Lying is as old as the “oldest profession” – and probably much older than that. But it’s not all bad. In the natural world, animals routinely try to deceive their enemies. Lying is a matter of life and death for them. One example is the tasty butterflies that changed their appearance to mimic other species that are known to be poisonous to predators. Winston Churchill once observed that, “in wartime, truth is so precious that she should always be attended by a bodyguard of lies.” Then there are the “white lies” -- lies that are inspired by our good intentions -- where telling the truth could be harmful, or simply cause hurt or embarrassment. In other words, the motives behind our lies matter a lot.
Lying is also a well-studied behavior pattern. The blog postings at Psychology Today are thick with items about deception and self-deception: Who lies (almost all of us sometimes), why we lie (there are many reasons, of course), adolescent lying (a special challenge), how to detect lies and liars (criminal investigators have well-honed techniques), how to protect yourself from liars (enlightened skepticism, learn who to trust, watch out for those who might want to cause you harm), and more.
A special concern is what could be called the hard-core lies -- the lies that do real harm to other people, sometimes even lethal harm. Perhaps the most notorious case in recent history was the way the cigarette companies, for at least a generation, denied the evidence that smoking causes cancer. The current version of this is the climate change deniers, in defiance of the overwhelming scientific evidence and the extreme weather all around us. Hard core lies are often discouraged with legal protections, and our courts are choked with cases where the claimants are seeking restitution for some alleged deception. Indeed, lying is a cardinal sin in a court of law. A lawyer can be disbarred for committing deliberate perjury.
Lying in politics is especially pernicious. A democracy cannot work without an informed electorate whose actions and votes are based on “transparency” -- knowing the truth. The model for lying in politics was Nazi Germany in the 1930s. Adolph Hitler’s propaganda minister Joseph Goebbels, an evil genius if ever there was one, was responsible for what came to be known as the “Big Lie.” If you repeat a lie often enough and with great sincerity and conviction, people can be seduced into believing just about anything. Proof of this was the relentless Nazi propaganda campaign against the Jews (blaming them for Germany’s defeat in World War One and the Great Depression), which culminated in the gas chambers of the Holocaust.
The modern masters of this dark art also have highly partisan ends in mind. Remember the “death panels” in the original health reform legislation? In reality it would have involved “interviews” that were intended to give the extreme elderly information about their options for end-of-life care. They were certainly not going to “condemn” people to death, as some opponents claimed. Likewise, the mandate that requires everyone to purchase some form of private health care insurance starting in 2014 is no more “socialist” than requiring everyone to carry automobile insurance. The latest examples of political canards are the various campaign proposals for drastically restructuring the tax code. These are portrayed (with a straight face) as fair and balanced but, in every case, they would sharply cut taxes for the wealthy and tilt the tax burden heavily toward the middle class.
So why don’t we get angry about the lies that are corrupting our politics, misleading the voters, and in some cases doing serious harm to our country? We are all too ready to accept uncritically the Big Lies, and stereotypes, that reinforce our biases and beliefs. Lies that serve our purposes are tolerated, it seems, because the end justifies the means. Too often we are too busy, or too ill-informed, or too prejudiced to care much about the truth. Or we shrug and assume that all politicians lie. But if they do lie, it’s because we let them get away with it and even to profit from it. There are all too many examples of lies (or “attack ads” that are borderline lies) that have decided elections. For instance, the so-called “swift boat” attacks on Senator John Kerry’s war record contributed to his defeat in the 2004 Presidential election.
Maybe it’s time to start fighting back against this destructive pattern. Some people, like Jon Stewart on “The Daily Show”, have been doing it. Here’s another idea. Somebody should set up an on-line “Liars Hall of Shame,” and every time a politician or some other public figure is caught in a lie, his/her image should be photo-shopped with a Pinocchio nose and then posted in this rogues gallery. Repeat offenders could then be flagged with sad smiley-face icons for each additional offense (they’re available at Google images). Public shame is still a powerful deterrent even in our cynical age, and repeat offenders would soon begin to stand out from the crowd. Lairs could even be assigned a mendacity ranking. Who would want to be known as the nation’s top ranked liar?
It won’t end lying in politics, of course. But it might give the truth a fighting chance.
Monday, October 31, 2011
Monday, October 24, 2011
The Value of Trust
Despite all the recent evidence to the contrary, many “mainstream” economists still cling to the myth that our economic progress can be attributed to our competitive “free market” capitalist system – based on a Darwinian “selfish gene” model of human nature. The myth persists in part because it has acquired the status of an ideological catechism. The reality, of course, is more complicated.
True, free enterprise and market competition has many virtues. It encourages innovation; it creates choices; it can motivate us to improve our performance (though intrinsic motivations are also important); and it provides a counterweight against the abuses that may occur when there is monopoly power in the market place.
But this is only part of the story. A so-called free market economy can also come to resemble a rigged game, where rich and powerful oligarchs write the rules in their own favor and crush upstart competitors, where government can come to resemble a handmaiden rather than a policeman or an honest broker, and where customer preferences are manipulated in ways that can be harmful or even lethal.
The root of the problem, though, is that many economists are still wedded to a flawed model of human nature. What the discipline of behavioral economics has learned – and the financial crisis and meltdown of 2008 tragically proved – is that humans are much more complicated than many mainstream economists assume, and that other aspects of human nature are also influential in the marketplace. The term “animal spirits,” coined by the economist John Maynard Keynes during the Great Depression, has recently come back into vogue. It implies that sometimes quite irrational behavior can control market outcomes. One such influence is our sense of fairness, which is the focus of my book about The Fair Society. Another influence, still underappreciated among many economists, is trust!
In fact, smoothly-operating markets depend on trust. Another way of looking at a complex modern economy is that it represents a vast network of cooperation and mutually beneficial exchanges of goods and services. And trust is the lubricant that makes it all work. As science writer Matt Ridley points out in his book, The Rational Optimist, the human species is not unique in displaying trust toward others – families, companions, other members of your social group. Studies in chimpanzees and capuchin monkeys, for instance, reveal similar tendencies. But we are quite unique in our pre-disposition to trust and trade with strangers.
Neuroeconomist Paul Zak and other researchers have shown that our trusting behaviors are closely associated with the release of the brain hormone oxytocin. It has been referred to as the trust hormone, and humans seem to have become oxytocin addicts. Some theorists believe that our predisposition toward trusting one another co-evolved in human evolution with the growing propensity of our ancestors, tracing back tens of thousands of years, to engage in extensive trade.
