I talk a little bit this week about systems thinking, and it’s ‘way more complex and important than may be apparent in this brief treatment. If you’re interested, you may want to go online and read a couple of my earlier essays on the subject. One is entitled simply “Thinking ‘Systems’”, and is found back in NN Number 266. The other is actually a series of essays that begins in NN Number 560 with an essay called “Introducing Systalectics.” As always, just type “Nygaard Notes Number 266,” or whatever number you want, into your search engine. Easy.
That’s all I have room for. See you next time,
Writing in the Winter 2004 edition of Dissent Magazine, economist Jeff Faux made a number of points particularly relevant to this issue of the Notes. I’ve selected the following for this week’s “Quote” of the Week:
“‘[T]here are poor people in rich countries and rich people in poor countries. And just as politics in an expanding American economy developed around class and other interests across state lines, a similar process is going on in the current globalizing economy. … Globalization has created a global elite— people with mutual economic interests regardless of nationality. They include the leaders of multinational corporations and their financiers, their political partners, and their clients and retainers among the punditry, the military, the international bureaucracies, and the academy.”
In an often-cited 2013 article in International Studies Quarterly titled American Economic Power Hasn’t Declined—It Globalized! Summoning the Data and Taking Globalization Seriously, political scientist Sean Starrs made a point that goes a long way toward understanding the limitations on the power of any given President to alter the long-term trends that shape our lives.
Starrs argues that the traditional measures of economic power—balance of trade, gross domestic product (GDP), etc—are not nearly as useful as they used to be, since they do not “mean the same today in the age of globalization as they did in 1950 when economic activity was far more nationally contained.” We must, says Starrs, “consider the implications of the rise of transnational corporations,” or TNCs, which really have no nationality … [but] now account for the lion’s share of global economic activity…”
And the people who run those TNCs tend to work together toward common goals. Here’s how economist Jeff Faux explains it:
“Bankers in Miami see the world differently than bankers in Portland, Oregon. Those in London have a different perspective from those in Singapore. But when it comes to protecting the generic rights of capital, the elites of Miami, Portland, London, and Singapore are united. Accordingly, issues of concern to other classes are, by joint agreement, left out of the agendas” of the international financial institutions. Those issues, says Faux, “include the rights of labor, the protection of the environment, public health, community stability . . . and of course, democracy and accountability.”
Not only do “issues of concern to other classes” get left off the agenda, but capital actively uses its power to affect the rules of the game in the various nations in which capital operates. Sometimes we’re talking about the many ways that large corporations discipline small countries, as in the case of the widespread capital strike in Venezuela in 2002/03, for example. But it’s not just large against small; international capital increasingly has the power to give orders to even the largest nations. The socialist magazine Jacobin, in a February 3rd posting, explains how it works:
“A manufacturer refuses to invest in the United States until the government cuts taxes and loosens ‘environmental regulations and hiring rules.’ The CEO of a top technology firm flatly states that the $181 billion stored in an overseas tax haven won’t come ‘back until there’s a fair rate.’ Despite several trillion dollars in reserves, banks and corporations collectively refuse to make loans or hire new employees. In response, politicians from both parties seek to encourage investment by enacting pro-business reforms.”
So, while it is still true that nations and the international institutions they sponsor DO make the rules, the rules increasingly respond to the needs of capital. As I’ve said in these pages before, empire in the 21st Century is a global phenomenon, “by which I mean that there are established global trade and financial patterns that work to direct wealth and resources in certain directions, serving the interests of certain people at the expense of others.” The patterns, systems, and networks are still under construction, and so we see that, as economist Jeff Faux put it, “sovereignty is steadily eroding under the relentless pressure of global markets.”
I wrote in the last Nygaard Notes that U.S. economic power is declining, which I attributed largely to the rise of other regional powers, new international capital structures, a move away from the dollar, and so forth. And in this issue I am talking about the decline of national economic power in general, as capital, which “really has no nationality,” asserts its power. But I also said in the last issue that “there is another part of the United States that is not seeing its dominance decline.” What part is that? Read on…
Political scientist Sean Starrs, whom I cited in the previous essay, talks about the difference between “American” economic power—which, as I have just said, is declining—and the power/wealth of “American investors,” which is very much NOT declining. Listen: “American investors are not only the predominant owners of American corporations, but also the largest owners of top European corporations and significant owners of top corporations domiciled in the rest of the world. And as American investors own and thus profit from the world’s top TNCs (whether US-domiciled or not) more than any other nationality, American citizens continue to own the predominant share of the world’s wealth—much more than America’s declining share of world GDP would suggest.”
Therefore, says Starrs, “even if American GDP relative to the world is in decline, this does not necessarily imply that American corporations are in decline.” Or that wealth is leaving the country. The United States has 549 billionaires, with a combined net worth of $2.4 trillion dollars. The above summary explains a bit about the nature of this ultra-exclusive club. These people are of the United States, but not loyal to the United States. Their allegiance is to money.
There’s much more that could be said about this, but for purposes of our current discussion, I think that what we have here is an answer to what many people must see as a rather startling contradiction. And that is the contradiction between the call shouted endlessly by Trump to “Make America Great Again,” on the one hand, and the right-wing clarion call, on the other, to “dismantle the administrative state.”
Let’s examine that apparent contradiction.
Allegiance to Class, Not Nation
The influential right-wing magazine “National Review” ran a February 24th article with the headline, “Trump Wants to Deconstruct the Regulatory State? Good. Here’s How You Start.” The sub-head read: “Dismantling the administrative state could be Trump’s most valuable legacy, if it’s done correctly.”
