Category Archives: CONGRESS WATCH

A radical legal ideology nurtured our era of economic inequality

By Sanjukta Paul – Where does economic power come from? Does it exist independently of the law?

It seems obvious, even undeniable, that the answer is no. Law creates, defines and enforces property rights. Law enforces private contracts. It charters corporations and shields investors from liability. Law declares illegal certain contracts of economic cooperation between separate individuals – which it calls ‘price-fixing’ – but declares economically equivalent activity legal when it takes place within a business firm or is controlled by one.

Each one of these is a choice made by the law, on behalf of the public as a whole. Each of them creates or maintains someone’s economic power, and often undermines someone else’s. Each also plays a role in maintaining a particular distribution of economic power across society.

Yet generations of lawyers and judges educated at law schools in the United States have been taught to ignore this essential role of law in creating and sustaining economic power.

Instead, we are taught that the social process of economic competition results in certain outcomes that are ‘efficient’ – and that anything the law does to alter those outcomes is its only intervention.

These peculiar presumptions flow from the enormously powerful and influential ‘law and economics’ movement that dominates thinking in most areas of US law considered to be within the ‘economic’ sphere.

Bruce Ackerman, professor of law and political science at Yale University, recently called law and economics the most influential thing in legal education since the founding of Harvard Law School.

The Economics Institute for Federal Judges, founded by the legal scholar Henry Manne, has been a hugely influential training program in the law and economics approach. more>

The Surveillance Threat Is Not What Orwell Imagined

By Shoshana Zuboff – George Orwell repeatedly delayed crucial medical care to complete 1984, the book still synonymous with our worst fears of a totalitarian future — published 70 years ago this month.

Since 1984’s publication, we have assumed with Orwell that the dangers of mass surveillance and social control could only originate in the state. We were wrong. This error has left us unprotected from an equally pernicious but profoundly different threat to freedom and democracy.

For 19 years, private companies practicing an unprecedented economic logic that I call surveillance capitalism have hijacked the Internet and its digital technologies. Invented at Google beginning in 2000, this new economics covertly claims private human experience as free raw material for translation into behavioral data. Some data are used to improve services, but the rest are turned into computational products that predict your behavior.

These predictions are traded in a new futures market, where surveillance capitalists sell certainty to businesses determined to know what we will do next. This logic was first applied to finding which ads online will attract our interest, but similar practices now reside in nearly every sector — insurance, retail, health, education, finance and more — where personal experience is secretly captured and computed for behavioral predictions. By now it is no exaggeration to say that the Internet is owned and operated by private surveillance capital.

In the competition for certainty, surveillance capitalists learned that the most predictive data come not just from monitoring but also from modifying and directing behavior. more>

Technology ethics campaigners offer plan to fight ‘human downgrading’

By Joseph Menn – Technology firms should do more to connect people in positive ways and steer away from trends that have tended to exploit human weaknesses, ethicists told a meeting of Silicon Valley leaders on Tuesday.

Tristan Harris and Aza Raskin are the co-founders of the nonprofit Center for Humane Technology and the ones who prompted Apple and Google to nudge phone users toward reducing their screen time.

Now they want companies and regulators to focus on reversing what they called “human downgrading,” which they see as at the root of a dozen worsening problems, by reconsidering the design and financial incentives of their systems.

Before a hand-picked crowd of about 300 technologists, philanthropists and others concerned with issues such as internet addiction, political polarization, and the spread of misinformation on the web, Harris said Silicon Valley was too focused on making computers surpass human strengths, rather than worrying about how they already exploit human weaknesses.

If that is not reversed, he said, “that could be the end of human agency,” or free will.

The big companies, Harris said, “can change the incentives.” more>

Why the US bears the most responsibility for climate change, in one chart

By Umair Irfan – Humans are pumping more carbon dioxide into the atmosphere at an accelerating rate. But climate change is a cumulative problem, a function of the total amount of greenhouse gases that have accumulated in the sky. Some of the heat-trapping gases in the air right now date back to the Industrial Revolution. And since that time, some countries have pumped out vastly more carbon dioxide than others.

The wonderful folks at Carbon Brief have put together a great visual of how different countries have contributed to climate change since 1750. The animation shows the cumulative carbon dioxide emissions of the top emitters and how they’ve changed over time.

What’s abundantly clear is that the United States of America is the all-time biggest, baddest greenhouse gas emitter on the planet.

