"I am told that at a World Economic Forum regional meeting earlier in
2008, the businessmen present were asked to vote on the most admired
political leader. Mandela and Obama were discussed and
dismissed. Putin was their laureate."

Tony--

Can you source this? Interventions that start with "I'm told" make me wary (cf. what Solve's been telling us).

I like the thrust of the question, but it leaves a number of escape routes ("beyond social responsibility") open. Asking for reassurance also seems a bit too ... ingratiating?

How about something like:
"In previous times of crisis, business leaders have often been seduced by the quick fix of authoritarian and anti-democratic solutions, especially when these have been dressed up in crowd-pleasing populist garb. What can be done to ensure that the current crisis will strengthen, rather than erode, corporate transparency and democratic governance worldwide?

I like both the suggestions by Hobbes and BigC.

I'd better not reveal my source on the Putin point without checking it is OK - but it was someone present at the meeting and whom I have every reason to believe trustworthy.

A combination of the distinct points might be good: a) the proper role of business in a democratic society is to serve the public and not to lead, but b) business has often, in times of crisis, found itself in a natural alliance with authoritarian and populist states, so c) what can Davos do this time to avoid the bad outcomes and promote a democratic vision of business?

---

tony

I am told that at a World Economic Forum regional meeting earlier in 2008, the businessmen present were asked to vote on the most admired political leader. Mandela and Obama were discussed and dismissed. Putin was their laureate.

Just out of curiosity, I spent a little while with Google, trying to find any reference to this incident. Nada. That doesn't mean it didn't happen, it just means that it apparently happened quite privately and went largely undocumented. If the central thesis of your question is that support for authoritarianism comes naturally to the global corporate elite in times of crisis and fragility, that thesis needs to be based on something more concrete than an unsourced and unsupported anecdote.

If I were to frame a question, I'd base it around what seems to me to be one of the fundamental economic problems of our time: in an age when sound economic policy is often unpopular and unsound policy is often popular, how do we establish and sustain sound economic policies without compromising democratic principles? In particular, how do we defend against pseudopopulist demagogues trying to talk their way to power by promising what they cannot deliver, or by riding on xenophobic and short-sighted protectionist policies?

Of course if I got to ask the question I'd frame it a lot more carefully, but since I don't get to ask, I won't bother.

I find it curious that so many seem convinced that the interests of business and the interests of "the public" are fundamentally dissimilar, but of course that's another issue...

owly - i do not think "business" or "the market" are anti-democratic or against the public interest. The freedom to transact is a basic freedom and very often the basic libertarian point is a good one that if two parties agree on something then there have to be very good reasons to intervene and stop them carrying out their agreement.

But Davos does not bring together the mom & pop stores of the world. It brings empires whose actions affect many people who are not party to any agreement with them; moreover, they are all bodies actively engaged in changing the rules by which society organises itself. This puts a special responsibility onto them, and onto citizens to hold them to account.

Steven - it sounds as if we're pretty aligned. In times of stress, how do we avoid the xenophobia and protectionism that were so readily embraced in the 1930s. My own view is that populism can only be countered by a thorough democratisation in which, as BigC says, values and goals are determined in a legitimate process and the corporation is a great and powerful tool in their realisation.

tony

Owly, not sure which bit I am not taking on board.

You start by saying: "most businesses are not multinationals ..." which I agree with, but simply point out that this is irrelevant to Davos where _only_ multinationals are represented.

You then argue about the proper role of business - to buy and sell "and not impose a vision on others." But that is exactly, in many ways, what many businesses, and particularly the ones at Davos, are involved in. Indeed, the world economic forum is a business organisation devoted to promoting a vision of the good society and business's (predominant) place within it. Indeed, you go on to praise the social-reforming businesses your ancestors have been involved in. What is that if not a (highly commendable) attempt to impose a vision on others?

You talk about the good things that business has done -- like reform society and found hospitals -- which, strangely, given your views, is not "buying and selling bananas". This seems to me to be going precisely in my direction of accepting that one way or another, business is good when it takes its social responsibilities seriously.

Governments, regulation and trade unionism have not always been the friend of the public good, you point out. But, I wonder, are you one of those people who have been expecting ever since the 1980s for a British economic miracle to trounce French or German economic performance and demonstrate the superiority of unregulated markets and attempts at making a small State? If so, I think you can expect to wait a long time. I (now) believe that the Thatcherite diagnosis of what was wrong with Britain was fundamentally incorrect, and we will continue to pay the price for not fixing the right problems for a long time.

tony

I am interested to see where this exchange goes. Just to add some fuel to the fire, I will say that I run a small business. I could also say that I would not be able to run this business in Europe.

