-way – i.e., unfixable – consequence(s), one can easily understand the importance of this development.  Presently, there are various issues vying for one’s attention; all of them important especially for those directly involved.  But there is one that affects every person not only here in the US but across the planet.  Of course, that is climate change.

Among the general population, there has been a reluctance to accept warnings related to climate change.  Was the earlier reporting by the media, that questioned the veracity of certain institutions, undermining current warnings or is it that a specific institution, the scientific community, is just issuing a message average Americans do not want to hear?  In this, a recent conversation with a relative comes to mind.

Are climate and/or weather developments indicating that there is a change in climate occurring and, if so, is it the product of human activities?  When this topic has come up before, this relative has questioned whether climate change is a real thing.  In a more recent conversation, his message is:  okay, it can be climate change, but any widespread fix – for example, abandoning gasoline powered automobiles – would result in enormous, negative consequences for millions of workers and destroy the economy. 

Perhaps, that’s progress toward accepting the dire messages the scientific community has been communicating concerning climate.  But it still does not take in the whole story.  One can, and this writer failed to do, point out that a shift to renewable energy sources means the creation of millions of jobs.  Net effect is unknown to this writer, but still this positive consequence can be communicated when the issue arises. But the issue here is:  why do Americans even question the legitimacy of the scientific community? 

Is it, as Lessig warned some years ago, there is an erosion of trust over the actions and statements of the nation’s institutions and that does reflect a dangerous development?  This writer believes that there is for civics teachers no greater issue than whether Americans are questioning their institutions; they should address this issue in their classrooms.  Of course, the first instructional aim would be to have students know, understand, and appreciate what institutions are and how they function in the maintenance of the republic.

A people establish institutions to rely on established ways to accomplish societal aims and those ways, in their manifestations, are associated with certain organizations or groupings.  Some of these are within government and some are not.  The two institutions under current attack are the press and the intelligence community.  There is also the above-mentioned target, the scientific community.  These are important institutions and they are protected by law, even constitutional law when it comes to the press. 

Yes, any human endeavor can be improved, but when one of these entities is labelled the “enemy of the people,” one should investigate not only the institution, but those who are issuing such a claim.  This blog avoids stating political messages, but this issue gets at the basic notion of citizenship and the ability to federate with the elements of the polity. 

Institutions, due to their central role in not only allowing a federalist political environment, but of maintaining any form of legitimate governance, need to be believed and deserve to be protected.  Civics classrooms should not avoid this undermining development that offends the basic elements of a viable republic.  Perhaps a way to refer to a healthy treatment of institutions is for Americans to see them with a critical, but sanctifying eye.

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[1] Lawrence Lessig, (2011).  Republic Lost:  How Money Corrupts Congress – and a Plan to Stop It (New York, NY:  Twelve, 2011), 1.

[2] Ibid., 29.  Emphasis in the original.

ARE THEY MISDIRECTED MOVES?

Before getting into this posting’s business, this writer hopes that all the readers of this blog enjoyed the Fourth.  In a time of noted division among the electorate, the nation’s shared holidays take on a more strident quality.  Hopefully, yesterday served to encourage a spirit of unity.

And now to the business of this posting.  Inevitably, civics teachers must deal with economic information.  When this writer taught seniors in high school, the last year being 2000, Florida mandated that these students take one semester course in American government and one semester in economics.  The economics course was one that approached the subject from the macroeconomic perspective.  But even the government course would have to deal with economic factors and developments that affect the nation.

          For example, when dealing with interest groups and lobbyists, there are business and labor groups that sponsor lobbying efforts to influence public policy.  Surely, given the current political array of issues, one that dominates a lot of media attention is how economic development affects civic matters and, therefore, calls upon citizens to pay attention to the state of the economy.  One issue:  there has been a great deal of political action and consequent governmental concern over the state of depressed wages among many Americans. 

