The Public Good [2]

drinking water

Photo by Kobu Agency on Unsplash

American schoolkids learn that their country has a republican form of government, which means everybody doesn’t get to vote on everything; we vote for people who do the voting for us.[1] But there’s more to the word republic than that:

republic (n.):  c. 1600, “state in which supreme power rests in the people via elected representatives,” from Middle French république (15c.), from Latin respublica (ablative republica) “the common weal, a commonwealth, state, republic,” literally res publica “public interest, the state,” from res “affair, matter, thing” (see re) + publica, fem. of publicus “public” (see public (adj.)). Republic of letters attested from 1702.

Etymology Online.

Publica (the people, the state) + Res (affair, matter, thing) = “the people’s stuff.” The republican state holds the people’s stuff in trust, and its elected representatives, as trustees, administer it for the public benefit. That’s the plan, anyway. A more elegant term for “the public’s stuff” is “commonwealth”:

commonwealth (n.):  mid-15c., commoun welthe, “a community, whole body of people in a state,” from common (adj.) + wealth (n.). Specifically “state with a republican or democratic form of government” from 1610s. From 1550s as “any body of persons united by some common interest.” Applied specifically to the government of England in the period 1649-1660, and later to self-governing former colonies under the British crown (1917). In the U.S., it forms a part of the official name of Pennsylvania, Massachusetts, Virginia, Kentucky, and Puerto Rico but has no special significance.

Etymology Online

Several online searches turned up a surprisingly long and illuminating list of things that are or used to be considered part of the common wealth trust portfolio. For example:

  • education
  • news
  • law
  • governmental administrative functions
  • healthcare
  • childcare
  • clean water
  • clean air
  • certain interior spaces
  • certain exterior spaces — e.g. parks
  • natural wonders
  • shoreline and beaches
  • mail and home/rural delivery service
  • trash removal
  • public toilets
  • sewage processing
  • food, clothing, and shelter
  • heat and lights
  • streets, roads, highways
  • public transportation
  • freight shipping
  • telephone and telegraph
  • pest control
  • use of public lands/wilderness access
  • the “right to roam”
  • the “right to glean” unharvested crops
  • the right to use fallen timber for firewood
  • defense
  • police and fire
  • handicapped access

Some people argue for the inclusion of additional, more contemporary items on the list:

  • information
  • internet access
  • net neutrality
  • open source software
  • email
  • fax
  • computers
  • cell phones
  • the “creative commons”
  • racial, gender, national, and other forms of equality
  • birth control
  • environmental protection
  • response to climate change

The res publica is made up of those goods, services, and places everybody is entitled to just by being human, or by being a citizen or member of the applicable socio-cultural institution. Somebody’s got to administer all that, and somebody’s got to pay for it. Plus, as we saw last time, there are competing private interests as well.

You’ve heard of technological singularity — the point at which technology overtakes human ability — e.g., artificial intelligence and machine learning. Nowadays, administration of both private interests and the commonwealth has been delegated to a near-universal economic singularity:  the “free” market, carried out in the form of American-style capitalism, as also exported to the rest of the world. Superstar Italian-American economist Mariana Mazzucato[2] thinks this practice has skewed the private/public balance to the point where the commonwealth has been eliminated from policy-making:

“[Government is] an actor that has done more than it has been given credit for, and whose ability to produce value has been seriously underestimated – and this has in effect enabled others to have a stronger claim on their wealth creation role. But it is hard to make the pitch for government when the term ‘public value’ doesn’t even currently exist in economics. It is assumed that value is created in the private sector; at best, the public ‘enable’ [that privately created] value.

“There is of course the important concept of ‘public goods’ in economics — goods whose production benefits everyone, and which hence require public provision since they are under-produced by the private sector.

“… the story goes [that] government should simply focus on creating the conditions that allow businesses to invest and on maintaining the fundamentals for a prosperous economy:  the protection of private property, investments in infrastructure, the rule of law, an efficient patenting system. After that, it must get out of the way. Know its place. Not interfere too much. Not regulate too much. Importantly, we are told, government does not ‘create value’; it simply ‘facilitates’ its creation and — if allowed — redistributes value through taxation. Such ideas are carefully crafted, eloquently expressed and persuasive. This has resulted in the view that pervades society today:  government is a drain on the energy of the market, and ever-present threat to the dynamism of the private sector.”

The Entrepreneurial State: Debunking Public vs. Private Sector Myths (Rev. 2018) See also The Value of Everything: Making and Taking in the Global Economy (2018)

Prof. Mazzucato isn’t the only one concerned about this. When Occupy Wall Street puts up its “We are the 99%” sign, when voters support populist politicians[3], when French farmers don yellow vests and riot in Paris, when Malala Yousafzai advocates for educational opportunity, when Greta Thunberg scolds world leaders on climate change… all these are advancing their own responses to the current public/private balance.

In the search for remedies, the younger generation is more likely than their elders to reject populist nationalist politics and private capitalist solutions, and to push instead for an expanded commonwealth administered under a new version of an economic system many of their elders consider an economic dirty word.

More on that next time.

[1] Pure democracy — all those ballot initiatives — has joined republican lawmaking since California’s 1978 Proposition 13.

[2] The Times called her “the world’s scariest economist.”

[3] Here’s a list from the BBC of European nationalist politicians.

Progressive Capitalism

torn dollar bill

Torn dollar bill image source and license.

We’ve been looking at economic winners and losers in the zero-sum economy — particularly in the context of higher education, where cultural belief in the importance of college and post-graduate degrees on upward mobility and success in the job market is driving behavior that harms both parents (the college admissions scandal) and the economic and mental health of their children (student loan debt, general anxiety disorder, depression, suicide).