As onerous as my tax burdens are now, they would be far worse if I were attempting this enterprise on the other side of the Atlantic. I would not be able to make it without passing that burden on to my customers, which would probably make the product I provide too expensive for the casual consumers that I service. (Lets just say that demand is highly elastic in my case.)

Europeans (generally) have made opening and operating a business prohibitively expensive for most ordinary people (I am extremely ordinary) and the result for their societies is less economic activity, higher unemployment, higher prices, less opportunity, and a lower net standard of living (Europeans have some of the highest wages in the world, but they also pay the highest prices.)

Tony, you can deride "corporate populism" all you wish, but it is the effects of political populism that is crippling Western European democracies, especially in a globalized world.

Owly, I wish you the best in this debate. I couldn't imagine being a conservative (read: economically literate) on that continent. However, something tells me that Tony is going to go on strike until you are forced to pay him a middle class income for a lower class argument, eight weeks of paid vacation annually, provide him with free health care for life, free childcare, full retirement benefits at age 50, pay enough taxes to do the same for workers in the public sector, etc, etc. If you are actually able to convince him of anything, then you should fly to France and apply your skills to pulling that country out of socialist bankruptcy.

Can somebody please tell me, why the mods deleted my answer to Tony? thank you very much!

Really, how democratic is opendemocracy?

Dear owly

In which position are you to defend a serious breach of freedom of speech? Are you an OD-mod too?

Placing links is well within UK Copyright law ...

I urge Iron Mike to bring back my proposal!

My proposal to Tony was a collection of links to shape my view on the issue, i cannot write it down in a single stroke, if you understand what i mean, to prevent me from airing my view is a serious breach of freedom of speech. Period!

All is good!

From Governmentally ill to Synarchy:

Dear Tony, here we go again, unbelievably true, but some people prefer to turn off fire fighters instead of the fire ... again, my cloud of thinking, to give you a direction what questions should be adressed to cope with holistic challenges in the 21st Century ...

From Governmentally ill to Synarchy: Divine Synthesis to holistically cope with global challenges in the 21st Century

Egomania The Invisible Pandemic

How Philosophy Overcomes Propaganda

Bring Back Capital!

Facing the Deindustrial Age

The Dawn of Aquarius - A New People, A New Consciousness, A New Era

The prophecy of Peter Deunov (Beinsa Douno)

A World Without Cancer - The Story Of Vitamin B17

Al Qaeda Doesn't Exist (Documentary) - 1

Al Qaeda Doesn't Exist and never has

The seven Cosmic Laws of Hermes Trismegistos

GOD asks us to LOVE terrorists and terrorism

Steep Uphill Climb to 2012: The World Will Not End

America's Dollar Denominated "Toilet Paper

Reinventing Money, Reweaving the Web of Life

Evolution of the Apocalypse - Empire's Demise - Human Renaissance

Divide and Conquer: The Anglo-American Imperial Project

Financial Meltdown: You Ain't Seen Nothing Yet

Heal The Money System - Heal Society

The Federal Reserve's War Against the Human Race

Why abolish the Federal Reserve?

THE WEB OF DEBT - The shocking Truth about our money system and how we can break free

Who are the Architects of Economic Collapse?

Financial Meltdown: Greatest Transfer of Wealth in History

The Noise of the US Transformations

U.S. Using Anti-Terror War to Gain World Oil Reserves

ZIONISTS DO NOT REPRESENT JEWS

America now is Germany then: Analogies

Message to materialists

True Economics

Synarchy vs. Anarchy

You have not come to earth for the purpose of becoming a CEO

Who runs the world? Wrestling for influence

Part of your purpose is to be a transformer of the matrix

Governmentally ill: We're the Government – and You're Not

Here's something the government didn't want you to see

The Most Powerful People in America

NATO and Israel: Instruments of America's Wars

The western world's war of terror against its own citizens

When love comes, there will be no more religion

The True Religion of Christ

The Invisible War on Humanity

The Concept of a Pan-World: Why a one world government makes perfect sense

Politics in the Light of Initiatic Science

Wealth in the Light of Initiatic Science

Technical progress and spiritual developement

All is good!

Dear Owly

You're producing list of horizontal arranged letters too, with more or less value in a discussion forum, but hey, no problem bro', freedom of speech rules!

At least i respect your thinking, i would never ever try to silence your opinion ... respecting every opinion is what democracy is all about ...

All is good!

Dear Owly

I am not wondering, while you following orders, even forgot, what produces opinion.

We want you to respect (open)democracy!

All is good :)

Dear Hobbes

Even if its more, what gives you the right to silence my opinion?

Tony--

Judging by some of the reactions, I think you're hitting the question just about right. It's clear that the "economically literate" among us (from Alan Greenspan and Hank Paulson on down) would prefer to conduct their business out of the public eye and without interference from the great unwashed. Business is just too complex to be left to the demos.