In small communities and established trading networks, trust is based on personal relationships. Many small towns still pride themselves on the fact that nobody locks their homes, or their cars, and lost items are always returned. But in large impersonal cities with many transactions between strangers, trust may depend on external trust-builders -- such as the reputation of a manufacturer and its brand, past experience with a product or service, advertising, endorsements by friends, celebrities (or doctors), government regulations and consumer protections, warranties, or perhaps the reputation of a middle-man or retailer.
However, trust is also a fragile commodity. It can quickly be dissipated by actions that are exploitative, dishonest, or unfair. Or simply harmful. Thus, Toyota suffered a steep drop in sales after it was disclosed that the company had been hiding problems with some of its models. Spinach sales in this country plummeted after an outbreak of lethal e-coli food poisoning that was traced to a farm in California. It has been reported that Greeks engage in widespread tax cheating because they do not trust a government that is perceived to be corrupt. And Wall Street banks experienced a deep freeze in the financial markets in 2008 when it became apparent that many of them were trading in toxic mortgage-backed securities.
Indeed, it seems that whole societies may differ significantly in relation to a cultural bias toward social trust, or distrust. Surveys have shown, for example, that some 65 percent of the population in Norway are predisposed to be trusting, whereas in Peru only 5 percent are trusting. Distrust in that society is widespread. And in our own society, the survey data suggest that social trust, and trust in our government, are at all-time lows.
Economists may still prefer to deal in the currency of dollars and cents. But the bottom line is that trust (or distrust) greatly affects the bottom line.
True, free enterprise and market competition has many virtues. It encourages innovation; it creates choices; it can motivate us to improve our performance (though intrinsic motivations are also important); and it provides a counterweight against the abuses that may occur when there is monopoly power in the market place.
But this is only part of the story. A so-called free market economy can also come to resemble a rigged game, where rich and powerful oligarchs write the rules in their own favor and crush upstart competitors, where government can come to resemble a handmaiden rather than a policeman or an honest broker, and where customer preferences are manipulated in ways that can be harmful or even lethal.
The root of the problem, though, is that many economists are still wedded to a flawed model of human nature. What the discipline of behavioral economics has learned – and the financial crisis and meltdown of 2008 tragically proved – is that humans are much more complicated than many mainstream economists assume, and that other aspects of human nature are also influential in the marketplace. The term “animal spirits,” coined by the economist John Maynard Keynes during the Great Depression, has recently come back into vogue. It implies that sometimes quite irrational behavior can control market outcomes. One such influence is our sense of fairness, which is the focus of my book about The Fair Society. Another influence, still underappreciated among many economists, is trust!
In fact, smoothly-operating markets depend on trust. Another way of looking at a complex modern economy is that it represents a vast network of cooperation and mutually beneficial exchanges of goods and services. And trust is the lubricant that makes it all work. As science writer Matt Ridley points out in his book, The Rational Optimist, the human species is not unique in displaying trust toward others – families, companions, other members of your social group. Studies in chimpanzees and capuchin monkeys, for instance, reveal similar tendencies. But we are quite unique in our pre-disposition to trust and trade with strangers.
Neuroeconomist Paul Zak and other researchers have shown that our trusting behaviors are closely associated with the release of the brain hormone oxytocin. It has been referred to as the trust hormone, and humans seem to have become oxytocin addicts. Some theorists believe that our predisposition toward trusting one another co-evolved in human evolution with the growing propensity of our ancestors, tracing back tens of thousands of years, to engage in extensive trade.
In small communities and established trading networks, trust is based on personal relationships. Many small towns still pride themselves on the fact that nobody locks their homes, or their cars, and lost items are always returned. But in large impersonal cities with many transactions between strangers, trust may depend on external trust-builders -- such as the reputation of a manufacturer and its brand, past experience with a product or service, advertising, endorsements by friends, celebrities (or doctors), government regulations and consumer protections, warranties, or perhaps the reputation of a middle-man or retailer.
However, trust is also a fragile commodity. It can quickly be dissipated by actions that are exploitative, dishonest, or unfair. Or simply harmful. Thus, Toyota suffered a steep drop in sales after it was disclosed that the company had been hiding problems with some of its models. Spinach sales in this country plummeted after an outbreak of lethal e-coli food poisoning that was traced to a farm in California. It has been reported that Greeks engage in widespread tax cheating because they do not trust a government that is perceived to be corrupt. And Wall Street banks experienced a deep freeze in the financial markets in 2008 when it became apparent that many of them were trading in toxic mortgage-backed securities.
Indeed, it seems that whole societies may differ significantly in relation to a cultural bias toward social trust, or distrust. Surveys have shown, for example, that some 65 percent of the population in Norway are predisposed to be trusting, whereas in Peru only 5 percent are trusting. Distrust in that society is widespread. And in our own society, the survey data suggest that social trust, and trust in our government, are at all-time lows.
Economists may still prefer to deal in the currency of dollars and cents. But the bottom line is that trust (or distrust) greatly affects the bottom line.
Wednesday, October 19, 2011
Compromise? Consider the Alternatives.
“Compromise” seems to have become a dirty word in some quarters these days – especially in our politics. To some people it seems to be a sign of weakness and moral turpitude. Compromise for them smells of “appeasement” -- or worse, defeat. In this view, you may only be encouraging a Hitler, or you may be abandoning your principles for the sake of expediency. If you compromise you are selling out. Thus, for example, if a business owner gives in to a labor union’s wage demands, or if you give in to your teenager’s pleadings for some privilege, it will only encourage more of the same. We all know about “intermittent reinforcement,” thanks to the Behaviorist psychologist B.F. Skinner.
Of course, some people are less concerned about principles. They are simply obstinate and inflexible, either by temperament or by training (or both), and every social conflict is viewed as a personal test of character. Compromise is not an option. So the old clich̩ about settling for half a loaf only works some of the time. In all too many cases, our conflicts have to be resolved by our friends and family members, or counselors, arbitrators, juries, or (sadly enough) with violence Рmurders, riots, revolutions, and even wars.
