Friday, November 14, 2014

“Applying lessons in a political economy,” The Colorado Springs Business Journal, November 7-13, 2014, 23.



LESSONS IN POLITICAL ECONOMY

As the latest mid-term election results are digested, and as we prepare for the onslaught of the 2016 elections, perhaps thinking about political economy is a more fruitful exercise than separating the two domains of our lives, the economy and politics.

The idea that the economy has nothing to do with politics is untenable, even in the ideal market capitalism of Adam Smith: who takes care of executing and enforcing contracts? Who ensures fairness of exchange?

There is an easy, somewhat cynical and definitely real way of thinking about the overlap of the economy and politics: the rich buying elections (through media advertisement). This has become especially true since Citizens United v Federal Election Commission (2010).

But there is a sober way of combining the two: the political and legal domains provide the conditions for markets—the economy—to thrive. Without the rule of law, markets become outrageously inefficient (and costly, if you have to hire the mob) if not outright dysfunctional (when no one can be trusted).

So, political economy encompasses the legal and political frameworks that reinforce the fairness of markets, the safety of exchanges, providing agencies and courts to make markets as efficient and inexpensive as possible.

Incidentally, this view isn’t limited to leftists who argue for market-socialism, but has been fully understood by the heroes of Milton Friedman and his Chicago School, namely, the Austrian School of Economics.

Two recent incidents reinforce this long-held belief. The first has to do with the newly appointed chairwoman of the Federal Reserve, Janet Yellen. While monitoring interest and unemployment rates, the flow of the money supply and the strength of the dollar, she reflected publicly about the hazards of inequality.

To be sure, chairwoman Yellen is concerned about economic and not political inequality; she cares less about the systematic disenfranchisement of voters in states like Texas and much more about income and wealth inequality.

As far as her comments can be interpreted, she’s channeling the view that financial inequality (of income and wealth) leads to reduced overall national demand (for goods and services) and therefore hampers economic growth.

Gone are the Reagan days of trickle-down economics, the theory that the very rich are supposed to spend so much that eventually the very poor will benefit as well. Likewise, the view that lowering taxes for expanded expenditure of the overall economy has been empirically discarded.

So, it’s reasonable to ask an economics question—is inequality undermining growth?—without having a moral question necessarily being asked as well (Pope Francis has taken care of raising the moral alarm bells).

But the economic question cannot be answered without changing policies associated with minimum-wages and closing tax loopholes for the corporate elite. All these, then, are political hot issues. Economics without politics is barren, and politics without economic consideration absurd.

The second case is less ideological but more frightening: the threat of the Ebola epidemic. Here we have political hot-button issues related to the balance that should be stricken between public health policies and individual privacy rights.

Should we quarantine those suspected of having been in the proximity of those infected by the Ebola virus? Should they be isolated from the general population? Where? When? For how long? Is this a state or federal policy?

How does this public health issue become an economic nightmare as well? Simply put, when a federal agency, like the Centers for Disease Control, wants to dictate a policy that affects private businesses, also known as hospitals. Where does one jurisdiction begin and the other ends?

Must private hospitals treat Ebola victims even if they have no insurance whatsoever or when the costs of treatment can never be recouped (even partially) by private or federal insurance agencies? Not every hospital takes all cases, and not every hospital has expensive and specialized units for rare disease: it’s not cost-effective.

But when it comes to public health, should economic questions even enter the equation? While the Affordable Care Act has been debated endlessly on ideological grounds, not much was heard from the private insurance companies that are the main beneficiaries from the Obama Administration’s largesse: the larger the pool of insured, the lower the risk; the lower the risk with additional premiums, the greater the profit.

Once again, the ideological debate cannot remain exclusively in the political domain, where candidates for political office can raise the issues without really dealing with them. For those wanting to blame Obama personally or his entire administration for the Ebola cases that were discovered on US soil, they should remember that health care remains a market-driven enterprise with federal mandates.

If we had universal health care like other industrialized nations across the globe, then of course the government has the power (and therefore the responsibility) to monitor and control the spread of an epidemic. But until we are more consistent in the application of our ideological differences, we cannot expect much progress.