          Some attribute Trump’s election to the presidency as being an expression of this concern.  His ability to win states in what is commonly referred to as the rust belt, directly reflects the discontent with the paucity of good paying jobs, jobs that were part of the manufacturing segment of the economy.  This blog has addressed how foreign competitors have allured many manufacturing concerns from this nation to theirs.  And there has also been the advancement in labor saving machines referred to as automation.

          A question one can ask is:  what happened, why are American workers subject to these detrimental conditions?  William K. Tabb addresses this question.[1]  This and later postings will share some quotes from his book that provides an interesting and informative account of what is affecting the economy, why these factors are viable, and how government and Americans in general have conceptualized these changes.

          In terms of the economy’s structural weaknesses, Tabb writes:

Short-term speculative gambits, the maximization of shareholder value, and the pressure of debt on companies and households produced [in the years leading up to the 2008 financial crisis] a growth dynamic that is not dependent on rising real incomes of American, but is built on asset bubbles, capital gains, and debt-driven consumption.  Technology, globalization, and the ability of firms to reset employment contracts (so they no longer tied worker pay to productivity) caused employment to become less well remunerated and more insecure.[2]

If this writer were to use this quote in the classroom, he would emphasize several issues.

          For one thing, there is the issue of businesses, in the search of cheaper labor costs, having moved their manufacturing activities to such countries like China, Vietnam, and India.  It is difficult to compete against Chinese workers who make on average between $250 and $500 a month.  In America, in “right-to-work” states (were weak to non-existing union representation exists), the average worker makes at minimum three times higher wages then those Chinese workers and, therefore, can’t compete.

          Tabb writes on:  “Serious social control of the economic surplus, channeling it away from speculation and into job creation, is essential; major redistribution of income and reorientation of priorities are required.”[3]  This reference focuses on how capital is being invested and how it should be invested to meet the maldistribution of income the nation is experiencing.  First though a word concerning how this is a “maldistribution.”

          One can argue that if one believes in capitalism, then wages are simply yielding to demand and supply forces.  But that, to many is an abstract notion.  What is real are comparisons.  And in the minds of many, one compares how well he/she is doing with how previous generations of Americans did or with how one did in earlier years.  And the immediate past was a bit unusual.

          Taking the post-World War II years – 1945 to 1965 – as the immediate past, America was the sole manufacturing nation in the world – or just about.  Why?  The war effectively destroyed the manufacturing capacities of just about every industrial nation of the world.  Both in European and Asian (like Japan) countries experienced sustained bombing from above.  Bombing sorties effectively leveled the industrial facilities of the belligerents.  Because of the protection the oceans provided, America was sparred.

          So, for the years following the war, America supplied the world with manufactured goods and there was little or no competition in those related markets, including the market for workers.  This led to higher wages and Americans became easily accustomed to the better lives those wages allowed.  But starting in the 1970s this began to change.  Today, the amount of manufacturing jobs once prevalent is but a small percentage of what it was.

          This has also led to what this second quote highlights.  That is, capital has been directed toward financial opportunities – stock markets, bond markets, lending opportunities – and away from manufacturing.  This can be risky.  Suddenly, over a few years, money can be attracted to artificial opportunities – like mortgage portfolios with high risk mortgages as happened in the years leading to 2008 – and financial bubbles result. 

People become aware of the rising profits such bubbles are generating, furthering the bubble effect.  But bubbles eventually burst, and the resulting loss of money and the accompanying undermining of the viability of financial institutions cause panic and that further intensifies the collapse of those institutions undergirding the global economy.  That is what happened in the 1930s with Great Depression and almost happened in 2008-09.  As it was, many of those institutions are no longer in operation.

A future posting will look at an important question.  Are such developments the result of what government does or are they the result of what markets do?  This basic question or how one leans in one direction or another, goes a long way in determining if one is a left of center, liberal or a right of center, conservative; if one is a Democrat or a Republican.

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[1] William K. Tabb, The Restructuring of Capitalism in Our Time (New York, NY:  Columbia University Press, 2012).

