Monday, June 16, 2008

The bad business of bashing business to get Obama 

John Hinderaker makes a good point:

Holder is a legitimate target because of the Rich affair, I guess, but frankly I have little or no interest in who helps Obama choose a V-P. What bothers me most about these battles is the implicit assumption by some that just about any involvement in the business world is somehow suspect...

This is frankly stupid. Covington & Burling and O'Melveny & Myers are top-notch law firms that have represented a vast array of clients. The idea that there is something wrong with associations with companies like UBS, Exxon Mobil and Hewlitt Packard is absurd. If any connection with a top law firm or a large corporation is somehow taken as a black mark, pretty soon those who advise our Presidential candidates, or serve in their administrations, will be as inexperienced as, say, Barack Obama himself. That would be a sad outcome.

John is making a utilitarian argument -- that these attacks by conservatives and the easily goaded press will drive executives and accomplished professionals away from the Obama campaign -- but there is also this: At a moment of ascendant leftism and rising contempt for productivity, Republicans really ought to avoid bashing people who produce wealth, even when they play for the other team. Yes, it is tempting -- Obama's deeply offensive anti-business rhetoric and his sanctimonious promises for change make it very tempting to attack him when he involves people from the world of business in his campaign, but it is a temptation conservatives really ought to resist. Instead, they should applaud him for noticing that effective executives make a disproportionate contribution to the national well-being regardless of their political views.

CWCID: Glenn Reynolds.


By Blogger DWPittelli, at Mon Jun 16, 09:00:00 AM:

Don't you know that it is improper to question a Democrat's defense of unpopular causes and people, such as terrorists and rapists, but entirely legitimate to criticize a Republican's defense of business and establishment interests?

The bien pensant's dilemma today is that, as usual, some who have worked for business are working for the Democrats, and that can't be swept under the table as usual while the Democrats are still narrowly divided, with some wanting their apparent nominee to fall before the convention, or barring that, in the fall.  

By Anonymous Anonymous, at Mon Jun 16, 09:24:00 AM:

John's wrong. There is no substance to Hussein; he's all illusion, smoke and mirrors. Anyone who buys in needs to be aware that there is a cost, even if its just the deli that makes sandwiches for campaign staff.
If McCain wins and the neocommunists hold the congress, I GUARANTEE that every McCain appointee will get a complete historical vetting and suffer for associations of long ago.  

By Anonymous Anonymous, at Mon Jun 16, 09:31:00 AM:

I agree, but sometimes it's hard to resist attacking somebody for their hypocrisy.  

By Anonymous Anonymous, at Mon Jun 16, 09:34:00 AM:

It is unreal how many people I have had to explain the mechanism of oil company profits. There seems to be a complete misunderstanding among many people of where wealth comes from. In this world of crazy PC causes where hundreds show up a rallies to support murderers of police officers and terrorists, we should show a constant respect for those who legally create wealth. I don't know anyone who was give a job by a poor man.  

By Anonymous Anonymous, at Mon Jun 16, 10:11:00 AM:

I think it is disingenuous to cast society in terms of the UberRich and the phenomenally poor. I am willing to just boldly assert a spectrum, with three major components. Most liberal causes in my experience have had a threefold argument for attention to the middle of those three:

1: A vibrant middle class is THE historical indicator for long term prosperity. The middle class is, in terms of numbers, composed of people with the wealth to accomplish large things in the world (starting businesses, innovating, etc) and the motivation to achieve those things (because they want to be upper class.) It may be the case that upper class business owners have the capacity to throw down a corporate structure or partnership with a good number of employees fairly immediately, but smaller business owners are valuable too. Further, what is the mechanism for equality commonly touted in face of AA/Caucasian economic disparity? Small business ownership, not corporate participation.

2: We don't have a free market. At least, not in the simplistic classical economic sense of free and total information, no negotiation costs, economically rational participants, (Kahneman & Tversky, much of their work for references,) free entry and exit, a functionally infinite number of players, and the like. We can use such assumptions to for indicative theories, but they'll need patching. One of the patches commonly brought up is that if we believe the classical economic equilibrium is the right way to go, but we observe a one-sided friction in what would be the bargaining process, a compensatory mechanism is required if we hope to approximate the equilibrium. Such frictions could include an employer's need for a worker sometime but a worker's need for food now, the race to the bottom and other collective action problems, easily organized employers and poorly (if allowed) organized workers, the country cludbnetwork, and so on. If you buy any unequal friction whatsoever, the discussion immediately becomes one of what rectifying mechanism should take place, not whether one should.

3: Even if you disregard asymmetric friction, the last argument becomes one of aristocracy. Centrally, the idea is that it is fundamentally UNAmerican to allow a small number of people huge influence over the populace, with arguments that resemble the antioligopolous ones we all remember from Econ. This isn't a contempt for productivity, though some unreasonable people make take that angle, but a position steeped in what you think of economic policy in the US and how it should influence societal structure.

