Tuesday, July 14, 2009

Pope says private enterprise should correct government failure

In July 2009 Pope Benedict XVI published “Caritas in Veritate” (Charity in Truth), his first papal encyclical on economic policy. He criticizes the concept that the goal of private companies should be to benefit the owners, such as the shareholders of corporations. The pope notes that the global economy has ruined the environment, generated great inequalities of wealth, and brought about a global depression.

The pope does not advocate state socialism, but rather calls on private enterprise to have as goals also the well being of society. Firms mush pay attention to the moral consequences of their decisions. What’s wrong with that?

Regarding pollution and other environmental destruction, since the atmosphere and oceans have no private owners, they are owned by the people, and governments have assumed the role of agents for the people. Thus governments have the moral obligation to charge polluters for the social cost of dumping waste into these areas. When they do not levy pollution charges, then they give the polluters an implicit subsidy.

If government subsidizes an activity, we get too much of it, more than is optimal. One cannot blame private enterprise for accepting the pollution subsidy. If folks don’t like the pollution, they should tell their agent the government to stop the subsidy.

Now comes the Pope saying that business should not maximize profit, but incur the cost of polluting less, even though government is offering a subsidy to pollute. In effect, the pope is saying, don’t take the subsidy. But that’s not the way the world works. Firms are in competition, and a firm that has a lower cost will have a competitive advantage. So firms will minimize costs by accepting the pollution subsidy from the state. If firms got together and agreed to all pollute less, governments would accuse them of collusion and impose heavy fines.

The pope wants firms to pay their workers more and to help the poor. Some firms indeed do charitable works, but why is there poverty in the first place? Economies with greater economic freedom, such as Hong Kong, have lifted their populations out of poverty, while those with little economic freedom, such as North Korea, have stayed poor or, like Zimbabwe, gotten poorer. Poverty can be extirpated, removed by the roots, with free trade and a free market.

Remove taxes from labor, enterprise, and goods, and shift them to land value. That equalizes the benefits from natural resources, removing the root cause of poverty. But the pope is not advocating this. His policies let government perpetuate poverty, and then he calls on private enterprise to correct this government failure. Maybe this is one of those religious mysteries.

What about the Great Recession, financial crash, and economic gyrations? Governments control the money supply, push interest rates around, and subsidize real estate, thus creating the booms and busts. The pope wants private firms to correct this also.

Why does the pope not call on government to reform itself, to stop subsidizing pollution and land values, and to stop penalizing labor with restrictions and taxes? Why does he not prevent the problems rather than let them happen and get business to mop up?

I don’t know why the pope condones government failure and then blames private enterprise. But I do know that the social reformer Henry George wrote about how we can apply on earth the economy in heaven. In his speech “Thy Kingdom Come,” George asked how land would be allocated in heaven. Would the first resident claim all the land and charge the others rent? Heaven forbid! All angels and other heavenly residents would share equally in God’s creation, and so God’s will on earth as it is in heaven is that the profit of the earth be equally for all.

But the pope did not say anything like that. He lets the profit of the earth go to corporations, and then asks the corporations to give the earthly profits back to the people. Why not let the profit of the earth go directly to the people in the first place?

It may well be church authorities and not God that work in mysterious ways.

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Thursday, July 09, 2009

Mass Democracy Fails in Iran

The protests about the election for president of Iran, and the violent response of the government, do not just indicate a problem with the vote count, but more deeply a problem with mass voting. Among its many flaws, mass voting is vulnerable to miscounting and election fraud.
If the government is in charge of counting the ballots, there is a temptation to skew the results in favor of the ruling party. This has occurred worldwide. Election results have been suspect in Zimbabwe, Kenya, Mexico, and many other countries. As we know, in the USA, the Florida vote count for president in 2000 was controversial, and there were questions about the vote count in Ohio in 2004.

Mass democracy creates a need to use the mass media to get attention and create a favorable image, but these messages can be misleading. But there is no way in mass voting for the typical voters to know the candidates personally, and there is little incentive for most voters to become well informed.

The opposite of large-group voting is small-group voting. People can know their candidates personally if they vote in a tiny group, such as in a neighborhood of about a thousand persons. Suppose in Iran the people only voted for a neighborhood council. There would still be factions and parties, but one could personally question and know the candidates. There would be candidate forums, and it would be inexpensive to distribute literature. Money could still be spent, but it could be effectively countered with personal communication.

The neighborhood council elections would use paper ballots, not machines. All machine voting is vulnerable to manipulation, and it is impossible to have a perfect test of any machine vote counting. With paper ballots, the counting would take place in public, and could be witnessed by anybody. The voting itself could be witnessed, as anybody could watch the voters go into booths and place the ballots into a box. As soon as voting ends, the ballots get counted. Thus election fraud could be minimized.

Even if, despite these safeguards, voting fraud takes place, it would be within one neighborhood district. Massive systemic fraud would be difficult to carry out if people everywhere are watching. In contrast, when the ballots are taken to a government office with restricted access, outsiders can’t know how the ballots are being counted. If the votes are counted by machine, as is common in the USA, the counting is inherently secret. Nobody knows for sure what is in the black box.

Another type of election fraud is ballot stuffing. The ruling party puts in fake ballots, or has its agents adopt the names of dead people for fraudulent voting. In the neighborhood council vote, the locals can know who really lives there, and the representatives of the parties could double check the signatures and identifications, if they wish.

Since in small-group voting, the people only elect a neighborhood council, the next higher level of government, such as a city council, is elected by the representatives of the neighborhood councils. The city councils then elect the provincial legislature, and the provincial or state legislatures elect the national parliament or congress. The national representatives then elect the president of the country.

When the people vote for a president, this generates hero worship and demagogues. With the economy in shambles and the people suffering from crime, pollution, and restrictions on speech and religion, people look to their favorite candidate as a messiah, but it is impossible for any leader to achieve salvation, because the system of mass democracy is inherently dysfunctional.
With small-group voting, there is much less of a tendency to turn party leaders into gods. National salvation becomes rooted in the genuine democratic process rather than being thrust on the goodwill and competence of a hero leader. If the chief turns out to be not so great, the parliament can dismiss him and elect somebody else, without the trauma of impeachment.
The Persians made a big mistake when they a century ago copied the voting model of the United States and western Europe, of having the chiefs of state elected by the people. It would have been better to have copied the anarcho-socialist model initially favored by the Bolsheviks of old Russia. The term “soviet” means “council” in Russian. The original model of the Russian socialist was “All power to the soviets!” The Soviet Union was to be a union of councils.

Of course in practice, the Communist Party became the ruler in the Soviet Union. The people did elect the representatives to the soviets, but the candidates had to be members of the Communist Party. For a true small-group democracy, there should be no restriction on who becomes a candidate other than being an adult member of the community.

If Iran practiced small-group democracy, the elections results would achieve the aim of democracy, social peace. But then the current chiefs would quite possibly lose their positions. That is why Iran will continue with mass democracy. But what is the excuse in the USA, UK, and other long-established democracies? Why do we continue with the massive failures of mass democracy?