"I do not think you have any conception of just how destructive Government, regulation and especially Trade Unions have been."

I realize, of course, that the world was a much better place when the wealthy could decide where and how to spend their money, and the rest of us doffed our caps and tugged our forelocks when addressing them. Alas, the days of deference are gone forever. All the world is not Texas (PTL)--nor should it be.

Dear Hobbes

I would never ever silence somebody's opinion, therefore i will always defend my right to express myself.

I never dished out, therefore I do not have to take that at openDemocracy ...

All is good :)

Roger,

That is exactly what you are NOT doing: expressing yourself. You are merely posting a link which is frankly useless. It is useless to you and the rest of us. we would far rather you engaged with all of us and argued your ideas with us, but all that seems to happen is you post a link and sail away never to return. Waste of everyones time I'm afraid.

I didnt understand Jay and Owly's reaction to Tony's question at all

Dr. Curzon-Price,

I am impressed by your last post. You have more fundamental economic knowledge than I had given you credit for. Indeed, a bit of research on your name reveals that you have a PhD in economics, and were the founder and CEO (until 2007) of a company which specializes in "datapath design". Something here just doesn't add up. I am afraid that I am going to have to ask you a few questions.

In your attempts to make "the business elite accountable", do you not consider yourself to be involved in a conflict of interest? You are the business elite. You are a "businessman", a CEO, and most probably a shareholder. These titles make you the bane of the simple-minded liberal dogma that you apparently champion.

In the question that you are proposing to propose to CNN, you queried:

"...what can global businesses do
to show that they are not a naturally anti-democratic force?"

Well please tell us. You founded a global business, so you should be held accountable to answering your own question. I would like for you to show me that you are not a naturally anti-democratic force.

My question actually is, what makes you exceptional? Why are you a "good" businessman, whereas other CEOs are naturally "bad"? I can see that you are a good person who is concerned with the human condition, but I am curious as to why you are so cynical towards other people who have the same titles as you. I could forgive your leftist adolescence if you had never had any experience with polemical abstractions such as "profit", "corporate" and "investors", but your history indicates that you have dealt with these abstractions as vital facts of life, which should have stripped them of all of their devious connotations. Quite simply, you have been on the inside.

You just said, "Most employment, employment growth, innovation, value added and corporate taxation comes from large corporations...". Obviously you recognize the immense benefits that "big business" generates in society, and as an economist I know that you understand that large corporations are generally the most efficient models for distributing finite resources to consumers. So, why are you so hostile to them? Why do you consider them to be "politically (malignant)"?

The world needs more entrepreneurs. We need people who have the knowledge and the skills to turn ideas into jobs. Liberal programs are very expensive, and we need a rich society to be able to afford them. I want to know why you have gone from being a producer to being a beggar. If you have the ability to form a company and CREATE wealth, why are you now in a non-profit where you have to beg producers of wealth to share this wealth with you? Why don't you set up another business, and then donate all of the profits to your non-profit. You could be creating jobs AND promoting whatever your favorite cause is without having to sweat over funding. Now that would be an endeavor worthy of your resume.

The business community has reached out to you. They actually paid money to people who tracked you down and asked you to contribute your educated opinion. They are looking for help in forming an agenda to respond to issues such as economic reform and climate change. I would consider this to be fairly progressive, and would also consider them to be operating in good faith. You should be honored that they are soliciting your opinion, but instead you publicly sneer at them and ask them a loaded, insulting question. Why?

This rant might seem off topic, but this entire thread is irrelevant. You posted this thread on January 22, but apparently you missed this:

"A key date to keep in mind is 21st of January: this is the last day on which we can accept question submissions."

Hobbes,

I am afraid I don't have time to respond at the moment, but I will let you know that it is a pleasure talking to you. I have been reading a lot of your posts lately and was looking forward to having a discussion with you. You seem like a very smart guy.

I liked your thread "Interesting Reading", from early last month, and wished Steven Rogers had answered your last question (on why government bureaucracy was "defined" as non-productive). That is exactly the type of question that he enjoys, and it seemed like you two were off to a great debate. I would resurrect that thread and hold him to task.

Also, where are you? I read in another of your posts that the power in your city was knocked out by hurricane Ike, so you must be in my neighborhood somewhere. You also have an animosity towards Texans which I find endearing. (I am from New Orleans, currently living in The People's Republic of Austin)

It sounds like you may have already seen it, but you should check out the documentary "Enron. The Smartest Guys In The Room". It is quite enraging.

