A Moral Economy
#1 Introduction and Part I: What would it look like?
This is the first essay in a series that will make my observations and recommendations regarding U.S. economic policy more accessible and provide readers opportunities to provide comments that will help all of us examine and clarify our own ideas as we explore alternatives. The series will consist of excerpts from Social Security Basic Income: A Safety Net for All Americans, which I published in March 2020. As I stated on p. 3, “Although this book proposes a very specific solution (Social Security Basic Income, or SSBI) to the problem of income inequality, it’s more importantly a plea to renew Americans’ appreciation, understanding, commitment, and action to seize freedom.” The title for this series better reflects the latter objective.
In the last three years, awareness of Universal Basic Income (UBI) and Basic Income Guarantee (BIG) solutions has grown, and there have been encouraging pilots in various localities. However, we have not seen significant developments in national policy. Entitlement reform has not received much attention, either. I’m not surprised or discouraged, because it’s clear that Congress will not address either issue until they face serious political pressure to do so. In the meantime, all of us who advocate for change need to keep our powder dry, so to speak.
The (Amazon Books) market has signaled that few readers have the appetite for an entire book devoted to radical reform. Additionally, I realized that my case could use a fresh approach. My book describes the problem, analyzes it, and then presents a solution. Well, actually, it addresses two problems (income inequality and insolvency of Social Security) at once. I attempted to demonstrate that they were one and the same, but the details on financing may have fueled fears that my real intention is to balance the budget by eliminating benefits. I’ve decided it may be worthwhile to present the same ideas in a different way. To that end, I’m calling this series A Moral Economy instead of SSBI, and my arguments will be organized as a “gap analysis.” That means I’ll paint a picture of what a moral economy would look like, document what we actually have, and then show how SSBI could get us from here to there.
My first three Medium posts in 2017–18 all became part of the book. I mention this only because two of them were 15 and 19 minute reads. I thought nothing of it at the time, but now I know no one is that interested; ten minutes appears to be the limit. Therefore, I’m going to make these installments “bite-sized.” I’ll also try to make them digestible; the book is not written for academics, but some of the footnotes and citations may not be necessary for this forum. Finally, I’ll be doing my best to connect the dots, i.e., to turn this into a story that is easy to follow and piques interest in what precedes and follows each post.
I have not added new material to the text from my book, but I have updated links and data as needed.
I hope you find this series worthwhile; please share your own ideas, pose any questions you may have, and let me know if I’m falling short on any of these promises.
Complex but not complicated
Economics is the study of human action within an enormous context of living systems and a more limited history of philosophy, religion, and politics. That’s why my first book, The Political Economy of Bureaucracy, which was also my dissertation, cited a number of sources many would not expect in a book about government. Insights of my research came from looking at the federal bureaucracy in a different way. Where others saw a machine, I saw a Kaleidic Hyperstructure[1] of semi-autonomous human beings. Understanding the system we wish to change is critical to identifying the real problems and what might fix them. Many economists have fallen into the trap of forgetting the social part of our science. Consequently, major policies of all stripes are often formulated with little regard for implementation challenges, and seldom tested and revised or reversed based on evidence of effectiveness. Those that are tested (through rigorous program evaluation) fail more often than not.
The lifeblood of every corporate entity is its organization of resources to serve a strategy for reaching a clearly defined goal. Government entities should operate the same way, yet while we have long and short-term plans to do that, they are highly constrained by rigid control of resources and authority. These controls are designed by a Congress that lurches from one vote-buying opportunity to another. There is no glory or election campaign payoff in the painstaking work of building a complex model of the current policy landscape and determining how any given proposal would alter its configuration and operation — so no one in the policy stratosphere calls for it.
We deserve better — programs that operate as components of a complex adaptive system. Such systems are relatively stable because they feature fluid relationships defined by choice among component agents. In other words, they’re flexible and decentralized. Imagine an environment of agile federalism — a flexible relationship with other levels of government in which the federal role is limited to establishing minimum protections; think Bill of Rights. Key design features would be accommodation of differing economic conditions, demographics, fiscal constraints, and individual choices. Agile federal interventions would impose a national standard and then fully fund and administer that program. States that want more can supplement it however they wish — with their own tax dollars.
Morally and fiscally responsible
There is a spiritual aspect to all human relations. Public policies that affect everyone — and some profoundly — should reflect our society’s values. If they are in sync, our values will be enhanced; if not, we can lose our way.
In the middle of the 18th century, Adam Smith’s first book, The Theory of Moral Sentiments (TMS) established economics as a moral philosophy by describing how we earn others’ approbation and cooperation by impartially observing our own behavior. This led to the insight in The Wealth of Nations that exchange, in a free market, only occurs when it benefits both parties — a clear incentive to put oneself in another’s shoes so as to provide the right goods under favorable terms.