[2] Ibid., 5 (Kindle edition).

[3] Ibid.

THE LAND OF DREAMS AND OATHS

One thing every citizen of the US should do, at least once, is attend a naturalization ceremony for new citizens.  As part of that event, those seeking citizenship need to take an oath of allegiance.  By taking the oath, the person makes a set of promises and those promises have been part of the ceremony since the 1700s.  The promises are duties that include:

·        Support and defend the constitution of the United States and its laws; particularly those laws formulated to protect the nation from its enemies;

·        Forego any allegiance to other nations or sovereigns;

·        Renounce any hereditary – such as those of nobility – titles;

·        And submit to military and civilian service when the government calls for such service.

This oath is taken from a person’s volition – he/she chooses to take it; no coercion involved.

          This step in becoming a citizen reflects a federal bias.  To remind the reader, previous postings have outlined the central concept of that construct; a federal union is one in which a group of people come together and inviolably promise to do something.  At times, this might have called for a promise to be witnessed by God and, if so, the promise is a covenant.  Or it might not have, in which case the promise is a compact.  The word federal is derived from the Latin word, foedus, which means covenant.[1]

          Some might argue that this oath should not be limited to immigrants who are seeking citizenship but one in which natural born citizen be called upon to take.  As it is, just being born within the borders of the nation ascribes to a person the status of citizen.  Of course, such a person, if he/she does not want to be part of the union compact, can renounce his/her citizenry.  That person can seek citizenship in another country.  The assumption here – both culturally and legally – is that if a citizen resides here, he/she voluntarily agrees to that promise or oath.

          But beyond the legality, one can, this writer believes, endow that oath with a spirit.  The promise is a minimum.  One can reasonably read into that promise a commitment for a citizen to express allegiance in a pro-active fashion, not because he/she is forced, but because he/she loves that union. 

To describe this spirit, in an earlier posting, this blog shared an extended quote by the political writer, Alexi de Tocqueville.  To remind the reader, here is a short excerpt of that more extensive quote describing America in the 1830s:

… [T]he political activity which pervades the United States must be seen in order to be understood  … Everything is in motion around you; here, the people of one quarter of a town are met to decide upon the building of a church; there, the election of a representative is going on; a little further, the delegates of a district are traveling in a hurry to the town in order to consult upon some local improvements; or in another place the labourers of a village quit their ploughs to deliberate upon the project of a road or a public school … Societies are formed which regard drunkenness as the principal cause of the evils under which the State labours, and which solemnly bind themselves to give a constant example of temperance … [2]

This, according to Tocqueville, represented common scenes of those years.

          America has changed.  One would be hard pressed to describe this nation in this fashion today.  This blog has offered ample evidence of the general reluctance Americans have in becoming politically engaged.  Yet structurally, Americans are still a federalist union.  This blog is dedicated toward informing and encouraging a more general understanding and commitment to a federal disposition among students and citizens, in general.  Is there any evidence indicating a move toward a more involved citizenry?

          This blog has also provided a general description – as a topic for students to investigate – of the opioid crisis.  To use a more concrete issue to describe what is happening in terms of citizen involvement, this crisis is helpful.  In that light, this posting will now describe a more current instance of how this issue of non-involvement has played a role in this crisis.

One aspect of this crisis is the role Mexican heroin dealers have played.  This blog has been reluctant to report on this aspect due to a generally perceived prejudice some Americans have voiced against Mexican immigrants.  But to be complete, this blog should report on the role a small percentage of Mexicans have filled.

          As it turns out, this drug trade originates from a small town, Xalisco, Nayarit, in Mexico.  The town’s name is pronounced as another Mexican city, Jalisco, but is spelled with an “X.”  Near that town, the opium poppy plant grew extensively.  The plant was harvested, and its milky fluid was extracted and cooked into a substance resembling a black tar.  This, in turn, was molded into small round shapes – marble type balls – and were smuggled into the US.  In the US, Xalisco dealers set up, across the nation, effective and extensive distribution systems using non-descript cars and an army of drivers with cell phones.