Unfortunately, it is also true that many conflicts involve what game theorists call a zero-sum situation. One “player’s” gain is offset by another player’s loss. No compromise solution is possible without changing the game. When a hawk looking for a meal goes after a rabbit, there is no “win-win” solution. In other cases, both players may lose if the game continues. World War One is the classic example; everyone lost that terrible war in different ways.
On the other hand, there are also many situations where all the players can benefit if only they have sufficient information to make the right choice. So “education” (and maybe some innovation) may be the way to find a resolution. Thus, if a deal had not been struck at the Constitutional Convention in Philadelphia in 1787 over such divisive issues as slavery and representation for the smaller states, we might have ended up with thirteen separate nations. All of this is well understood by game theorists, economists, marriage counselors and others in the conflict resolution business.
What is sometimes short changed in conflict situations is a deeper moral issue that may have very real psychological and practical/political consequences. Every stable social relationship involves at least a tacit (if not explicit) “social contract” that provides benefits and entails reciprocities for all the parties, or “stakeholders. And if we do not honor these contractual obligations, we may become exploitative – free riders or cheats who betray not only the interests and rights of others but also their trust. We violate their deep sense of fairness – not to mention the Golden Rule. We would almost certainly not want others to treat us the same way. And when we violate a social contract, we risk having other stakeholders abandon their obligations as well.
This, in essence, is the dilemma we face in our politics today. Our society represents a vast, complex social contract. We are all dependent upon many others to satisfy our basic needs and wants. And if some of us reject our mutual obligations, we cannot expect the other stakeholders to honor their obligations in return. The current Occupy Wall Street protests are thus only the tip of the iceberg – a growing sense of anger about a society that has become deeply unfair for many of us. In this situation, compromise represents the moral high ground, and a “my-way-or-the-highway” attitude is the road toward civil war. It is a dangerous moment in our history.
Of course, some people are less concerned about principles. They are simply obstinate and inflexible, either by temperament or by training (or both), and every social conflict is viewed as a personal test of character. Compromise is not an option. So the old clich̩ about settling for half a loaf only works some of the time. In all too many cases, our conflicts have to be resolved by our friends and family members, or counselors, arbitrators, juries, or (sadly enough) with violence Рmurders, riots, revolutions, and even wars.
Unfortunately, it is also true that many conflicts involve what game theorists call a zero-sum situation. One “player’s” gain is offset by another player’s loss. No compromise solution is possible without changing the game. When a hawk looking for a meal goes after a rabbit, there is no “win-win” solution. In other cases, both players may lose if the game continues. World War One is the classic example; everyone lost that terrible war in different ways.
On the other hand, there are also many situations where all the players can benefit if only they have sufficient information to make the right choice. So “education” (and maybe some innovation) may be the way to find a resolution. Thus, if a deal had not been struck at the Constitutional Convention in Philadelphia in 1787 over such divisive issues as slavery and representation for the smaller states, we might have ended up with thirteen separate nations. All of this is well understood by game theorists, economists, marriage counselors and others in the conflict resolution business.
What is sometimes short changed in conflict situations is a deeper moral issue that may have very real psychological and practical/political consequences. Every stable social relationship involves at least a tacit (if not explicit) “social contract” that provides benefits and entails reciprocities for all the parties, or “stakeholders. And if we do not honor these contractual obligations, we may become exploitative – free riders or cheats who betray not only the interests and rights of others but also their trust. We violate their deep sense of fairness – not to mention the Golden Rule. We would almost certainly not want others to treat us the same way. And when we violate a social contract, we risk having other stakeholders abandon their obligations as well.
This, in essence, is the dilemma we face in our politics today. Our society represents a vast, complex social contract. We are all dependent upon many others to satisfy our basic needs and wants. And if some of us reject our mutual obligations, we cannot expect the other stakeholders to honor their obligations in return. The current Occupy Wall Street protests are thus only the tip of the iceberg – a growing sense of anger about a society that has become deeply unfair for many of us. In this situation, compromise represents the moral high ground, and a “my-way-or-the-highway” attitude is the road toward civil war. It is a dangerous moment in our history.
Friday, October 14, 2011
Text Message to the 99 Percent…
…And an Open Letter to President Obama
The anger behind the Occupy Wall Street movement – the 99 Percent -- runs deep, and the protests seem to be spreading like a super-virus. But, as some critics have pointed out, anger is not enough. The outrage needs to be focused on a goal – a specific agenda for reform.
The overall objective should be to create a Fair Society. We need a new “social contract” based on three fairness principles: (1) equality -- ensuring that everyone’s basic needs are provided for, (2) equity -- reforming capitalism so that its rewards are more closely related to merit and all of the “stakeholders” receive a fair share, and (3) reciprocity – insisting that everyone pays a fair share, or contributes a fair share, for the benefits we all receive from our society. This would entail drastic tax reforms, along with a broad program of national service.
Here is just a partial agenda for achieving a fair society: First and foremost, we need a national full employment program that would put everyone to work who is ready and able to do so, and with a “living wage”. This is not a new idea, but it poses many challenges; there would have to be many moving parts to make a full employment program work, but it could be done. (I discuss this idea further in my book, The Fair Society.) We need to supplement this with a more generous safety net for those who, for whatever reason, cannot provide for themselves -- our “no-fault needs.” (The USDA’s estimate that some 50 million Americans went hungry at various times last year is a national disgrace.) Let’s also do something radical about our hugely expensive and inefficient health care system by going to universal health insurance -- Medicare for all -- along with some obvious cost reforms like drug price competition. (The administrative overhead cost for Medicare is 3-5 percent. Under private insurance, some 25-30 percent of the total cost goes to overhead, including advertising and lobbying expenses,and profits.)
Restructuring mortgages and otherwise assisting distressed homeowners (and former homeowners) is another obvious measure. Then there is the need to do something the long deferred maintenance on our national infrastructure of roads, bridges, sewers, dams and the like, to the tune of perhaps $2 trillion dollars. This would also provide many construction jobs. We also need to get back on track with efforts to reform and upgrade our vitally important educational system, rather than making drastic cuts (a form of national suicide by slow death.)
Then there are the structural reforms that are needed to fix our dysfunctional political system. Among other things, we need to do away with the filibuster rule in the U.S. Senate (or drastically curtail it). And we need to reverse the damage done by the Supreme Court with its Citizens United decision and sharply reduce the flood of corrupting money in our politics. Other democracies have done much better.