Thank you for the help in formulating the question - which has been selected by CNN over here:
http://edition.cnn.com/2009/WORLD/europe/01/07/davos.deardavos/#cnnSTCText

I promise to reflect the plurality of views if the BBC ask me to comment again :)

Very briefly Jay - you ask why I run a NFP when I could be a money-making entrepreneur. Because in both cases my goal is public service; by 2004, a year after the invasion of Iraq, it was clear to me that doing my best by trying to innovate in technology was not the most pressing thing I could be doing.

tony

Hobbes,

"If you think the world is divided into producers and beggars..."

I don't

"...it's pretty clear you've never run a non-profit..."

True

"...or given much thought to what it takes to have a democratic society..."

False

"I appreciate your point about needing people who can turn ideas into jobs. Too bad it's so easily confused with needing people who can turn ideas into profits--not exactly the same thing..."

Now just hold it right there. The word "profit" is simply the phenomenon of a surplus after costs have been deducted from revenues. Profits can be reinvested in the enterprise, used to hire more personnel, distributed to those individuals who invested in the company's future, distributed as bonuses to employees and officers, paid out in taxes or employee benefits, etc. All of these are good things. A business that is unprofitable is going to stagnate and die, which means there will be unemployment, decreased tax revenues, less economic activity, etc. These are a bad things.

We are going to have to bridge this disconnect before any further discussion. Please explain how you have come to equate "profit" with "evil".

Profits can be reinvested in the enterprise, used to hire more personnel, distributed to those individuals who invested in the company's future, distributed as bonuses...

Jay,

You failed to mention: Used to purchase a Learjet, a private resort in Cabo, spent on unlimited liquor and hookers, and some squandered frivolously.

Hobbes,

"In addition to Alan's examples..."

So, starting with Alan:

"(squandered money) Used to purchase a Learjet, a private resort in Cabo, spent on unlimited liquor and hookers, and some squandered frivolously."

(Great. Now I have to justify learjets to a hostile audience.)

For the sake of argument, lets say that we have an entirely useless CEO of a major corporation who wants a learjet because he has an inferiority complex and wants to prove that he is better than us. (Ignoring how such a person could have conceivably gotten past the board of directors and shareholders to land his position, much less maintain it to this point.) Lets say that everyone knows that he is an imbecile, and so all executive functions have been carved up between the CFO and the COO, and that the CEO thus has no pressing engagements because no one would trust him to chair tomorrow's meeting in Tokyo or any other meeting anywhere else. The CEO basically wants a 10 million dollar learjet so that he can pick up chicks, and for some reason the board votes to give it to him.

Is this a waste of company and investor money? Yes. Is it an unproductive use of wealth? No, if you can make the intellectual leap from microeconomics to macroeconomics. Learjet is a perfectly competent company headquartered out of Wichita, Kansas, which has been getting hammered lately. (Not much of a market for private aircraft these days.) An order for a 10 million dollar jet might prevent layoffs for Learjet, and those companies which supply parts to Learjet, and the companies that supply commodities to the parts makers. As long as all of those orders are still being made and all of those paychecks are still being written, everyone from Appleby's to Zales is going to taste a piece of that 10 million dollars. The fact that money is spent and re-spent until its gross economic impact far surpasses the initial input is known as "the multiplier effect". From an economic perspective, a bad decision here is merely a boon further down the line.

I am saying that buying a learjet is not "wasting" money. It has value and purpose inside the company and its purchase has economic benefits for society. It is also a fully depreciable capital asset that could be resold if necessary. Parenthetically, wealth can not be destroyed. It can be disastrously and immediately redistributed--as in, "my grandpa lost his fortune on porkbellies"--but that simply means that someone else has the money.

Now in the popular imagination, buying a learjet is a symbol of corporate excess, an unnecessary expenditure--usually claimed when the company is in financial trouble. I find it rather ridiculous that a company with nearly 63 billion dollars in revenue (Merrill Lynch, 2007) should have to defend itself against an accusation like "that 10 million dollar jet sank the ship!", but, whatever, let me try to explain why Learjet even exists. Lets forget the asinine CEO example above and move back to the real world.

In all of humanity, there are but a few individuals who have the knowledge, experience, and personal mettle to become the Chief Executive Officer of a multi-national corporation. When it is your job to be ultimately responsible for overseeing an enterprise with 90,000(!) employees scattered across the globe, and a balance sheet that stretches into the hundreds of billions of dollars(!), then you are one of the few individuals on this planet who can command a base salary of 50 million dollars a year.

Society resents a businessman making that kind of money, yet it has no qualms with Brad Pitt making the same amount for basically being good looking, or with Lebron James making the same amount at his "job". (I am not dissin' on The Bron. I know you are in Ohio and all.)

