Archive for the ‘Crony Capitalism’ Category.

Credentialism and “Meritocracy” and Philosopher Kings


Does America Really Need More College Grads? – George Leef

The Chinese imperial bureaucracy was immensely powerful. Entrance was theoretically open to anyone, from any walk of society—as long as they could pass a very tough examination. The number of passes was tightly restricted to keep the bureaucracy at optimal size.

Passing the tests and becoming a “scholar official” was a ticket to a very good, very secure life. And there is something to like about a system like this … especially if you happen to be good at exams. Of course, once you gave the imperial bureaucracy a lot of power, and made entrance into said bureaucracy conditional on passing a tough exam, what you have is … a country run by people who think that being good at exams is the most important thing on earth. Sound familiar?

The people who pass these sorts of admissions tests are very clever. But they’re also, as time goes on, increasingly narrow. The way to pass a series of highly competitive exams is to focus every fiber of your being on learning what the authorities want, and giving it to them. To the extent that the “Tiger Mom” phenomenon is actually real, it’s arguably the cultural legacy of the Mandarin system.

That system produced many benefits, but some of those benefits were also costs. A single elite taking a single exam means a single way of thinking:

The examination system also served to maintain cultural unity and consensus on basic values. The uniformity of the content of the examinations meant that the local elite and ambitious would-be elite all across China were being indoctrinated with the same values.

All elites are good at rationalizing their eliteness, whether it’s meritocracy or “the divine right of kings.” The problem is the mandarin elite has some good arguments. They really are very bright and hardworking. It’s just that they’re also prone to be conformist, risk averse, obedient, and good at echoing the opinions of authority, because that is what this sort of examination system selects for.

. . .

[T]his ostensibly meritocratic system increasingly selects from those with enough wealth and connections to first, understand the system, and second, prepare the right credentials to enter it—as I believe it also did in Imperial China.

And like all elites, they believe that they not only rule because they can, but because they should. Even many quite left-wing folks do not fundamentally question the idea that the world should be run by highly verbal people who test well and turn their work in on time. They may think that machine operators should have more power and money in the workplace, and salesmen and accountants should have less. But if they think there’s anything wrong with the balance of power in the system we all live under, it is that clever mandarins do not have enough power to bend that system to their will. For the good of everyone else, of course. Not that they spend much time with everyone else, but they have excellent imaginations.

America’s New Mandarins – The paths to power and success are narrowing. So is the worldview of the powerful.

Statolatry

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Silicon Robber Barons

Silicon Valley’s power brokers want you to think they’re different. But they’re just average robber barons.

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The press [i.e., clerisy] enjoys excitedly praising tech titans by comparing them to fantastical and mythical figures. Zuckerberg is Caesar. Elon Musk, a wizard. Peter Thiel, who believes that he lives in the moral universe of Lord of the Rings, is a vampire. I do not know if these men believe that they have the supernatural powers the media claims. Maybe they do. I do know that they do not mind the perception, or at least have done nothing to combat it, even among those critics who believe that they’re cartoon villains.

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This might not be so bad if the phenomenon were limited to daft profiles by fawning magazine writers. But this Hegelian fan fiction is nowhere more potent than from the mouths of the Disruptors themselves. Mark Zuckerberg speaks in the voice of God. Shane Smith, by his own account, is the Stalin of Vice. Silicon Valley investor Carl Icahn was called “evil Captain Kirk” by fellow billionaire Marc Andreessen, before he was himself dubbed Dr. Evil by Rod Dreher, who has evidently not absorbed a cultural reference since 1999. When Elon Musk worries that Larry Page is hurtling toward AI without a sufficient appreciation of the risks, he calls it “summoning the demon.” Seamless CEO Jonathan Zabusky, a typical case, says his food delivery application for depressed millennials is “disrupting the paradigm” by showing people that “the era of the paper menu” is over. AirBnB’s mission statement laments “the mechanization and Industrial Revolution of the last century,” which “displaced” “feelings of trust and belonging”; their mission is to turn the world back into the “village” of simpler eras by encouraging longstanding residents of gentrifying areas to rent out their homes to monied travelers. Some firms are more modest: HubSpot, a marketing and sales platform, is merely on a mission to make the whole world “more inbound,” which is to say, more reliant on their blogging tips for small businesses.