The obvious objection to all this (and more) is that we already have a yawning national deficit. These measures would only make the deficit much worse, so it has been said. The response to this charge is that we do not have to choose between deficit reduction and reforms. On the contrary, higher taxes on the wealthy (the top 10 percent, actually) and additional tax revenues from plugging the huge loopholes in our tax code, would then be “invested” in ways that would stimulate consumer demand and produce real and meaningful economic growth, with more revenues to businesses and many more employed workers paying taxes, which would increase overall tax revenues. In fact, falling tax revenues from the financial meltdown and the recession have played a major part in the current budget deficit.
The point is that there is a lot that we can do to bring about needed change, if there is the national will to do so. But this requires both a mobilized electorate – the 99 Percent – and committed and organized leadership. As the distinguished (now retired) PBS interviewer Bill Moyers put it: “The answer to organized money is organized people.” So my text message to the 99 Percent is: “Focus your anger on a demand for a “fair society.” And my Open Letter to President Obama reads (in part): “If you want to lead the 99 Percent, stop triangulating. It’s time to get behind your 2008 campaign promise and champion radical change. In case you’ve forgotten, here’s the agenda…”
The anger behind the Occupy Wall Street movement – the 99 Percent -- runs deep, and the protests seem to be spreading like a super-virus. But, as some critics have pointed out, anger is not enough. The outrage needs to be focused on a goal – a specific agenda for reform.
The overall objective should be to create a Fair Society. We need a new “social contract” based on three fairness principles: (1) equality -- ensuring that everyone’s basic needs are provided for, (2) equity -- reforming capitalism so that its rewards are more closely related to merit and all of the “stakeholders” receive a fair share, and (3) reciprocity – insisting that everyone pays a fair share, or contributes a fair share, for the benefits we all receive from our society. This would entail drastic tax reforms, along with a broad program of national service.
Here is just a partial agenda for achieving a fair society: First and foremost, we need a national full employment program that would put everyone to work who is ready and able to do so, and with a “living wage”. This is not a new idea, but it poses many challenges; there would have to be many moving parts to make a full employment program work, but it could be done. (I discuss this idea further in my book, The Fair Society.) We need to supplement this with a more generous safety net for those who, for whatever reason, cannot provide for themselves -- our “no-fault needs.” (The USDA’s estimate that some 50 million Americans went hungry at various times last year is a national disgrace.) Let’s also do something radical about our hugely expensive and inefficient health care system by going to universal health insurance -- Medicare for all -- along with some obvious cost reforms like drug price competition. (The administrative overhead cost for Medicare is 3-5 percent. Under private insurance, some 25-30 percent of the total cost goes to overhead, including advertising and lobbying expenses,and profits.)
Restructuring mortgages and otherwise assisting distressed homeowners (and former homeowners) is another obvious measure. Then there is the need to do something the long deferred maintenance on our national infrastructure of roads, bridges, sewers, dams and the like, to the tune of perhaps $2 trillion dollars. This would also provide many construction jobs. We also need to get back on track with efforts to reform and upgrade our vitally important educational system, rather than making drastic cuts (a form of national suicide by slow death.)
Then there are the structural reforms that are needed to fix our dysfunctional political system. Among other things, we need to do away with the filibuster rule in the U.S. Senate (or drastically curtail it). And we need to reverse the damage done by the Supreme Court with its Citizens United decision and sharply reduce the flood of corrupting money in our politics. Other democracies have done much better.
The obvious objection to all this (and more) is that we already have a yawning national deficit. These measures would only make the deficit much worse, so it has been said. The response to this charge is that we do not have to choose between deficit reduction and reforms. On the contrary, higher taxes on the wealthy (the top 10 percent, actually) and additional tax revenues from plugging the huge loopholes in our tax code, would then be “invested” in ways that would stimulate consumer demand and produce real and meaningful economic growth, with more revenues to businesses and many more employed workers paying taxes, which would increase overall tax revenues. In fact, falling tax revenues from the financial meltdown and the recession have played a major part in the current budget deficit.
The point is that there is a lot that we can do to bring about needed change, if there is the national will to do so. But this requires both a mobilized electorate – the 99 Percent – and committed and organized leadership. As the distinguished (now retired) PBS interviewer Bill Moyers put it: “The answer to organized money is organized people.” So my text message to the 99 Percent is: “Focus your anger on a demand for a “fair society.” And my Open Letter to President Obama reads (in part): “If you want to lead the 99 Percent, stop triangulating. It’s time to get behind your 2008 campaign promise and champion radical change. In case you’ve forgotten, here’s the agenda…”
Monday, October 10, 2011
"Class Warfare"? Absolutely!
Class warfare is nothing new. Plato spoke about it in his great dialogue, The Republic, more than 2000 years ago. “Any State, however small, is in fact divided into two -- one the State of the poor, the other that of the rich – and these are [forever] at war with one another.” He warned that extremes of wealth and poverty were the greatest of all causes of social conflict and revolution.
Adam Smith, the “founding father” of modern free market capitalism, also wrote about class warfare in The Wealth of Nations, in a passage that is seldom quoted by modern proponents of Smith’s “invisible hand” metaphor. “Masters are always and every where in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their [prevailing] rate.” Furthermore, Smith noted, “masters, too, sometimes enter into particular combinations to sink the wages of labour even below this rate.”
Many years later, Karl Marx embraced this theme and pronounced that it was the result of an “iron law” of economic evolution that would finally be repealed when the oppressed working class overthrew capitalism and replaced it with an egalitarian communist society.
During the industrial revolution in the nineteenth century, the words of Plato, Smith and Marx (among others) seemed to ring true. The rising factory system resulted in brutal, slave-like working conditions and squalid, impoverished living conditions for the laborers while capitalist owners amassed vast fortunes. And, as Smith predicted, organized efforts to reform these conditions were regularly thwarted by the organized opposition of the ruling class.
The take-home lesson from this dismal story came (mainly) in the twentieth century, when the major nations of the world took two very different paths – revolution and reform. The convulsive, bloody upheavals in Russia and China led to an authoritarian communism that was radically different from Marx’s vision, while most Western democratic societies undertook reforms that produced the modern “welfare state,” along with a moderate redistribution of wealth.