Thinking of political economy as an interwoven set of ideas and practices that require a delicate balancing act between economic and political interests is the only way forward. With this in mind, we should expect piecemeal engineering, fine-tuning of policies that ensure the balance between the well-being of the nation as a whole and individual privacy.

Raphael Sassower is professor of philosophy at UCCS. He can be reached at rsassower@gmail.com See previous articles at sassower.blogspot.com

Tuesday, October 14, 2014

“Time is appropriate for reflection, action,” The Colorado Springs Business Journal, October 10-16, 2014, 23.



Time for Reflection and Action

Every businessperson knows that there isn’t enough time to think through decisions, that time for reflection isn’t usually scheduled during a hectic week.

The Jewish High Holidays are just that kind of time, asking us to stop and reflect, in a span of ten days, on what happened last year and what we hope to accomplish in the next year. 
The yellowing aspen leaves remind us of this time of the year as well; time for change.

Young residents cynically say that we should keep Colorado Springs “lame,” that in fact nothing has or will change in this sleepy village just south of the vibrant Denver metropolis. Should we?

As a challenge, I suggest four ways in which we can overcome our lameness and think of ourselves as potentially good enough, if not great. Yes, it’s about conceptualizing first and then doing, the way we offer a business plan to be executes later.

First, we should acknowledge past grievances in order to overcome them. Enough with the political bickering between the Mayor and City Council. Unless they want to compete with the low approval rate of Congress, they should change.

The Mayor should meet with each councilmember alone (with a therapist in tow?) to air old concerns in order to build a civil environment if not outright trust. If the Truth and Reconciliation Commission worked in South Africa after apartheid, it can work among our leaders.

Second, whatever has gone on in the past with city utilities, it’s time to think ahead to the future of our young entrepreneurs, those who care about the air they breathe and want to ensure a bright and healthy future for their children.

Why is CSU the “other” rather than “our” very own utility? Our best interests should be on their minds rather than threats of rate increases; as stakeholders and outright legal owners, we should determine the future of CSU.

Looking around the country at what is happening in every utility enterprise, we can quickly conclude: coal is out, renewal energy is in; old plants are out, efficient new ones are in. It’s not complicate to figure out how to be stewards of our environment—just some common sense and goodwill.

Third, let the City of Champions come forth and bring some fresh air to our stale old city. Despite the bickering and power moves, despite the concerns about wasting money and raising taxes, what else can transform the old warehouse district into a viable center?
Look northward to Denver and see what it did, with city leadership and financial support, to renew various areas that were moribund, that could be crime scenes rather than party spots. Has anyone been recently up there? It’s alive!

The four parts of this grandiose plan, the Air Force Academy—a federal entity that will take care of its allotted share, UCCS—a state entity that can be counted to take care of its future leaves the other two. Rumor has it that Dick Celeste said that he’ll lead the effort on behalf of the Olympic Museum; so what’s left? One fourth of the total, and we can’t find out how to handle it?

Fourth, I have proposed for years (to two different heads of the Convention and Visitors Bureau) to copy Colorado’s mountain towns. They somehow managed over the past decade to transform their heavy reliance on the ski season into a year-round programming that brings visitors every weekend for different festivals.

Breckenridge, with about 5,000 residents, hosts over 1.5 million guests annually. Can Colorado Springs, with 500,000, at least match that? I proposed to have something called “100 days of summer” (to Ms. Palus—Director of Parks, Recreation & Cultural Services—with no response). Here’s the plan.

Starting sometime in May or June, going all the way to late August or September, we should have an event every day in Acacia Park downtown: from farmers’ market to a local band, poetry reading and silent movie projection with a live piano player, all the way to street chalk paintings, mimes, and puppeteers. You name it, we can do it.

Who’ll fund this? I suggest we ask local individuals and business to contribute $500 for each day, thus completely underwriting the 100 days; some things will require less, some more, but $500 daily average should cover the costs. I volunteer to fund 2 days. Is anyone listening? Does anyone care?

These are just four ideas that I’m sure others can improve on. These are just some reflections that deserve to be heard and debated, just as I’m sure others, younger and smarter than I can offer theirs. What forum can they use? CSBJ? Social Media?