Two hundred years later (1971), John Rawls’ hugely influential philosophical treatise A Theory of Justice employed a “veil of ignorance” approach to questions of policy that have differential class-related impacts. He suggests that we can only arrive at a fair redistribution policy by imagining what we would support if we had no knowledge of our own circumstances (rich or poor heritage, good or bad health, greater or lesser intelligence, etc.). If we are honest, he says, we would choose a system that maximizes our liberty while limiting public options to those that benefit the least advantaged members of society. More recently (1999), in Development as Freedom, Nobel laureate Amartya Sen redefined freedom in terms of access to markets, challenging the view that markets are the means to freedom.
Even more relevant to welfare policy are remarks by the famous English Zen Buddhist Alan Watts about 50 years ago. He addressed the capital/labor issue by reminding us that technology is supposed to work for us, not the other way around. Watts said that we have allowed 17th century Protestant myths about the devil and idleness and 20th century myths about economics to warp our thinking about work as something we all must do to earn money. As credit fueled technological growth that should have reduced the need for labor, our hang-up about everyone needing to work instead created a problem of how to keep everyone working. We created jobs “making every kind of frippery and unnecessary contraption” that we then had to convince people they need and want. As a result, people are now working for the machines. The way out, he says, is to change our attitude about money and its relationship to work — “a formidable problem.”
Yuval Levin thinks we need to take a close look at individuals’ relation to the state: “Moral individualism mixed with economic collectivism feels like freedom only because it liberates people from responsibility in both arenas. But real freedom is possible only with real responsibility.” He takes issue with the idea that government can design and administer effective social programs — preferring instead dispersion of control because knowledge of both problems and feasible solutions is dispersed (local). As indicated in the preceding section, I strongly support structural decentralization of power, or federalism, not just because it is more efficient but because it is better for human development.
Debt financing is out of control because we have not insisted that our elected officials make real choices regarding taxation and spending. Those dependent on payments or tax breaks (and Congress has seen to it that most of us fit into one or both categories) want them to continue. Most federal spending is not being paid for at all; it’s on the tab that will be presented to citizens not yet old enough to vote or not yet born.
This is dereliction of duty by our elected leaders, who should use their innate ability, resources, and power to make decisions better than those that would emerge from mob rule. We need models of sincerity, integrity, restraint, prudence, wisdom, compromise, humility, trust, resilience, etc. Representative government will not work if elected officials merely grant wishes and pretend that rules we live by individually do not apply to collective choices.
No ruling class
The ruling class consists of rent-seekers — people who rely on government-sanctioned advantages, usually in regulations or tax policies such as tariffs and myriad corporate and individual tax deductions or credits. The working class is everyone else — rich or poor and regardless of income sources.
The vast majority of those benefiting from any given policy are not easy to identify, and it is impossible to know which individuals among a firm’s employees, investors, and customers are active supporters of the privileges and which are passive. It doesn’t really matter. We will not end the class war unless we eliminate special privileges. Those who have passively taken advantage are unlikely to actively resist. On the other hand, those who have built or rescued an enterprise that relies on the status quo will be very vocal about how unfair it is to them and detrimental to society to change the rules (e.g., by claiming it will lead to layoffs, or worse). I welcome this debate because I’m not advocating confiscation of past plunder — just immediate leveling of the playing field. Initially, on average, it will hurt the few more than it helps the many because it reverses policies that previously concentrated benefits and dispersed costs.
By my definition, welfare is any form of government-funded support to corporations or individuals. I’m sympathetic to the libertarian argument that taxation is theft by a tyranny of the majority. By this logic, eliminating tax expenditures (allowable deductions from income) is a tax increase. However, that complaint is completely undermined by another libertarian favorite: TNSTAAFL (There’s No Such Thing As A Free Lunch). The principle of self-government points toward paying one’s own way — not seeking exemptions. Our system is riddled with exemptions, and removing them will raise taxes on some of us. They may not agree with how much we are spending or how we are spending it. Neither do I. But that’s beside the point. It’s about time we restored fairness in taxation and balanced the budget. In my view, the main thing is that we all live by the same rules, because if we do not have the rule of law — agreement to decide on rules and abide by them — we’re not really American.
It’s time to merge these two classes by eliminating opportunities for rent-seeking. This requires active participation in self-government by members of the working class. SSBI is a huge step but just one example of a shift toward policies that treat everyone the same, trust people to make their own decisions, and make responsible public choices.
[1] Hyperstructures are systems of systems. Kaleidic is my term for the tendency of living systems to change their structures.
This essay drew from Chapter 1 My Perspective. The next (Part I continued) will include text from Chapter 4 Moral Inventory and Chapter 6 American Dream Reboot. The series will consist of three parts; Part II is What do we have? and Part III is How do we get from here to there?