However, in this country political conservatives and the capitalist class seem to have forgotten this important historical lesson. While other welfare capitalist societies have maintained and even improved conditions for their workers, America has reversed course with a vengeance. Our safety net has been allowed to deteriorate while many millions of jobs have been outsourced and we have seen a huge increase in the gap between the wealthy few (the “one percent”) and the rest of us. For instance, CEO salaries have multiplied by about five times (after inflation) since 1980, while the average worker’s wage has stagnated. At the bottom of the economic pyramid, incomes have declined by about 27 percent (and a lot more than that after inflation). Today, the top 1 percent take home almost one quarter of our total national income. Earlier this year, Forbes magazine reported that 214 new billionaires were added to its list in 2010. Many of these were in other countries, but we still have the most billionaires, at 413. Overall, the net worth of the world’s billionaires jumped by 5.7 percent to an average of $3.7 billion each (the total is $4.5 trillion!).
The return of class warfare in this country has also been plainly evident in our politics. There have been systematic efforts to (among other things) hold down the federally-mandated minimum wage, reduce taxes for the top end of the income scale, eliminate inheritance taxes and shift the tax burden to the middle class And since the 2010 election there has been a full-scale assault on the safety net, coupled with demands to lower high-end taxes even further.
Now the pushback has begun, and class warfare has moved from Wall Street and Washington to -- well, Wall Street and Washington, though now it’s out in the streets. The psychology of negotiation and compromise has been replaced by the psychology of confrontation. Going forward, we will face once again the two alternative paths that were followed in the twentieth century – either reforms that will deal with the underlying economic hardship and distress, or an accelerating conflict that is unlikely to have a happy ending.
The hope is that we will choose the right path. The fear is that we will fulfill Plato’s prophesy that “ignorance is the ruin of states.”
Adam Smith, the “founding father” of modern free market capitalism, also wrote about class warfare in The Wealth of Nations, in a passage that is seldom quoted by modern proponents of Smith’s “invisible hand” metaphor. “Masters are always and every where in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their [prevailing] rate.” Furthermore, Smith noted, “masters, too, sometimes enter into particular combinations to sink the wages of labour even below this rate.”
Many years later, Karl Marx embraced this theme and pronounced that it was the result of an “iron law” of economic evolution that would finally be repealed when the oppressed working class overthrew capitalism and replaced it with an egalitarian communist society.
During the industrial revolution in the nineteenth century, the words of Plato, Smith and Marx (among others) seemed to ring true. The rising factory system resulted in brutal, slave-like working conditions and squalid, impoverished living conditions for the laborers while capitalist owners amassed vast fortunes. And, as Smith predicted, organized efforts to reform these conditions were regularly thwarted by the organized opposition of the ruling class.
The take-home lesson from this dismal story came (mainly) in the twentieth century, when the major nations of the world took two very different paths – revolution and reform. The convulsive, bloody upheavals in Russia and China led to an authoritarian communism that was radically different from Marx’s vision, while most Western democratic societies undertook reforms that produced the modern “welfare state,” along with a moderate redistribution of wealth.
However, in this country political conservatives and the capitalist class seem to have forgotten this important historical lesson. While other welfare capitalist societies have maintained and even improved conditions for their workers, America has reversed course with a vengeance. Our safety net has been allowed to deteriorate while many millions of jobs have been outsourced and we have seen a huge increase in the gap between the wealthy few (the “one percent”) and the rest of us. For instance, CEO salaries have multiplied by about five times (after inflation) since 1980, while the average worker’s wage has stagnated. At the bottom of the economic pyramid, incomes have declined by about 27 percent (and a lot more than that after inflation). Today, the top 1 percent take home almost one quarter of our total national income. Earlier this year, Forbes magazine reported that 214 new billionaires were added to its list in 2010. Many of these were in other countries, but we still have the most billionaires, at 413. Overall, the net worth of the world’s billionaires jumped by 5.7 percent to an average of $3.7 billion each (the total is $4.5 trillion!).
The return of class warfare in this country has also been plainly evident in our politics. There have been systematic efforts to (among other things) hold down the federally-mandated minimum wage, reduce taxes for the top end of the income scale, eliminate inheritance taxes and shift the tax burden to the middle class And since the 2010 election there has been a full-scale assault on the safety net, coupled with demands to lower high-end taxes even further.
Now the pushback has begun, and class warfare has moved from Wall Street and Washington to -- well, Wall Street and Washington, though now it’s out in the streets. The psychology of negotiation and compromise has been replaced by the psychology of confrontation. Going forward, we will face once again the two alternative paths that were followed in the twentieth century – either reforms that will deal with the underlying economic hardship and distress, or an accelerating conflict that is unlikely to have a happy ending.
The hope is that we will choose the right path. The fear is that we will fulfill Plato’s prophesy that “ignorance is the ruin of states.”
Wednesday, October 5, 2011
For Wall Street Protesters, the "Big Idea" is a Fair Society
The spontaneous, bottom-up protests of the so-called “Arab Spring” succeeded because they coalesced around an agenda for political change – to replace the brutal and corrupt regimes in Tunisia, Egypt, Libya (and now perhaps even in Syria) with new democratic institutions and new leaders who would deal with the deep poverty in those countries.
The growing anti-Wall Street protests in this country are similarly fueled by anger over our high unemployment, spreading poverty, and the extreme income gap between the rich and the rest of us. If the “American Spring” hopes to ignite a sustained movement for reform and revitalization, it will also need a platform for change – a vision for our future as a society. There is at least one candidate vision, and it’s called “The Fair Society.”
“Fairness” is a much-used buzzword in our politics these days, and cynics think it’s only a cloak, or a mask to hide our self-interests. But the cynics are wrong. One of the important findings of the emerging, multi-disciplinary science of human nature (it spans more than twenty different research domains) is that humans do, indeed, have an innate sense of fairness. We regularly display a concern for others’ interests as well as our own, and we even show a willingness to punish perceived acts of unfairness. Equally important, we are very good at judging when we are being treated unfairly.
The accumulating evidence for this distinctive human trait, which is reviewed in my book The Fair Society: The Science of Human Nature and the Pursuit of Social Justice, also suggests that it played an important role in our evolution as a species. The ability to recognize and accommodate to the needs, interests and rights of others served to lubricate the close-knit, egalitarian social organization that was a key to our ancestors’ success over literally millions of years. But things have obviously changed. The rise of large-scale, complex, hierarchical societies in the past 10,000 years has often resulted in enclaves of great of wealth surrounded by widespread poverty, and this has often precipitated social turmoil and revolution. This is not news. Plato warned about it in his great dialogue, The Republic, over 2000 years ago.