So lets say a certain CEO works 12 hour days for 330 days a year. (Which is a schedule not uncommon for such people.) With a salary of 50 million, you are talking about a person who makes almost $13,000 an hour. As difficult as it is to accept, when time is so valuable it makes perfect economic sense for certain people to travel in Learjets. If you ever see Bill Gates or Steve Jobs standing next to you in the airport security line--with their shoes in one hand and their boarding pass in the other--that is when you will know that the economy is truly screwed, and in a short amount of time we will all be bartering beans and eggs for shoes.

This is why the outcry over auto executives taking their Learjets to Washington "to beg for money" was somewhat ridiculous. However, even more ridiculous was the executives' populist response: each DRIVING hybrid vehicles from Detroit to Washington for the next meeting. I think it would have been more sensible to "Jetpool", but what do I know?

"...$35,000 commode...$87,000 area rug..."

Dude, you got me. I don't have the faintest idea why--even in goddamn New York--someone would feel it was necessary to spend such sums on everyday items. That is more than a sense of entitlement. I can understand paying 10 million for a corporate jet, but not money like that for something to walk on and something to crap in.

However, I don't think that 125k on these items was enough to sink the company. There is confusion and resentment in the general public as to what this global liquidity crisis is all about, and stories such as these are just a media feeding frenzy. The factors leading to a collapse of the Western banking system have little to do with some schmuck who got drunk and then went to an auction at Sotheby's.

Jay,

Sometimes you scare the crap out of me when you post my thoughts before I get a chance to type them.

Rather than Brad Pitt and Lebron, I was going to use A-Rod and Susan Sarandon. Hollywood stars and mega-star athletes make insane amounts of money, equivalent to big-time CEOs. The difference is, the CEOs do, at least, provide direct employment for lots of folks through the very existence of the companies they run.

The mega-stars provide employment to a small cadre of sycophants. Sarandon may employ some housekeepers, a publicist, an agent, a wardrobe consultant, etc., but that type of employment serves only her own interests. Those type jobs are akin to slave girls waving big feather-fans at the queen as she lounges on the couch eating grapes. (Okay, okay, the movies she makes provide a lot of jobs for camera men, script writers, jujube salesmen, and whatnot. But those are indirect employments of the movie industry. They are not a creation of Susan's plans, nor her investments. Those jobs are more the product of the producer's efforts.) Yet, I doubt there would be any sort of outcry if Susan was shown sitting on her golden toilet for an episode of "Lifestyles of the Rich and Famous."

Hobbes did, in my opinion, step into a pile of crap, leaving himself open to a line of attack, when he criticized a CEO for buying a golden toilet. For, if you can hold up the bad apple, you can also hold up the good one. How many jobs have been created by Bill Gates, Steven Spielberg, and Ted Turner? How many people now live in nice homes, have put their kids through school? How much money have these three men spent on charitable causes? Ted Turner has purchased millions of acres of the western wilderness to protect for future generations. Those CEOs used their wealth to improve the human condition. They took advantage of the capitalist system to make lives better. There are many other examples of CEOs who benefit us.

Now, if you can hold up good/bad CEOS to show the evils of "profits," you should also be allowed to hold up the good/bad leaders of the alternatives. So, show me the good sides of socialism and dictatorships. I can think of plenty of "bads." Pol Pot, Stalin, Mao, Mugabe...

If you can criticize profit by pointing out a golden toilet, I can counter that with massive poverty, genocide, injustice, and death.

Hobbes,

Getting to that post on the public sector that I pledged...

From the perspective of conservatives, the superiority of the private sector lies in its accountability. Ideally, there is one person at the core of a business whose life is directly impacted by the performance of the enterprise. This is critical for the economy of function within the business, as it creates a sense of urgency to innovate, to cut costs, to improve service, to do whatever it takes to remain competitive and avoid unprofitability. (read: dipping into your own savings account to avoid bankruptcy) When you have an owner or entrepreneur who is directly invested in the business (usually with his or her life's savings), you have a situation where the boss has a direct incentive to improve the economy of the business to its maximum potential. A good product at a good price thus becomes a great product at a great price, and this benefits consumers (people).

Naturally, if you remove accountability and incentive from an enterprise, you are going to have decreased productivity--the operation becomes less efficient. It is a fact of life that the public sector is less efficient than the private sector.

"My point was that creating jobs and making profits are not at all equivalent..."

I pointed out that this scenario was unsustainable. I also said "If a business is unprofitable it would be making itself less profitable (read: losing even more money) by hiring more people, and when it drains the bank account and exhausts the credit line it is going to implode." That is the natural order of things. However, your statement would be true if you were referring to the public sector. If Income is overwhelmed by Expenses in the public sector, you simply ask for more government funding.