And thus did National Review, perhaps unwittingly, gave a hint of what’s going on in the current moment. It takes a little explaining to understand what they’re saying.
Noam Chomsky, in a 2015 interview on the website Alternet, described the United States as a “Plutocracy masquerading as formal democracy.” Plutocracy, as the old joke goes, is based on the Golden Rule: “Those who have the gold make the rules.” But, while Chomsky was speaking of the role of money in shaping the modern-day Democratic and Republican parties, the point that I’ve been making here is even more profound: Government is actually losing its ability to shape our daily lives and is being supplanted by a corporate organism that makes its own rules and makes more and more of the decisions about how we live.
When Trump says he wants to “Make America Great Again,” his nostalgia evokes the first Gilded Age, which ran from the 1870s to the end of the 19th Century, and which the Los Angeles Times recently wrote was characterized by “the reign of plutocracy, government in the hands of the bankers and the corporations, and ordinary people suffering.” Jump forward to 2017, and you find that many of those ordinary people really ARE suffering, which is a part of what drove them to cast their votes in 2016 for the guy who promised to “make America great again”. The point I’ve been making, in the last issue and continuing here, is that Trump cannot “make America great again” even if he wants to. And here we circle back to the revealing headline of the National Review article I cited above. You remember: The headline read “Trump Wants to Deconstruct the Regulatory State? Good. Here’s How You Start.” And the sub-head read: “Dismantling the administrative state could be Trump’s most valuable legacy, if it’s done correctly.”
Propagandists talk about the “administrative state” (when they are forced to talk about this stuff at all). But National Review reveals that the “administrative state” is also known as the “regulatory state.” And the word “regulation,” in the United States, is code for any intrusion of democracy into the world of capital. And preventing any such intrusion is very close to the core of “the generic rights of capital” that the bankers and other capitalists are united in their desire to protect. So, if Trump or any other president wants to wield state power for the purpose of “Making America Great Again,” he or she will soon find their efforts stymied by the billionaire class that has no interest in anything other than accumulating wealth for itself. America, and its pesky democracy, be damned. (The fact that the President himself is a plutocrat presents tensions that will play out in unpredictable ways.)
Chomsky may sound extreme when he says that the U.S. is a “plutocracy.” But if you take the time to look it up, you’ll see that a “plutocracy” is “a state or society governed by the wealthy.” I think an honest look at the degree to which unified capital imposes its will on the population, not just of the United States, but globally—reveals that plutocracy may be exactly the word we need to use if we want to understand the nature of today’s U.S. society.
Each year the Congressional Budget Office, or CBO, “provides the Congress with several hundred formal cost estimates that analyze the likely effects of proposed legislation on the federal budget.” According to the CBO website, the release of these “scores,” as they are commonly known, is done so that “Members have information about the budgetary consequences of enacting … legislation.”
The liberal media—and many others—were up in arms last week when the U.S. House of Representatives passed a revised version of the American Health Care Act without waiting for a score from the CBO. Waiting for these AHCA scores makes sense to a lot of people—as does the whole idea of the CBO doing cost estimates—and it’s worth thinking for a moment about why that is.
The idea is based on an understanding that, in addition to the stated intent of a legislative action—repealing and replacing Obamacare, for example—there are also other effects, which may or may not be stated or intended, but that legislators and the public should know about before proceeding.
This idea—that we should consider the effects of public policy beyond the stated intent—is a very important idea, because it encourages people to “think Systems.” When people are required to consider the costs of impending legislation, it reminds us all that everything has a cost, which may or may not be justified, or desired. But why do we only do this in regard to unintended budgetary effects? Doesn’t legislation have all sorts of costs beyond financial costs? Of course if does. And that leads us back to a discussion I left hanging in the last Nygaard Notes.
Consider Unintended Racial Impacts
In the last Notes I talked about the “Enhance Minnesota” Legislative Agenda put forth by the newly-formed People of Color and Indigenous (POCI) caucus in the Minnesota State Legislature. Two bills I did not talk about are perhaps the most exciting, and potentially important, proposals: House Files #142 and #1813. These are two different versions of what are known as REIAs, or Racial Equity Impact Assessments. According to Race Forward: The Center for Racial Justice Innovation, “A Racial Equity Impact Assessment (REIA) is a systematic examination of how different racial and ethnic groups will likely be affected by a proposed action or decision.” And the rationale, says Race Forward, is this: “The persistence of deep racial disparities and divisions across society is evidence of institutional racism––the routine, often invisible and unintentional, production of inequitable social opportunities and outcomes. When racial equity is not consciously addressed, racial inequality is often unconsciously replicated.”
Each of the bills supported by the POCI Caucus would apply this thinking to legislation proposed in Minnesota. (Companion bills have been proposed in the MN Senate.) The thinking here is that, just as every bill has some budgetary impact that we should know about, so does every bill have an impact on racial equity in the state, and we should know about that, so we don’t unwittingly make things worse.
Minnesota is hardly the only place where REIAs are in effect or being considered. Race Forward reports on REIA policies being proposed or enacted in Seattle, Iowa, Connecticut, and the United Kingdom, in addition to Minnesota.
Something in the political/cultural environment has made it seem desirable, even “normal,” to make ourselves aware of the monetary costs of proposed legislation. What will it take to make it seem desirable to consider the racial impact of proposed legislation coming out of Washington? I suggest that it starts with supporting REIA proposals that are being proposed in city halls and state legislatures (and elsewhere) all over the country. The POCI Caucus in Minnesota has made the proposals, and it doesn’t look like they’ll be considered by our now Republican-controlled state legislature. But the issue won’t die and, if we keep pushing and demanding this basic tool to address racial injustice, someday—hopefully soon—it will be the law of the land.