In the twentieth century, after two horrendous world wars, a deep and prolonged economic depression, and two convulsive political revolutions (in Russia and China), Western societies generally moved toward a more equitable distribution of wealth and created an array of programs and institutions to fill in the wide gaps in our free market economies. These included pensions (Social Security), health insurance (Medicare), unemployment insurance, aid to unemployed families with dependent children, a minimum wage, low income housing, education assistance, and much more.
From the 1930s through the 1960s, America led the way. However, in the past 40 years we have reversed course and (worse) have been outsourcing many millions of well-paying jobs. We now have the highest income inequality among all but two of the 30 advanced OECD democracies (Mexico and Turkey), and we have undermined our social welfare safety net. We now have about 25 million unemployed (or under-employed) and close to 50 million Americans living in poverty (most of them working poor who must struggle to earn even the official “poverty line” income of about $22,500 for a family of four). In fact, the USDA estimated that some 50 million of us went hungry at various times during 2010. Compared to other so-called welfare capitalist societies (like Denmark, Norway, the Netherlands, Sweden, and Germany), our safety net is also in tatters. For instance, most of these countries provide much more generous unemployment benefits and make a much greater effort to retrain workers and assist them in finding new employment. (Steven Hill’s study called Europe’s Promise is an eye-opener.) Our next door neighbor, Canada, also puts us to shame.
It’s time to re-write our “social contract,” and it has to be based on a moral foundation of fairness. Fairness means, quite simply, taking into account the interests and needs of all parties, all the “stakeholders”, and trying to strike a balance between them. However, there is no cookbook recipe, or formula for fairness. Because we have so many conflicting interests, and different opinions about what is fair in a given situation, it’s a goal that can only be approximated with consistent effort and often in the face of strong opposition. And, whenever there are conflicting views, “compromise” is the indispensable solvent for achieving a fair outcome. The challenge before us is that fairness in relation to our economy and politics also has three distinct aspects, or principles, that are rooted in human nature (equality, equity, and reciprocity), and these must be bundled together and balanced in order to achieve a fair society.
First and foremost, the deep purpose of a human society is not, after all, about achieving growth, or wealth, or material affluence, or power, or social equality, or even about the pursuit of happiness. An organized society is quintessentially a “collective survival enterprise” -- a vast interdependent system of reciprocities and collective undertakings designed to meet our fourteen distinct categories of basic needs. These needs are imperatives for our biological survival and the ability to reproduce future generations, and they are shared more or less equally among us. (Our basic needs are discussed in detail in my book.) So the first element of a fair social contract consists of a mutual obligation to ensure that all of our basic needs are provided for, including especially those among us who are the victims of various circumstances beyond their control. I call it our “prime directive.” If we abandon this moral obligation, we betray our heritage and we put our society in grave peril.
Beyond providing for all of our basic needs, the science of human nature has identified two other important fairness principles that must also be included in a new social contract. One is the principle of “equity”, or rewards for merit (or punishments, as appropriate). Not only is recognition for merit a deeply ingrained human desire, but rewards for merit are the incentives that fuel our ambitions, our exertions and, ultimately, the contributions we make to our society.
The third fairness principle – a need for reciprocity -- is also a deeply ingrained aspect of human nature and a well-documented norm in every successful human society – indeed, of most human relationships. It means providing compensation for a service, paying back a favor, doing your fair share and, in a broader sense, respecting the interests and rights of others and adhering to the Golden Rule (“Do unto others…”). And, of course, paying a fair share of the tax burden in return for the benefits you, your business, and your family and children receive from society. Otherwise, you are a “free rider” who is exploiting the efforts and contributions of others. This applies to the rich and the poor alike.
Accordingly, the new social contract that is outlined in The Fair Society has three distinct components: (1) a “basic needs guarantee” for all of our people; (2) beyond this, a reform of our capitalist system toward what has been called “stakeholder capitalism” – a model that ensures that the operative values in (especially) our banks and large business enterprises are fair to all of the stakeholders, not just the shareholders; and (3) reciprocity in the form of a much stronger commitment to ensuring a fair share of the tax burdens and a broad national service obligation for all of our citizens who are able to do so.
A range of specific reform proposals are described in The Fair Society, and there are many other practicable ideas that are waiting only for the political will to enact them. Some of the ideas I discuss include (most importantly) a national commitment to a full employment program, including efforts to re-train workers and subsidize private sector job creation, supplemented with programs like the successful Civilian Conservation Corps and the Works Progress Administration in the New Deal era. Beyond this, real help in restructuring mortgages for struggling homeowners would benefit the entire housing industry. Massive infrastructure spending could begin to work down the $2 trillion (plus) backlog of deferred maintenance (and put a lot of construction workers back on a payroll). This too would have long-term benefits for our economy. We also need to get realistic about the cost of living and raise the minimum wage gradually to a “living wage.” And, not least, we need top to bottom reform of a tax code that is corrupt and blatantly unfair. (This is not a full shopping list, but only a sampler.)
The Tea Party achieved its political clout with a focused and organized political movement and a clear legislative agenda. If the rest of us want to have a voice, we need to define the goals and agenda for “The Fair Society” and then mobilize the energies and resources needed to make it happen. This is the way that reforms have always happened in the past our society, and there is no reason why it can’t happen again.
The growing anti-Wall Street protests in this country are similarly fueled by anger over our high unemployment, spreading poverty, and the extreme income gap between the rich and the rest of us. If the “American Spring” hopes to ignite a sustained movement for reform and revitalization, it will also need a platform for change – a vision for our future as a society. There is at least one candidate vision, and it’s called “The Fair Society.”
“Fairness” is a much-used buzzword in our politics these days, and cynics think it’s only a cloak, or a mask to hide our self-interests. But the cynics are wrong. One of the important findings of the emerging, multi-disciplinary science of human nature (it spans more than twenty different research domains) is that humans do, indeed, have an innate sense of fairness. We regularly display a concern for others’ interests as well as our own, and we even show a willingness to punish perceived acts of unfairness. Equally important, we are very good at judging when we are being treated unfairly.