That’s true, despite recent gains in energy efficiency and cuts in emissions. These relatively small steps now cannot offset more than a century of reckless emissions that have built up in the atmosphere. Much more drastic steps are now needed to slow climate change. And as the top cumulative emitter, the US bears a greater imperative for curbing its carbon dioxide output and a greater moral responsibility for the impacts of global warming.

Yet the United States is now the only country aiming to withdraw from the Paris climate agreement. more>

Kavanaugh Ethics Complaints Once Again Dodge Ruling In The 10th Circuit

By Steve Denning – The judicial review of multiple ethics complaints against Justice Kavanaugh continued on its Gilbert-And-Sullivan trajectory with a 6-1 decision by the 10th Circuit last Friday that that court does not have jurisdiction to consider the complaints, even though Chief Justice Roberts explicitly requested the 10th  Circuit to assess them.

Some 83 ethics complaints had been filed against Judge Kavanaugh alleging not only false statements under oath during hearings on his nominations to the U.S. Court of Appeals for the D.C. Circuit in 2004 and 2006, but also, more flagrantly, misconduct at the nomination hearing for the U.S. Supreme Court itself in 2018, including making inappropriate partisan statements and treating senators with disrespect.

The complaints were not made without legal basis. More than 2,400 law professors concluded that during the Senate confirmation hearings, Kavanaugh has “displayed a lack of judicial temperament that would be disqualifying for any court.” Unlike the allegations of lying about events that happened many years ago, there was no question of fact as to whether Kavanaugh’s conduct at the Senate hearings actually took place: it was visible for the whole country to see on national television.

Former Supreme Court Justice John Paul Stevens also stated that Judge Kavanaugh has demonstrated bias and is “not fit for the Supreme Court.” Former Justice Stevens, in remarks to retirees in Boca Raton, Fla, declared that Kavanaugh’s statements on September 27 revealed prejudices that would make it impossible for him to do the court’s work. “They suggest that he has demonstrated a potential bias involving enough potential litigants before the court that he would not be able to perform his full responsibilities.” more>

Debunking Deregulation: Bank Credit Guidance and Productive Investment

Deregulated banking in rich countries delivers more “investment” in speculative asset markets, not productive businesses.
By Josh Ryan-Collins – Mortgage and other asset-market lending typically does not generate income streams sufficient to finance the growth of debt. Instead, the empirical evidence suggests that after a certain point relative to GDP, increases in mortgage debt typically slows growth and increase financial instability as asset prices rise faster than incomes.

These new empirical findings support a much older body of theory that argues that credit markets, left to their own devices, will not optimize the allocation of resources.

Instead, following Joseph Schumpeter’s, Keynes’ and Hyman Minsky’s arguments, they will tend to shift financial resources away from real-sector investment and innovation and towards asset markets and speculation; away from equitable income growth and towards capital gains that polarizes wealth and income; and away from a robust, stable growth path and towards fragile boom-busts cycles with frequent crises.

This means, we argue, there is a strong case for regulation, including via instruments that guide credit. In fact, from the end of World War II up to the 1980s, most advanced economy central banks and finance ministries routinely used forms of credit guidance as the norm, rather than the exception. These include instruments that effected both the demand for credit for specific sectors (e.g. Loan-to-Value ratios or subsidies) and the supply of credit (e.g. credit ceilings or quotas and interest rate limits).

In Europe, favored sectors typically included exports, farming and manufacturing, while repressed sectors were imports, the service sector, and household mortgages and consumption. Indeed, commercial banks in many advanced economies were effectively restricted from entering the residential mortgage market up until the 1980s. Public institutions — state investment banks and related bodies — were also created to specifically steer credit towards desired sectors. more>

The great tax debate—the world is turning

When intellectual and moral arguments align, the global climate can change quickly. That’s what’s happening with the US tax debate.
By Atanas Pekanov and Miriam Rehm – Policy proposals by lawmakers in the United States have spurred a hotly contested debate on taxation among economists in recent weeks. The Democratic congresswoman Alexandria Ocasio-Cortez argued that the US needed to raise additional revenue by going back to marginal top-income tax rates of up to 70 per cent to fund social programs and a Green New Deal, while the Massachusetts senator Elizabeth Warren proposed a wealth tax of up to 3 per cent on the richest.