          One aspect of the distribution was its actual delivery service.  All a user or addict had to do was make a call and a driver showed up with the requested drug.  These deliveries were cheap and convenient.  They were particularly attractive to people – many of them young – who were hooked on pain pills, such as OxyContin, that were usually more expensive and harder to get.  This blog, in a previous posting, described this “medical” aspect of the opioid crisis.[3]  The point here is the victims were hooked on pills and shifted to heroin via these Xalisco distributors.

          While the epidemic has affected most regions of the country, one state has been particularly hit; that was/is Ohio.  One town in Ohio, Portsmouth, is highlighted by the journalist, Sam Quinones, in his book, Dreamland.[4]  He begins the book by describing a recreational area in Portsmouth that apparently was the center of the town back in the sixties.  It had a large pool and adjacent recreation area, called Dreamland, where the town “hung out” during the warmer days of the year. 

In those years, the town was relatively doing well with a strong manufacturing base.  But as with many manufacturing towns since those earlier days, Portsmouth lost those factories to mostly foreign competitors.  The results of such a development was obviously devastating.  But that is only the backdrop to the tragedy.  Then, as this blog has described, the selling of opioid in the form of pain pills took hold.  As the earlier cited posting describes, many otherwise average Americans became victims to the opioid epidemic:

They – the Mexicans – devised effective, on-demand distribution arrangements in numerous communities around the US.  Their customers are not inner-city junkies, as the heroin trade of old was and found in major urban centers, but among, in many cases, middle class whites who have gotten themselves hooked on opioids.

Oftentimes, these middle-class customers became addicted after they were exposed to some chronic pain management protocol under the supervision of legitimate doctors.  A lot of this, in turn, was based on an underestimation of the addictive quality of the drugs prescribed and aggressive drug company strategies in marketing opiates.  Once hooked, these people became desperate to find cheaper and unlimited supplies of a substitute drug – heroin, a type of opioid – to satisfy their cravings.[5] 

But times move on and many aspects of the story have changed since the early years of this century.

          One, the cartels of Mexico, earlier not interested in cheap drug sells, eventually moved in and has disrupted the Xalisco system.  Also, the general reaction to opioids in the US is taking a toll on the trade and there seems to be some improvement on meeting the crisis.  In this, Portsmouth has gone through some positive changes.  These changes remind this writer of the above cited Tocqueville quote describing an involved citizenry.

          Here is another quote offered by Quinones:

          Angie Thuma, the veteran Walmart shoplifter [to pay for her addiction] … told me the last time we spoke, “when I think about all the things I went through and I’m still alive, it gives you courage to keep bettering yourself.”

          That seemed to be Portsmouth’s attitude.  The town still looked as scarred and beaten as an addict’s arm.  Wild-eyed hookers strolled the East End railroad tracks, and too many jobs paid minimum wage and led nowhere.  Portsmouth still had hundreds of drug addicts and dealers.  But it also now had a confident, muscular culture of recovery that competed with the culture of getting high – a community slowly pitching itself.

          Proof to that was that addicts from all over Ohio were now migrating south to get clean in Portsmouth.  No place in Ohio had the town’s recovery infrastructure.

          On my last trip to Portsmouth, I met a young woman from Johnstown, a rural town northeast of Columbus that from her description sounded a lot like the 740 that RWR rapped about.  She had been buying heroin from the Xalisco Boys in Columbus for a couple years.  When she tried to quit, a driver who spoke English called her for a week straight.

          “But, senorita, we have really good stuff.  It just came in.”

          Finally, she threw away her phone.  There wasn’t much on it but dope contacts anyway.  She was twenty-three, alone with a ten-month-old son, and – seeking to get clean with nowhere else to turn – she found refuge in Portsmouth.