The accumulating evidence for this distinctive human trait, which is reviewed in my book The Fair Society: The Science of Human Nature and the Pursuit of Social Justice, also suggests that it played an important role in our evolution as a species. The ability to recognize and accommodate to the needs, interests and rights of others served to lubricate the close-knit, egalitarian social organization that was a key to our ancestors’ success over literally millions of years. But things have obviously changed. The rise of large-scale, complex, hierarchical societies in the past 10,000 years has often resulted in enclaves of great of wealth surrounded by widespread poverty, and this has often precipitated social turmoil and revolution. This is not news. Plato warned about it in his great dialogue, The Republic, over 2000 years ago.
In the twentieth century, after two horrendous world wars, a deep and prolonged economic depression, and two convulsive political revolutions (in Russia and China), Western societies generally moved toward a more equitable distribution of wealth and created an array of programs and institutions to fill in the wide gaps in our free market economies. These included pensions (Social Security), health insurance (Medicare), unemployment insurance, aid to unemployed families with dependent children, a minimum wage, low income housing, education assistance, and much more.
From the 1930s through the 1960s, America led the way. However, in the past 40 years we have reversed course and (worse) have been outsourcing many millions of well-paying jobs. We now have the highest income inequality among all but two of the 30 advanced OECD democracies (Mexico and Turkey), and we have undermined our social welfare safety net. We now have about 25 million unemployed (or under-employed) and close to 50 million Americans living in poverty (most of them working poor who must struggle to earn even the official “poverty line” income of about $22,500 for a family of four). In fact, the USDA estimated that some 50 million of us went hungry at various times during 2010. Compared to other so-called welfare capitalist societies (like Denmark, Norway, the Netherlands, Sweden, and Germany), our safety net is also in tatters. For instance, most of these countries provide much more generous unemployment benefits and make a much greater effort to retrain workers and assist them in finding new employment. (Steven Hill’s study called Europe’s Promise is an eye-opener.) Our next door neighbor, Canada, also puts us to shame.
It’s time to re-write our “social contract,” and it has to be based on a moral foundation of fairness. Fairness means, quite simply, taking into account the interests and needs of all parties, all the “stakeholders”, and trying to strike a balance between them. However, there is no cookbook recipe, or formula for fairness. Because we have so many conflicting interests, and different opinions about what is fair in a given situation, it’s a goal that can only be approximated with consistent effort and often in the face of strong opposition. And, whenever there are conflicting views, “compromise” is the indispensable solvent for achieving a fair outcome. The challenge before us is that fairness in relation to our economy and politics also has three distinct aspects, or principles, that are rooted in human nature (equality, equity, and reciprocity), and these must be bundled together and balanced in order to achieve a fair society.
First and foremost, the deep purpose of a human society is not, after all, about achieving growth, or wealth, or material affluence, or power, or social equality, or even about the pursuit of happiness. An organized society is quintessentially a “collective survival enterprise” -- a vast interdependent system of reciprocities and collective undertakings designed to meet our fourteen distinct categories of basic needs. These needs are imperatives for our biological survival and the ability to reproduce future generations, and they are shared more or less equally among us. (Our basic needs are discussed in detail in my book.) So the first element of a fair social contract consists of a mutual obligation to ensure that all of our basic needs are provided for, including especially those among us who are the victims of various circumstances beyond their control. I call it our “prime directive.” If we abandon this moral obligation, we betray our heritage and we put our society in grave peril.
Beyond providing for all of our basic needs, the science of human nature has identified two other important fairness principles that must also be included in a new social contract. One is the principle of “equity”, or rewards for merit (or punishments, as appropriate). Not only is recognition for merit a deeply ingrained human desire, but rewards for merit are the incentives that fuel our ambitions, our exertions and, ultimately, the contributions we make to our society.
The third fairness principle – a need for reciprocity -- is also a deeply ingrained aspect of human nature and a well-documented norm in every successful human society – indeed, of most human relationships. It means providing compensation for a service, paying back a favor, doing your fair share and, in a broader sense, respecting the interests and rights of others and adhering to the Golden Rule (“Do unto others…”). And, of course, paying a fair share of the tax burden in return for the benefits you, your business, and your family and children receive from society. Otherwise, you are a “free rider” who is exploiting the efforts and contributions of others. This applies to the rich and the poor alike.
Accordingly, the new social contract that is outlined in The Fair Society has three distinct components: (1) a “basic needs guarantee” for all of our people; (2) beyond this, a reform of our capitalist system toward what has been called “stakeholder capitalism” – a model that ensures that the operative values in (especially) our banks and large business enterprises are fair to all of the stakeholders, not just the shareholders; and (3) reciprocity in the form of a much stronger commitment to ensuring a fair share of the tax burdens and a broad national service obligation for all of our citizens who are able to do so.
A range of specific reform proposals are described in The Fair Society, and there are many other practicable ideas that are waiting only for the political will to enact them. Some of the ideas I discuss include (most importantly) a national commitment to a full employment program, including efforts to re-train workers and subsidize private sector job creation, supplemented with programs like the successful Civilian Conservation Corps and the Works Progress Administration in the New Deal era. Beyond this, real help in restructuring mortgages for struggling homeowners would benefit the entire housing industry. Massive infrastructure spending could begin to work down the $2 trillion (plus) backlog of deferred maintenance (and put a lot of construction workers back on a payroll). This too would have long-term benefits for our economy. We also need to get realistic about the cost of living and raise the minimum wage gradually to a “living wage.” And, not least, we need top to bottom reform of a tax code that is corrupt and blatantly unfair. (This is not a full shopping list, but only a sampler.)
The Tea Party achieved its political clout with a focused and organized political movement and a clear legislative agenda. If the rest of us want to have a voice, we need to define the goals and agenda for “The Fair Society” and then mobilize the energies and resources needed to make it happen. This is the way that reforms have always happened in the past our society, and there is no reason why it can’t happen again.
Monday, October 3, 2011
Debunking “The Age of Empathy”?
In an op-ed piece in The New York Times the other day, columnist David Brooks debunked the current “age of empathy” craze -- or at least the claims that empathy makes a significant difference in how we behave toward one another. Though most of us (not all) experience feelings of compassion toward others, Brooks acknowledges, “The problem comes when we try to turn feelings into action…It’s not clear it actually motivates you to take moral action…It doesn’t seem to help much when that action comes at personal cost.”