This series of blog posts is now in its third year — throughout, we’ve seen how hyper-competitive capitalism and its staunch faith in the implicit justice of the “free” market is causing other economic loses. For example:

  • the stagnation of middle class real incomes;
  • the rise of the numbers of statistically poor people in the U.S.;
  • the dismantling of compassionate social safety nets in favor of expensive, counterproductive, and humiliating replacements;
  • the rise of the “rentier” economy in which formerly public benefits have been privatized, making them accessible only to those who can afford them through the payment of economic “rents”;
  • the end of the American ideal of upward social and economic mobility;
  • the high cost of housing and the death of the American dream of home ownership;
  • the elimination of “normal” jobs through off-shoring, outsourcing, and the delegation of productivity to intelligent machines;
  • the advent of the short-term, contract-based “gig economy” with its lack of fringe benefits and its precarious prospects for sustainable income;
  • economic inequality that favors the wealthiest of capitalists at the expense of the bottom 90% (or 99%, or 99.9%, depending on your data and point of view);
  • the creation instead of an insular top-level “meritocrat” socio-economic class;
  • the new state of “total work” and the “monetization” of goods and services;
  • rising rates of career burnout, mental illness, and suicide resulting from social isolation and the vain struggle to find meaning and purpose at work;
  • the rise of corporate nation-states with economic and policy-making power that dwarfs that of many governmental nation-states;
  • the private (non-democratic) social policy-making initiatives of the wealthiest elites;
  • and much, much more.

Nobody meant economic policy to do this, but it has, for roughly the past 30-40 years. Good intentions; unplanned results.

We’ve seen that both plutocrats and progressives advocate for systemic change, while status quo inertia weighs in on the side of those who don’t see what all the fuss is about, since capitalism is undeniably the best economic option and always has been, and besides it’s still working just fine, thank you very much. Instead of meaningful discourse, we have a predominant nostalgic, populist doubling down on the neoliberal socio-economic cultural ideology that jet-propelled post-WWII recovery but finished running its course in the 1970s, while the retrenchers and the media slap those who beg to differ with the kiss-of-death label “progressive.” As a result, we’re left with incessant lobbing from one end of the polarized spectrum to the other of ideological bombs that originate in data and analysis skewed by cognitive biases, intentional blindness, and fake news . Economic policy-making resembles WWI trench warfare — a tactical grinding down of the opposition and the numbing and dumbing of everyone else. It was a bad idea then, and it’s still a bad idea now.

I had no idea this is what I was getting into when I decided three years ago to research and write about the new economy and the future of work.

It’s in the context of this toxic environment that Economics Nobel Laureate Joseph E. Stiglitz, offered his “progressive capitalism” alternative, based on “the power of the market to serve society.” Progressive Capitalism Is Not an Oxymoron: We can save our broken economic system from itself, New York Times (April 19, 2019). His article, like virtually all of the economics books and articles I read these days, begins with a long parade of evils and ends with a handful of policy ideas. His version of the former is by now quite familiar:

“Despite the lowest unemployment rates since the late 1960s, the American economy is failing its citizens. Some 90 percent have seen their incomes stagnate or decline in the past 30 years.

“This is not surprising, given that the United States has the highest level of inequality among the advanced countries and one of the lowest levels of opportunity — with the fortunes of young Americans more dependent on the income and education of their parents than elsewhere.

“There is a broader social compact that allows a society to work and prosper together, and that, too, has been fraying. America created the first truly middle-class society; now, a middle-class life is increasingly out of reach for its citizens.

“We confused the hard work of wealth creation with wealth-grabbing (or, as economists call it, rent-seeking).

“Just as forces of globalization and technological change were contributing to growing inequality, we adopted policies that worsened societal inequities.

“Even as economic theories like information economics (dealing with the ever-present situation where information is imperfect), behavioral economics and game theory arose to explain why markets on their own are often not efficient, fair, stable or seemingly rational, we relied more on markets and scaled back social protections.

“Politics has played a big role in the increase in corporate rent-seeking and the accompanying inequality.

“Markets don’t exist in a vacuum; they have to be structured by rules and regulations, and those rules and regulations must be enforced.

“We are now in a vicious cycle: Greater economic inequality is leading, in our money-driven political system, to more political inequality, with weaker rules and deregulation causing still more economic inequality.

“If we don’t change course matters will likely grow worse, as machines (artificial intelligence and robots) replace an increasing fraction of routine labor, including many of the jobs of the several million Americans.

“The prescription follows from the diagnosis: It begins by recognizing the vital role that the state plays in making markets serve society.

“Progressive capitalism is based on a new social contract between voters and elected officials, between workers and corporations, between rich and poor, and between those with jobs and those who are un- or underemployed.

“Part of this new social contract is an expanded public option for many programs now provided by private entities or not at all

“This new social contract will enable most Americans to once again have a middle-class life.

“The neoliberal fantasy that unfettered markets will deliver prosperity to everyone should be put to rest.

“America arrived at this sorry state of affairs because we forgot that the true source of the wealth of a nation is the creativity and innovation of its people.”

His point seems to be that merely reciting litanies of economic woes won’t bring about systemic relief — for that, we need to embrace an essential factor:

Paradigms only shift when culture  shifts:
new ideas require new culture to receive them,
and new culture requires new belief systems.

Systemic change requires cultural change — remodeled institutions and revised social contracts that tether ideas to real life. Trying to patch policy ideas into the existing socio-economic system is like what would happen if a firm were to abruptly change its products, services, and strategic and marketing plans without bothering to change its mission statement, values and beliefs, and firm culture.

Like that’s going to work.

Coming up, we’ll look beyond policy bombs to the higher ground of revised cultural beliefs, starting with next week’s search for the “public” that’s gone missing from the Republic.