          “I love it here.  I’m really afraid to go back,” she told me in the lilting drawl of rural Ohio, when we met at a party for a woman celebrating her first year clean.

          So the battered old town had hung on.  It was, somehow, a beacon embracing shivering and hollow-eyed junkies, letting them know that all was not lost.  That at the bottom of the rubble was a place just like them, kicked and buried but surviving.  A place that had, like them, shredded and lost so much that was precious but was nurturing it again.  Though they were adrift, they, too, could begin to find their way back.

          Back to that place called Dreamland.[6]

Is there a silver-lining?  Perhaps.  Maybe the bottom of a nightmare offers enough motivation to rekindle the communal base of a spirited federal union.  Sadly, if so, what a price to pay.  Perhaps a more proactive civics program can help avoid such a price.  Of course, neither the nightmare nor a proactive educational program can make the total difference, but they can be exploited toward helping.

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[1] Daniel J. Elazar, “Federal Models of (Civil) Authority,” Journal of Church and State, 33, (Spring, 1991):  231-254.

[2] Alexi de Tocqueville, “Political Structure of Democracy,” in Alexis de Tocqueville:  On Democracy, Revolution, and Society, eds. John Stone and Stephen Mennell (Chicago, IL:  Chicago University Press, 1980/1835), 78-101, 78-79.

[3] See Robert Gutierrez, “And Then There Is Law-Abiding Behavior, Part II,” Gravitas:  A Voice for Civics, May 21, 2019, accessed July 1, 2019, https://gravitascivics.blogspot.com/2019/05/and-then-there-is-law-abiding-behavior_21.html .

[4] Sam Quinones, Dreamland:  The True Tale of America’s Opiate Epidemic (New York, NY:  Bloomsbury Publishing, 2015).

[5] Ibid.

[6] Ibid., 344-345.

HIDING THE MULA

There is an important element of any modern society that by its nature holds a federalist character and, at the same time, does not.  The modern corporation, by its very structure, has the very federal element of being owned by the voluntary affiliation of stock owners – ostensibly forming a federation through that ownership. 

Yet, it does not have, among those stock owners, any sense – except perhaps for a select few who own large number of shares – any sense of ownership of that entity.  They, in terms of their consciousness, own stock shares, not a corporation with all its human attributes and qualities.  As such, their “pride” in ownership does not stem from ownership, but from any transactional profit they might derive from said ownership – the first step of detachment.

          Its worth mentioning, the typical stock purchaser does not care about the company he/she is buying ownership into which in a vast number of cases amount to a miniscule portion of the total ownership.  All that person cares about is the price for which he/she is purchasing the shares and how much the anticipated price he/she can sell it at some future date.  In most cases, the person anticipates a higher price and, therefore, a profit from the transactions.  Just another way to make a buck.

          This posting needs the reader to understand these basic elements of stocks, corporations, and stock ownership to make its points.  But the main point being made here is not directly associated with these elements, but with how the notion of corporation is used to establish the processes that lead to unsavory results.  This is aided by, to various jurisdictions being fast and loose with attaining identifiable information with those establishing corporations. 

And those results, as is cursorily explained below, come about from a detachment system – detachment between ownership and business – that allows certain practices to take place.  But before this established process came into being, it was an idea, but an idea with important consequences. 

Its manifestation has probably done more to advance what Jonah Goldberg[1] calls “the Miracle” than just about any other development.  As the reader is probably aware, the formation of corporations provides the vehicle for the accumulation of financial capital to fund the purchases of physical capital allowing the expansion of smaller businesses.[2]  In turn, that allows the businesses, if successful, to go national or even global.