It is important to remember that economics is generally about the quest to meet the infinite demands of society with finite resources; economics is obsessed with efficiency. Americans, for all our faults, tend to have an advanced appreciation for economic truths. We prefer that our government define the problem, and then have the private sector bid to do the actual work. It is more efficient that way. Our government rarely involves itself in income generating activity, as we generally believe these endeavors are also best left to the private sector. Conversely, consider socialist or left-leaning governments that have to varying degrees "assumed the means of production", as Marx put it.

So when I mention government funding--specifically in America--one should always remember that the only substantive source of government revenue is taxation. The target of taxation is going to be consumers and business, because the public sector is non-productive. I can sense the hair standing up on the back of your neck, so lets go back to your "Stimulating Reading" thread:

"Between the allocation of funds and the actual work lies a layer of non-productive bureaucracy, a layer that tends to expand dramatically as spending increases and remain firmly and eternally in place when the spending is done."

Steven Rogers

"So my question is whether "government bureaucracy" is non-productive by definition--only the private sector is productive--or by perspective (private contractors don't need any supervision, thank you)--or merely by millenial prejudice (everyone knows bureaucrats do no real work)?"

Hobbes

You and Steven are using the same words, but speaking entirely different languages. You are interpreting "non-productive" as "non-accomplishing". Steven is not saying that the public sector as a whole justs sits on its ass and does no real work. Steven is an academic writer, and his prose is brutally linear and succinct. He does not bother implying anything or alluding to anything. He is precisely stating that the bureaucracy does not produce anything that it can sell to pay for its operation. He is saying that without the accountability and incentive of the private sector there is no sense of urgency to economize the operation in response to market forces. He is saying that bureaucracy has a natural tendency to become bloated and to stay that way, and that this requires more resources to be diverted from productive industries into non-productive ones, which is fundamentally detrimental to the economy.

Liken the growth of bureaucracy to the aging baby boomers. As more of them reach retirement age, stop working and begin drawing benefits, there are fewer workers left to contribute to social security. More money is being taken out of the plan than put in. If you drastically raise social security taxes to bring the system into equilibrium, you are going to reduce consumption in the economy and possibly trigger a recession. Job losses will require higher social security taxes on fewer workers, plus more taxes for now necessary unemployment benefits. If the cycle continues, you wind up with France.

Many governments have attempted to remedy such budget shortfalls by "assuming the means of production". With rare exceptions, these governments have made the case against large public sectors. Countries such as Mexico, Venezuela, and Iran have state control over their oil industries. They wanted to bypass the greedy businessmen (perhaps) and use all of the revenues to benefit their societies (perhaps). Case by case, state appropriation of private industry is a disaster. (Although I do remember a story of the former state-owned Chilean telephone company being profitable.) Without the sense of urgency born of accountability and incentive, funds are misspent, research is neglected, infrastructure crumbles, labor productivity is unbelievably low, corruption is rampant, etc.

Another factor to consider with the public sector is personal accountability. When a person's employer is the government--either in bureaucracy or an employee of the state owned oil company--is it difficult to imagine that employer collapsing in bankruptcy. Even managers in such an entity find it difficult to fathom how such a contingency could be realized. It is even more difficult to conceive of the actions of an individual bearing any responsibility for it. Thus is born the complacency of anonymity. Individuals in a vast public sector enterprise begin to wonder if it even matters if they perform their job or not. People with access to company funds often pocket them. Employees take government property home. In the absence of an ultimately accountable authority who has a direct incentive to curb such behavior, the outcome is inevitable. Extrapolate that across an entire economy, and you can witness a spectacle like the collapse of the Soviet Union.

Now consider France. France is quite heavy in the public sector. The psychological legacy of centuries of class warfare has led to decades of populist legislation in France, and the result is a welfare state that the French popularly regard as a victory wrested from the ruling class. The French bureaucracy exacts a heavy toll on French business, and to illustrate this I will use Tony's words from above:

"France has high taxes and finds itself with the highest factor productivity in thew world because only very profitable businesses survive in that environment. (The downside - which it does not always handle well - is dealing with the inevitable unemployment thus created.)"

Like in the baby boomer cycle mentioned above, France has taxed many players (businesses in this case) out of the market and has thus created more strain on the economy. With so many demands on so few businesses, France has been borrowing profusely to cover their budget deficits. Per Capita, French debt dwarfs American debt, and their situation is unsustainable. Particularly because France does not currently have the business culture to correct the problem. Sarkozy has been attempting to address French fundamentals, and make it easier on businesses to succeed, but the French vehemently resist such efforts because they see them as social regression. Revolution or implosion actually seem possible.