Observation: I have intentionally left numbers off of my class distinctions. I recognize that, as I don't have good numbers handy, and I am open to suggestions as to what they should be. I am aware that such numbers should be influenced by tax, cost of living, and inflation, and that they should skew higher than they do.  

By Blogger Dawnfire82, at Mon Jun 16, 12:01:00 PM:

"Centrally, the idea is that it is fundamentally UNAmerican to allow a small number of people huge influence over the populace"

But that's a fantasy. In any organized group, there has to be someone in charge to manage affairs and enforce decisions or you have chaos. The larger the group, the more you need.

The real issue is to make the composition of such an elite group fluid. Meritocratic, rather than aristocratic.  

By Anonymous Anonymous, at Mon Jun 16, 01:52:00 PM:

@Dawnfire: In my mind, that argument boils down to "You always need leadership, so leadership can never be allocated unjustly/inefficiently/detrimentally." The distinction that can be made is between problems of presence and problems of degree. It's not a matter of having or not having leadership (because we need it,) it's a matter of how much of it we have, and how many people get how much influence. Let's take your argument into an economic realm, there the market for widgets is theoretically organized. (All the players provide direction with their market action.) However, concentration in the form of oligopoly or monopoly is still bad, because there is a overcentralization of influence the hands of few and this generally leads to bad things.

When it comes to the income gap, materials like these:
are deemed disturbing, unfair, or some similar thing. (Before anyone attacks me for using a word like "fair," I intend its use in much the same way TH might have used it in his previous post: a share of the tax burden for X is unfair if it buts and undue and unjustified burden on X, where those words are defined by what you think is due and justified.) Even if many people get a turn in the really nice apartments sometimes, it would be good if the alternative wasn't a rat-nibbled box in an alley; potential for the nice spaces isn't everything, particularly when many psych studies indicate that utility derived from income has a heavy interpersonal comparative component. As to the mobility problem, I'll draw my conclusions from


among other places. The report regularly claims that there was quite a bit of income mobility, but let's look at the data. Table 1, page 7.

Of the five quintiles, permanence was highest in the top section at 63% more than the next highest permanence figure of 42.4 percent (for the bottom quintile). In the 10% 5% and 1% breakouts, there was tumult at the top (as one might expect from butting up against the tail of the distribution,) but the figure for 10% permanence is still high at 61.1%. Indeed, ALL of the permanence figures for the 10-5-1 breakouts are higher than ALL the permanence figures for quintiles except for the top one. One might be inclined to infer an upward trend from the skew in large numbers in the bulk of the table and the comparableness of the diagonals, but this data isn't sufficient to distinguish true independent distribution (where you came from has no impact on where you will go next) from what I'll call the Olympic rings distribution; vortices across major points of delineation with little spillback. To make the delineation clearer, it could be that rather than having Top 10ers fall to 4ther status and bounce around from there, a 3rder becomes a 4ther while a 5ther becomes a 4ther, then they return to their respective sides in the next shift. I am certain we can all imagine the narrative that might accompany this, with extended family bailing out and investing in corporations for the less fortunate family members to work at, so I won't elaborate. Should this be the status quo, what would seem to be high mobility actually doesn't produce much change.

Further, with continued efforts to repeal the estate tax, uncap political donations and such, efforts are in place that I doubt would increase mobility. (Interestingly, willingness to donate to political campaigns goes down when a donor-masking provision is invoked, implying a certain amount of perceived reciprocity.) Also, the report contends that there is high historic mobility, but that is cold comfort in an era where we face a theoretically unprecedented amount of opportunity. Colleges have stronger financial aid programs (with many now moving to grants rather than loans), information technology should theoretically be improving education, and discrimination should be less of an issue. If you want to make the weak comparison of "well, at least everything dosn't suck and we're all not dead," fine. However, I don't know that such a comparison is an apt one; it seems appropriate to compare in all things to where we should be, not where we could be.  

By Blogger Andrew Hofer, at Mon Jun 16, 06:34:00 PM:

"The real issue is to make the composition of such an elite group fluid. Meritocratic, rather than aristocratic."

Unfortunately, both candidates want a 'third way', they want to hand control to a group that is bureaucratic.  

By Blogger Andrew Hofer, at Mon Jun 16, 06:38:00 PM:

Anonymous - it's one thing to aspire to a more equal distribution. The question is how do you advocate getting there, and how does that relate to the post's subject of biting the hand that feeds the economy?

I disagree about the Estate Tax, I think abolishing it will increase mobility from the highest reaches. Money tends to flow from people who use it unwisely, especially when their hands aren't tied with estate -planning structures.  

By Anonymous Anonymous, at Tue Jun 17, 09:21:00 AM:

Somehow, I figured you would be throating Buttrocket on this one.  

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