Raphael Sassower is professor of philosophy at UCCS. He can be reached at rsassower@gmail.com See previous articles at sassower.blogspot.com


Saturday, September 20, 2014

“The ‘other’ side of the NFL’s story,” The Colorado Springs Business Journal, September 19-25, 2014, 27



The NFL’s Other Story

While the airwaves and print media recycle their outrage over the revelations of domestic violence perpetrated by Ray Rice against his fiancĂ© at the time and Adrian Peterson against his 4-year old son, the focus has shifted from the alleged crimes themselves to the NFL’s cover-up.

Reminiscent of US Presidents’ own cover-up stories that ended in impeachments and the Catholic Church’s sordid history of protecting priests’ acts of pedophilia, the media reflects public outrage.

Will this storm be as quickly forgotten as the storm about the long-term debilitating effects of injuries suffered by NFL players? Will the concussion controversy be swept under million-dollar settlements with retired players or clever marketing campaigns?

As these scandals come to light, and regardless of how they’ll be eventually settled, they also shed light on the NFL itself as one of the most successful financial enterprises in the American entertainment industry.

To begin with, though race and class issues have been raised in media explanations of the behavior of NFL players, we are dealing here with millionaires, after all. The lowest NFL contractual salary per year is $375,000 (with an average of $1.9 million). Even if the average playing career of NFL players is short, this is a handsome compensation.

When we direct our ire at Commissioner Roger Goodell, we should remind ourselves that his annual compensation exceeds $44 million—not bad for the so-called sheriff of football. You’d think that for that salary he could have the courage to deal with criminals among his flock. Can we expect some moral courage as well, or is this too much to ask of a millionaire?

But with all of this money flowing, what we forget is that the NFL is a non-profit organization with strong players union. For devout fans—NFL games attract more viewers per game than any other sport—these facts might not be known. Non-profit? With an estimated $9 billion in annual revenue, how is it conceivable that the IRS would recognize such an organization as non-profit?

We know that the Church of Scientology has had its run-ins with the IRS, because of its dubious claims of religious practices. Is the NFL the new American religion? Does the worship of athletic celebrities warrant non-profit designation? I’m sure some clever lawyer made the argument that allowed for this ridiculous designation, but does that mean that game tickets are tax-deductible?

From a business perspective, this non-profit status is fascinating—who wouldn’t want to shelter profits in a similar fashion?—but not nearly as fascinating as the communal, even socialist, rules governing the league.

Last Sunday, there were three big upsets in the league: the Chicago Bears defeated the 49ers in their new stadium south of San-Francisco, San Diego defeated the 2013 Super-Bowl champions, the Seattle Seahawks, and Cleveland defeated the New Orleans Saints. How is that possible? Why is it that on any given Sunday, any team, even the statistically worst one, can beat the best?

The NFL is the model of real competition, the one Adam Smith already envisioned, and the one economists theorize about. If any participant team in the football market can beat anyone else, there must be some fairness in this game. How is fair play in the NFL guaranteed?

Though not government-imposed, there is league-imposed salary cap on all teams, so that the best and the worst cannot outspend each other. This way rich owners cannot skew the results of games by buying all the available talent in one year (the way it’s done in baseball, for example).

This imposed equality—socialist if I ever saw one—is an accepted, unquestioned feature of the game of billionaires (one of the worst teams in the league, the Buffalo Bills, was just sold for $1.4 billion). Would these same billionaires agree to such caps in other markets? Would they agree that fair competition requires strict regulations and enforcement, even unions?

Instead of reciting Adam Smith’s clichĂ© of Invisible Hand—unbridled competition despite monopolistic tendencies and barriers to market entry—we should recall his more nuanced and insightful Impartial Spectator. Focusing on morality, Smith insisted that our conscience be our guide, that our moral sentiments can ensure fair dealings with others.

As we delight in the socialist-framed competition of the NFL, we may also want to encourage owners, players, and fans alike to think in moral terms about their moral responsibility on and off the field. Celebrity status comes at a price, and so are the expectations of millionaire athletes: they are role models to young viewers and future players. As such, domestic violence, drug abuse, and DUIs should be fully excised from their daily diet.

Raphael Sassower is professor of philosophy at UCCS. He co-authored with Jeff Scholes Religion and Sports in American Culture (2014). He can be reached at rsassower@gmail.com See previous articles at sassower.blogspot.com