Finally, consider the non-profit, or NFP as the Brits like to say. A non-profit could be considered the happy medium between the public and private sectors. It has a corporate structure but is non-productive. Inside any substantial non-profit you are going to find a Chief Executive Officer, a Human Resources Director, a CFO, etc. These people do not work for free, so they must be paid out of the charitable contributions. The non-profit does not get free power, or free rent, or free computers, or free office supplies, etc, so all of these expenses must be deducted from the charitable contributions also. If I give $5,000 to a battered woman's shelter, as a businessman I am perfectly aware that 80% of my contribution is going to operating expenses. Many people are shocked by this, but that is not my point.

Now lets say that Obama wants to do more to help victims of domestic violence. Lets say that he raises my business's taxes by $5,000, and then sends it to the same non-profit. Obama would have had to create a government agency to collect those funds, to research relevant non-profits to donate them to, to allocate those funds, and then to evaluate the effectiveness of the entire program. This agency would not get free labor, free power, rent nor office supplies either. How much of that $5,000 is reaching victims of domestic violence now?

More on the public/non-profit sector later. Meanwhile:

"Give me your definition of "equality" so that I can figure out where you are going with this."

Give me your definition of "definition" and maybe I can help. Ride the bus, work in a soup kitchen, volunteer at a homeless shelter, try to make ends meet: it gives you a kind of perspective on how most people get by that riding in a Learjet--no matter how efficient that might be--just won't. It's easy to forget.

Tony,

"Jay - I'm with you about accountability ... but less optimistic about the private sector's virtues in this respect."

If you like honey, then you are going to have to tolerate bees. Bees do not create honey because they are virtuous. On the contrary, we have to steal it from them, and they are never happy about it.

A great product at a great price, jobs, and a tax base that funds projects for the public good are all fringe benefits of a system that is the opposite of virtue. The private sector is often motivated by a greed that propels Darwinian brutality. The fact is that some individuals are not satisfied being rich. They want it all. They want to completely dominate their environment and destroy all competition. It is this alpha male mentality that creates society's most efficient companies, and we all benefit.

I am not naive. I am not saying that the private sector is warm and fuzzy. As much as I might be tempted to swat those buzzing, stinging bastards, I have to let them do their thing so that I can enjoy the ultimate reward. Basically, I am over here trying to enjoy some sausage, and you and Hobbes keep screaming at me, "Do you know whats in that?!?"

"To have power over others is precisely to be unaccountable to them."

You are thinking about it too much. Forget what you know and enjoy the sausage.

"Bankers free from the oversight that in theory their boards ought to have exercised have abused that "power over" just as the faceless bureaucrat in his adminstration abuses that power over."

This would be an interesting debate of differing perspectives. I am not seeing a deliberate abuse of power here. As a rational person, I do not believe that "the bankers" had any intention of sinking the ship beneath their feet. I think we must resist the temptation to find an easy scapegoat and instead scrutinize this problem in order to prevent ourselves from repeating it. The answers are going to come from people like you, Tony, (PhD economics, entrepreneur, CEO, principled humanist) so remember that society is looking to you.

As best as I understand this crisis:

Asian financial crisis of 1998. Savings glut. Sovereign Wealth Funds. Low American interest rates. American housing boom. Sub-prime mortgages. Collateralized Debt. Investment spiral. Maturing ARMs. Economic downturn. Default spiral. Global recession.

"It is in this sense that equality, democracy and accountability are foundational for me in a way that property is not."

Philosophically, I believe that property is fundamental, so this would be another interesting debate. But you might be on to something here. It is the capitalist belief in property that is responsible for a lot of this mess. (This is purely my opinion, so don't hold me to it.)

In my outline above, you see "collateralized debt". How could bundles of sub-prime mortgages--houses "sold" to people with no credit history and no money down--be given triple A ratings? How were people tricked into investing in this garbage?

I am not a cynic, so I do not believe it was intentional. For those regulators and inspectors who looked into these investment vehicles, I believe that there was a supposition--a capitalist bias--on their part that led them to believe that people would do anything to maintain control of their property, even if it meant taking on a second or even third job to keep from losing their house.

Without that bias, they might have looked closer into these investments, and realized that the individual buyers were not invested (had made no sacrifices or effort) in their new houses, and that companies such as Countrywide that had made many of these loans were not invested in these people paying them back. Countrywide did not make money on mortgage interest, they made money selling to Wall Street. One of the basic linchpins of the private sector--accountability--was removed from the equation, so these investment vehicles should have been treated with suspicion and derision.

You and Hobbes are leftists, which means that you believe that a few rich white guys caused all of this. (I am kidding, a little). I think there is plenty of blame to go around here. I fault Wall Street negligence and foreign investor greed right on down the line to the African-American janitor who "bought" a quarter million dollar home with no-money-down even though he didn't know what an ARM was and didn't even care. Blaming "bankers" for this mess makes about as much sense as blaming Tyrone.