. . .

Let us state the obvious: None of these men are Roman Emperors, and they haven’t got the wherewithal to “blow up” anything but a stock market bubble. They are not Lex Luthors or Gandalfs or Stalins. Their products do not bring about revolutions. They are simply robber barons, JP Morgans and Andrew Mellons in mediocre T-shirts. I have no doubt that many are preternaturally intelligent, hardworking people, and it is a shame that they have dedicated these talents to the mundane accumulation of capital. But there is nothing remarkable about these men. The Pirates of Silicon Valley do not have imperial ambitions. They have financial ones.

The vast majority of Silicon Valley startups, the sort that project lofty missions and managed improbably lucrative IPOs despite never having graced the cover of The Economist or the frontal cortex of the president, work precisely like any other kind of mundane sales operation in search of a product: Underpaid cold-callers receive low wages and less job security in exchange for a foosball table and the burden of growing a company as quickly as possible so that it can reach a liquidation event. Owners and investors get rich. Managers stay comfortable. The employees get hosed. None of this is particularly original. At least the real robber barons built the railroads.

Like all slim ranks of oligarchy, the Silicon Valley billionaires hate and fear nothing more than ordinary people. This manifests itself in mundane ways, in their open, cartoonish class spite (why, they ask, must Innovators in San Francisco be burdened by the existence of homeless riff-raff?); it is revealed in their most contemplative moments too. Peter Thiel has said that when the history of the 21st century is written, René Girard will be remembered as one of its greatest intellectuals. Girard is best known for the contention that all human desire is mimetic, that not only aesthetic taste but even hunger and lust are modeled on the desires of others. Perhaps this is why Thiel does not believe that capitalism and democracy are compatible. We know which side he’s chosen. So long as he and his fellows can continue to exploit that same mimetic tendency to persuade people that they are superhuman and essential to their flourishing, his side will continue to win.

. . .

If your enemies can convince you that they are an unprecedented species of madman, you will convince yourself that you need unprecedented weapons to fight back or that you may be better off just hiding in the forest. But you are not.

The rigged contracts and wage suppression, the racism and surveillance collusion (soon to be playing voluntary footsie with Donald Trump’s NSA, with further chicanery to follow), all these sins of Silicon Valley have come about and been overcome before in the short history of American capitalism. They require only the same weapons as before. Organization and agitation. Strikes and labor laws. The ordinary practice of radical politics. Some of these efforts have begun already, with militant organizing and unionization drives beginning to organize Silicon Valley laborers against their exploiters. But these movements require national and popular support, support that cannot begin until the pretense and terror of world-conquering wizards is abandoned and the truth is laid bare: These are only rich assholes, the same as they ever were. All that superman bullshit is just the cheap propaganda of the powerful, propaganda so thoroughly saturated in the American mind that its own inventors might believe it.

Valley of the Dolts

Moral preeners aided and abetted by the clerisy.

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Superman Politics

The Carrier bailout is awful, of course. It is a case of two politicians’ using public funds to bribe a business into doing things that benefit them personally and politically while creating no real long-term economic value. Pence, who dropped his free-market principles like the world’s hottest potato once he got within sniffing distance of presidential power, can burnish his populist credentials at the taxpayers’ expense, and Trump can get ready to flit on to the next publicity stunt.