While opponents and some commentators have deemed such proposals radical or ideological, both are buttressed by economic research. Economists largely seem to agree on some basic facts: inequality within the US has been rising and the benefits of growth have accrued largely to the top 1 per cent, while the real incomes of what in America is called the middle class have stagnated over the past three decades.

There is also consensus that the progressivity of the income-tax system has been eroded in many countries since 1980 and that wealth is currently much more unequally distributed than income.

The recent economic debate has thus revolved around whether higher taxes on top incomes or for very wealthy people should be deployed to counteract these trends. American progressives argue that higher revenues are needed if the US aspires to become more like the role-model European welfare state, with more inclusive social systems and better public services, financed by top marginal income-tax rates of above 40 per cent (in most EU countries) and/or some form of wealth tax. While some have misrepresented these ideas, they would only burden very wealthy individuals. more>

Faith and Religion in Public Life Are Not Replacements for Reform

By Chayenne Polimédio – Last week, religious leaders, humanitarians, and politicians came together at the Hilton Hotel in Washington, D.C., for a fellowship breakfast “in the spirit of Jesus.” The National Prayer Breakfast, held every year since 1953, is one of those moments—now rarer by the day—when political strife and division ostensibly take a back seat to prayer, calls for unity, and reminders of our shared identities. It’s also a reminder of how faith and public life are intertwined in a country where 70 percent of the population is Christian, and where the public’s trust in the church has always been greater than its trust in government.

But one need only think about recent headlines detailing a racist attack, a homophobic remark, or even broader political pettiness to question the extent to which the breaking of bread is enough to overcome the record-breaking level of division in American democracy.

The National Prayer Breakfast, in other words, is a reminder not of what kinds of positive changes faith is able to effect in public life, but of the kinds of changes it isn’t able to bring about. more>

How Trump’s Economic Chickens Are Finally Coming Home To Roost

By Steve Denning – Assisted by the least qualified White House staff in history, Trump has continued to breach conventional wisdom and practice. Yet Liberal analysts have watched with dismay as polls have showed stable support from Trump’s base, no matter how outrageous the behavior. Surely, they said, the economic reality of what Trump is up to must eventually kick in.

Now a trifecta of bad economic news for his base raises the question whether that time has finally arrived:

The comfort offered by Trump’s fictions is too seductive to be undermined by facts. To Trump’s base, the beautiful myth of “the Wall” is, and remains, more attractive than the real world.

In this way, “the Wall” has become a code-name for the racist, anti-immigrant isolationist policies of Trump’s presidency and a symbol of multiple toxic policies,

There’s a catch with the use of fictions in politics. “The chief disability of propaganda,” wrote Hannah Arendt in her classic book, The Origins of Totalitarianism, “is that it cannot fulfill the longing of the masses for a completely consistent, comprehensible, and predictable world without seriously conflicting with common sense.”

For a time, common sense can be held at bay and prevented from intruding into the cocoon of reassuring fiction. Yet the deliberate distortion of reality is also the cause of propaganda’s inevitable downfall. It is the inexorable collision with reality that eventually ruins the cocoon. It’s not a matter of whether. It’s only a question of when. more>

Democracy splutters—good governance under pressure

Amid political polarization and declining democratic standards, can OECD and EU countries sustain the good governance challenges such as globalization, social inequality and climate breakdown demand?
By Christof Schiller – Eroding standards of democracy and growing political polarization are severely hampering the implementation of sustainable reforms. This is one of the main findings in the Sustainable Governance Indicators (SGI) 2018 study by the Bertelsmann Foundation.

SGI is an international monitoring tool, which sheds light on the future viability of all 41 countries in the OECD and the European Union. On the basis of 140 indicators, we assess democratic standards, the quality of governance and reforms in the areas of economics, social affairs and the environment. More than 100 international experts are involved in our cross-national survey.

The most recent study highlights how waning standards of democracy and growing political polarisation hamper sustainable reform. Governments in countries including the United States, Hungary and Turkey are deliberately stoking social tensions rather than seeking consensus.

The report shows that the quality of democracy in many western industrial nations is waning, with democratic standards declining in 26 of the countries surveyed, compared with similar data from four years earlier. ‘Even within the OECD and the EU, the model of liberal democracy is subject to growing pressure—in some countries this means that even central democratic and constitutional standards such as media freedoms are already severely damaged or undermined,’ it finds.

Compounding this worrying trend, the study’s authors identify a simultaneous decline in the adequacy of governance, with many countries losing ground on key measures of good governance. more>