What most impresses me is that Countrywide could trigger a global recession. (That is an oversimplification, but an accurate one.) Perhaps we need a new Bretton Woods, and a field of international regulators in the financial sector to make sure we don't accidentally call in the airstrike on our own position again. It will be a person like you that figures out how to set that up, so quit wasting your time talking to me and get to work, you damn lefty slacker.

Chris,

Funny. As I was writing that, I knew someone was probably going to call me a racist for doing so. I actually did think about changing it to "Mexican-American", because hispanics might have less historical grievances with Whitey and therefore I might come across as being less insensitive. I must admit that "prostitute" is a nice touch, but I rarely have such smashing flair in my prose.

By the way, where have you been? The entire discussion on the "Life on Mars" thread was merely a ruse to playfully insult your intelligence. I kept waiting for you to go on the attack, and I started getting nervous when you didn't. I kept looking over my shoulder as I walked around Austin, looking for a guy with a Toronto Argonauts jersey, an orangutan, and a knife, who would only say, "I said I didn't like hockey!!!" (Slash, slash, slash)

As to where have I've been, I told you, I'm honestly exhausted by the same old same old garbage being written here. Maybe if your country can invade another country to save the people by killing them, things will pick up.

Ah...to dream.

Chris,

"Maybe if your country can invade another country to save the people by killing them, things will pick up."

My country? Do you mean "Texas"? God help you if I ever get a brigade of rednecks together to come up there and kick your stupid ass.

By the way, with Iraq calming down and the Sunni's embracing the elections this time around, do you think it is time to have a conversation entitled, "What if Bush was right?" I mean, what if we do replace a dictator and build a democracy that transforms the Middle East? Would all of this have been worth it?

It was just a thought. In the meantime try not to muck up this thread with a bunch of your American-hatin'-dope-smoking-pacifist-Canadian nonsense. I have been working hard here.

Hobbes,

"One of the reasons (a learjet is) desirable is because you don't have to bother with the rest of us poor schmucks."

When I read that sentence a second time, I realized that the "you" in it was not actually referring to me. However, for the sake of argument, I will pretend that it did.

"One of the reasons (a learjet is) desirable is because you don't have to bother with the rest of us poor schmucks."

But I do bother with you poor schmucks! I just prefer to interact with you over the internet where I don't have to smell you and your "Obama" brand patchouli.

Hobbes,

"On the other hand, I don't believe that the "demands of society" are "infinite.""

I saw this come up with you and Steven once. I would disagree about the extent of society's demands. For example, I am but one person, but look at my Christmas list here:

I want peace between the Arabs and the Jews. I want a cure for AIDS. I want a cure for cancer. I want more economic development in Africa. I want more opportunity in Mexico so that its people do not have to risk their lives crossing a desert just to tape and float drywall. I want a cheeseburger with bacon and jalapenos. I want an international banking system suitable for a globalized economy. I want to eradicate polio once and for all. I want North Korea to free its people. I want China, India, and the rest of the developing world to be included in the Kyoto treaty so that America will sign it. I want Mugabe to stop destroying his country. I want Chris to come out of the closet--or, at the very least, as long as he is in the closet I want him to pick out a tie to go with my suit.

When I speak of "the infinite demands of consumers", I am not just talking about those people at The Gap. With the exception of the cheeseburger, all of my demands are going to take huge investments of time, skill, and money. We only have so much to go around, and we just don't have the resources to do everything that needs to be done.

One of my greatest frustrations with my liberal friends is that they all too often assume that the reason that we have not ended poverty, homelessness, illiteracy and AIDS is simply because rich people who ride around in learjets and "control all the world's resources" are just too greedy and selfish to help. I consider that an adolescent mentality that is contributing to the political equivalent of civil war in America. We have to learn to respect one another's perspectives. We have to learn that people who might hold views anathema to our own often have sophisticated and valid philosophies to support them. I want all of you liberals to think about that. I also want you to shave and take a shower.

I believe that Liberals and Conservatives have the same goals, they just have different philosophies on how to achieve them. They use the same words, but speak different languages. If the subject is addressing poverty in Africa, a liberal might suggest raising taxes on the rich in order to fund non-profits that could distribute aid. A conservative will suggest economic growth. When the liberal hears "economic growth" he translates that into "pave paradise and put up a parking lot". The conservative points out that the liberal's idea is unsustainable, and the liberal threatens to move to Canada if he doesn't get his way.

If you want something to succeed, you have to make it profitable. Not because money is all that matters, but to ensure that the process is sustainable. The best remedy for poverty could be encapsulated by "the migration of the shoe industry". I will explain that later--unless Steven shows up and does it for me--but for now I have to go.