          With those physical assets, as well as human capital, a business company can buy machinery, set up distribution facilities, set up sell operations, rent the necessary office spaces, acquire the use of buildings, on and on.  In the process, by the willful, chosen course of action, investors – who supply the money – in a formal way, form a type of “partnership.”  On paper, they become federated one to the other.  So much so, that the scholar, Daniel Elazar, cites this process as one that helps demonstrate that America is a “thoroughly” federated system.[3]

          But hold on.  Oliver Bullough points out a missing federal quality in these arrangements.  In his description, he explains how corporations have attained the ability to hide money and other assets and this has led to very un-federated realities.  He writes:

… there is more going on here than just [corporate] lawyers being dishonest – turning a blind eye, or otherwise.  It was not a crooked London solicitor or a dishonest New York attorney that made it so easy to create companies [instrumental in hiding money]; that was the work of government.  The crucial attribute of corporate vehicles is that they are legally separate from their owners and their owners’ liability for their debts is limited.  What that means in practice is that, if you operate through a company, society as a whole is taking responsibility for your debts.  It’s a kind of insurance.  If your business fails, only the assets of the limited liability company will be at risk, not those of its owners.[4]

Of course, it is this “insurance” that helps persuade investors to invest in “start-up” companies despite all their inherent possibilities for failure.  So far, so good; but this process, by avoiding direct attachment to the business in question, through this “insurance” scheme, accomplishes an important – second – step toward non-identification of ownership.

          Naturally, corporate structuring has a history and it is relevant to what is currently going on.  The first corporations of note popped up in the early 1800s.  England and the Netherlands were the first two nations to employ them.  But they were initially highly restricted.  For example, in England, Parliament had to give permission for the creation of one and that, in turn, limited the number that were created under that supervisory regime. 

But leave it to the good ole USA – even in its more federalist years – to give it its current form.  New York first legislated the limited liability form in 1811 and by the 1850s, that structural form was in full use.  By the early twentieth century, modern incorporated entities accounted for 95% of the market.  Citing the Economist, Bullough reminds his readers, “Limited liability is … ‘the key to industrial capitalism’.  Companies are good, without them, our modern prosperity would have been impossible.”[5]

So, there is an upside, but there is also a downside.  It turns out, that not only people can buy stocks or form corporations, but for a variety of reasons – some reasonable and honest, some not so much – corporations (legal persons) can also form them – sometimes many times over.  And this layering of ownership provides the third, and perhaps most important, structural basis for hiding ownership and with it, the ability to hide money.

And hark, the problem comes into focus.  Through this anonymity, a lot of shenanigans take place.  From spouses who want to hide their assets from divorcing mates to Mafia and other illicit, organized groups who use this structural capacity to hide money, how it is earned, and how it is used.  And this includes corrupt politicians on the take.  Some of those activities include fraud, bribes, embezzlement, and tax evasion.  And, of course, these activities have social consequences.

If the way the money is “earned” happens to be illegal (dirty money), the ill effects of that activity is problematic – take drug dealings or a blind eye to shoddy construction by public inspectors.  But people can find such hiding not only associated with “dirty” money, but also with “naughty” money. 

Tax evasion, in the eyes of many (not including this writer), is not dirty, it’s naughty.  People also see spending on extra marital affairs, for example, and other such expenditures as less than dirty but not honorable.  They result in embarrassment, so through the efforts of some skillful lawyers, those funds can become de-embarrassing through certain practices and incorporating, in certain ways, plays an important role.  

There are countless reasons why people want to hide money.  And since the uses of money have social consequences – as just pointed out – society has every right to ferret out where and by whom money is owned and controlled.  But they can only do so if the important information is recorded and accessible – they are too often neither.  In terms of the US, these practices go against the very notion that Americans are, constitutionally, a federated people.

Central to these unfederated consequences, created by hiding money, is the function corporations fulfill in such efforts.  So, an issue civics classes can have students investigate – at the risk of encouraging future practitioners – is the ability of individuals or groups to partake in these practices including those associated with corporations that are set up for these dishonorable and even illicit purposes.

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[1] Jonah Goldberg, Suicide of the West:  How the Rebirth of Tribalism, Populism, Nationalism, and Identity Politics Is Destroying American Democracy (New York, NY:  Crown Forum, 2018).  The “Miracle” refers to the explosion in economic wealth since the seventeenth century.