Brooks cites a recent review of the scientific research by philosopher Jesse Prinz, who concluded that “These studies suggest that empathy is not a major player when it comes to moral motivation.” Brooks concurs and echoes the naysayers who have called empathy a “fragile flower” that can easily be crushed by self-concern. Brooks gives more weight to “a sense of duty” that is dictated by social, moral, religious, or military codes. He concludes that “empathy is a sideshow.” We need, instead, to debate, reform, enact and “revere” our ethical codes.
Well, it’s not quite that simple. The truth may lie in a more complex, and subtle, middle-ground. In the first place, you’ll note that the philosopher quoted by Brooks said only that the studies he reviewed “suggest” that empathy is a minor factor. That’s a classic “weasel word” for a finding that is far less than conclusive. In fact, there are other studies that suggest the opposite – that empathy is a significant causal factor in our social and moral behavior. A more nuanced interpretation is that empathy is necessary but may not be sufficient. There are many other factors influencing our social behavior as well.
Consider this. “Prohibition” – the shameful episode in our history recounted in the new Ken Burns TV series – imposed a strict “moral code” with disastrous consequences. A similar disconnect exists with the Catholic ban on birth control measures versus Catholic practice. Sometimes, in fact, our sense of fairness and empathy toward others stands in stark opposition to the prevailing “codes.” Just think about the “codes” in our history that condoned slavery, racial discrimination, and the subjugation of women. Likewise, stealing is a crime everywhere, and most people support this prohibition in principle. But in a repressive and exploitative society that has extremes of wealth and deep poverty, the sympathies of many of us lie with the Robin Hoods and Zorros, who steal from the rich and give it to the poor.
In short, a moral code that does not also evoke our sense of compassion and fairness toward others is like a song without the lyrics (or maybe vice versa). But this is only the starting point, because many other factors do, indeed, influence our feelings of empathy (we can be quite selective about it) and what we do about it, if anything. In the first place, variation is the rule in nature, and human personalities are no exception. There is good evidence that some 25-30 percent of us are more or less empathy and fairness-challenged. Empathy is also highly susceptible to the “we-they” dichotomy in human behavior (and morality). Thus, “thou shalt not kill” does not apply to our “enemies” or, for many of us, convicted murderers.
Indeed, we are, as a rule, more likely to feel empathy toward somebody who is close to us, or like us, and to develop negative stereotypes to rationalize behaviors that align with our self-interests. Much of the antagonism in some circles to our safety net these days is fueled and justified by claims that the poor are (a) illegal immigrants, (b) lazy free-loaders and/or (c) drug addicts who do not deserve our charity.
And yet, a full accounting has to include the many millions of people who more or less anonymously donate billions of dollars each year to the victims of hurricanes, tornadoes, earthquakes, tsunamis, floods and terrorist attacks. In these cases, empathy is quite enough as a motivator for “costly” action, and it directly challenges Brooks’s claim that empathy is a weak flower that predictably succumbs to our self-interest. By the same token, even in the absence of formal ethical “codes”, our charitable actions are powerfully influenced by our social norms and expectations -- by the “praise and blame” of others around us, as Darwin put it in The Descent of Man.
In sum, empathy is alive and well, but it needs constant nurturing. That is the task before us.
Brooks cites a recent review of the scientific research by philosopher Jesse Prinz, who concluded that “These studies suggest that empathy is not a major player when it comes to moral motivation.” Brooks concurs and echoes the naysayers who have called empathy a “fragile flower” that can easily be crushed by self-concern. Brooks gives more weight to “a sense of duty” that is dictated by social, moral, religious, or military codes. He concludes that “empathy is a sideshow.” We need, instead, to debate, reform, enact and “revere” our ethical codes.
Well, it’s not quite that simple. The truth may lie in a more complex, and subtle, middle-ground. In the first place, you’ll note that the philosopher quoted by Brooks said only that the studies he reviewed “suggest” that empathy is a minor factor. That’s a classic “weasel word” for a finding that is far less than conclusive. In fact, there are other studies that suggest the opposite – that empathy is a significant causal factor in our social and moral behavior. A more nuanced interpretation is that empathy is necessary but may not be sufficient. There are many other factors influencing our social behavior as well.
Consider this. “Prohibition” – the shameful episode in our history recounted in the new Ken Burns TV series – imposed a strict “moral code” with disastrous consequences. A similar disconnect exists with the Catholic ban on birth control measures versus Catholic practice. Sometimes, in fact, our sense of fairness and empathy toward others stands in stark opposition to the prevailing “codes.” Just think about the “codes” in our history that condoned slavery, racial discrimination, and the subjugation of women. Likewise, stealing is a crime everywhere, and most people support this prohibition in principle. But in a repressive and exploitative society that has extremes of wealth and deep poverty, the sympathies of many of us lie with the Robin Hoods and Zorros, who steal from the rich and give it to the poor.
In short, a moral code that does not also evoke our sense of compassion and fairness toward others is like a song without the lyrics (or maybe vice versa). But this is only the starting point, because many other factors do, indeed, influence our feelings of empathy (we can be quite selective about it) and what we do about it, if anything. In the first place, variation is the rule in nature, and human personalities are no exception. There is good evidence that some 25-30 percent of us are more or less empathy and fairness-challenged. Empathy is also highly susceptible to the “we-they” dichotomy in human behavior (and morality). Thus, “thou shalt not kill” does not apply to our “enemies” or, for many of us, convicted murderers.
Indeed, we are, as a rule, more likely to feel empathy toward somebody who is close to us, or like us, and to develop negative stereotypes to rationalize behaviors that align with our self-interests. Much of the antagonism in some circles to our safety net these days is fueled and justified by claims that the poor are (a) illegal immigrants, (b) lazy free-loaders and/or (c) drug addicts who do not deserve our charity.
And yet, a full accounting has to include the many millions of people who more or less anonymously donate billions of dollars each year to the victims of hurricanes, tornadoes, earthquakes, tsunamis, floods and terrorist attacks. In these cases, empathy is quite enough as a motivator for “costly” action, and it directly challenges Brooks’s claim that empathy is a weak flower that predictably succumbs to our self-interest. By the same token, even in the absence of formal ethical “codes”, our charitable actions are powerfully influenced by our social norms and expectations -- by the “praise and blame” of others around us, as Darwin put it in The Descent of Man.
In sum, empathy is alive and well, but it needs constant nurturing. That is the task before us.
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