[2] This is especially the case when investors buy into an IPO, an initial public offering, of a promising, relatively young business.

[3] Elazar, D. J.  (1994).  How federal is the Constitution? Thoroughly.  In a booklet of readings, Readings for classes taught by Professor Elazar, (pp. 1-30) prepared for a National Endowment for the Humanities Institute. Conducted in Steamboat Springs, Colorado.

[4] Oliver Bullough, Moneyland:  Why Thieves and Crooks Now Rule the World and How to Take It Back (London, England:  Profile Publishers, 2019), 92.  Emphasis added.

[5] Ibid., 93.

BEING SCHMALTZY?

This blog has just finished a series of posting regarding a foundational construct offered by Jonah Goldberg.  This writer needs a milder topic and the reader deserves a shorter read.  So, at the risk of being schmaltzy, this blog offers the following – from Lao Tzu – that captures, for the writer, a federalist notion:

Watch your Thoughts, they can become Words.

Watch your Words, they can become Actions.

Watch your Actions, they can become Habits.

Watch your Habits, they can become Character.

Watch our Character, it becomes Destiny.

Perhaps the original intent was religious, but it doesn’t necessarily have to be.  It can also be secular.

          The federalist turn occurs in the last line.  This writer does not know this philosopher’s meaning, but he feels the line captures an unavoidable truth.  No matter how much a person feels he/she determines his/her own fate, the manifestation of what will occur relies on the “our” element.

          People who hold a purely capitalist notions of the economy, seem to have a hard time accepting that fact.  Yes, business owners work hard.  They put in the hours, the sweat, the anguish, and the risked capital.  But all businesses exist within a social landscape that permits that business to exist.  Like what?  All the publicly owned infrastructure – the streets, water works, police protection, public health services, etc.  Are those services and related goods just a transaction between resident/businessperson and the government – taxes for services?

          Roughly testing that idea, this posting offers the following.  In New York City, from “Googling” the subject, one finds that the median income is from $50-58,000.  The City’s budget comes to $89.2 billion a year.  That comes to a per capita (per 8.6 million population) share of expenses of circa $10,350.  Add to that state expenses and taxes and federal expenses and taxes.  Somehow, these numbers seem to indicate the average New Yorker falls short of covering city expenses given the median income levels just listed. 

The point is:  an individual citizen, on average, does not exchange the amount he/she pays in taxes and the benefits he/she gets from living in a jurisdiction like New York City.  This blog is not passing judgement on the fairness of that city’s taxing policies or of any level of governance.  Do governments do too much question is for another posting.  This one is only claiming that being a citizen transcends being in a transactional relationship.  More is at stake.  In the extreme, how does one place a price on the sacrifice many have made – such as in the armed forces or first responders.

In addition, transactions do not elicit love.  It might engender appreciation, respect, even a sense of marvel at what professionals can accomplish.  But they do not, in any real sense, elicit love.  Yet, for a nation to survive, that is exactly what is needed in order to advance much less survive.  “Watch our Character, it becomes Destiny” refers to what a society is and will become.

Of interest, there has been various version of the above set of suggestions.  A more individualistic version has the last line, “Watch your character, it becomes your destiny.”  This is attributed to Frank Outlaw, the deceased president of the Bi-Lo Stores.[1]  Perhaps his version demonstrates the “businessperson” bias alluded to here. 

Another point of interest is the fact that the word “watch” contains the first letter of each of the key words of the quote.  “W” for words, “a” for action, “t” for thoughts, “c” for character, and “h” for habits.  They are not in order, but the coincidence (?) is worth noting.

How’s that for a schmaltzy effort?

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[1] See “Watch Your Thoughts, They Become Words; Watch Your Words, They Become Actions,” Quote Investigator, n.d., accessed June 24, 2019, https://quoteinvestigator.com/2013/01/10/watch-your-thoughts/ .