But the emerging “Superman” politics here are truly poisonous. One of the genre conventions of superhero stories is the compression of all the world’s drama into the immediate presence of the hero — only his actions and intentions are relevant. People may be dying all over the world, but Superman saves Lois Lane. (Comic-book movies have lately subverted that convention by focusing on the collateral damage done by superheroes to the cities in which they live.) What that means in the context of our contemporary presidential politics is that no one takes any note of the fact that Carrier is not the only HVAC company in the United States or the only industrial concern in Indiana. Carrier has competitors that employ Americans, pay taxes, and produce real economic value, and they have been put at a relative disadvantage by the political favoritism extended to Carrier. What about them? They’re not on the stage, so they do not matter.

What is important to understand here is that this is not part of an economic-development agenda: It is theater. It is an adolescent fantasy of political power, and wherever Superman happens to land is where the action is. Nothing else is relevant. It does not matter that there is no broader logic at work: Small displays of efficacy can work to create an illusion of general efficacy. It is busyness as business.

. . .

Trump’s big idea so far is spending $7 million of other people’s money to delay an embarrassing headline. Some deal. Some deal-maker.

Trump’s Superman Style of Politics

Cronyism has a new moral preener and Crony Capitalist in Chief.

Ozymandias

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Ozymandias on the Potomac

Washington, [DC,] though, is something else. It is now the nation’s leading consumer per capita of fine wines, and while the price of housing there hasn’t quite hit Manhattan and San Francisco levels, it is among the nation’s most expensive, far outpacing expensive California locales such as Los Angeles and San Diego and almost anything between the coasts.

The District of Columbia, the wealthier precincts of which are disproportionately populated by young professionals not averse to taking the subway, is not an especially remarkable automotive market. But Virginia and Maryland, where those Millennial apparatchiks will move once they’re making real money, are fairly rarefied: One in five new vehicles sold in those states is from a luxury marque (about a third higher than the national average) with BMW leading the way, because D.C. is exactly that douchey, and Mercedes-Benz in second place. Aston-Martin is unusually popular in Virginia; Bentley sells unusually well in Maryland.

We know what drives California’s lifestyles of the rich and famous: technology, and for that we are grateful, which is why people admired Steve Jobs even though he was as much of a hard-assed capitalist as Henry Ford or J. P. Morgan. We know what drives New York City, too: finance, to no small degree, but also advertising, publishing, media, and fashion. Maybe you do not admire those industries as much as you do Silicon Valley’s technology innovators: Nobody says you have to, but those Wall Street jerks and book-peddlers and fashionistas do perform a useful — and, indeed, irreplaceable — role in the modern economy. Miami is doing well, too, and we know what drives that economy, too — the DEA is no doubt on the case. (Kidding! But not entirely kidding.) Houston has an economy that makes sense when you understand it, and so do Los Angeles, Chicago, and Denver.

What drives Washington?

One thing that drives the capital and its environs is those very large federal paychecks, which now amount to about $90,000 a year in money wages and just under $125,000 a year in total compensation. Washington pay has long been above the national average, but it is pulling away. In 2000, the median compensation for an American worker at large was about 74 percent of the median compensation for a federal employee; today, the average working taxpayer makes only 55 percent of what the average federal tax-eater makes. Our would-be class warriors talk about “transfers of wealth” and “transfers of income” when they mean mere changes in those metrics, but in this case, there is a literal transfer, with the most fearsome agency of the federal government — our corrupt and politicized IRS — raiding our households and businesses to support $1,000-a-night La Tur habits in Washington.

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The problem is that if you add up everything legitimate Washington does in the way of keeping the peace, securing property, and enforcing contracts, you can account for — if you’re really generous – maybe 20 percent of federal spending, which is the real measure of federal activity. The rest is straight-up transfer of income and wealth from one political constituency to another and a whole lot of Harry Reid cowboy-poetry festivals and research involving getting monkeys high on cocaine. All that money sloshing through the pipes creates conditions where it is easy — and irresistible — to siphon a little off, legally and or otherwise. And that is why you see Hill staffers who put in ten years at modestly-paid jobs and then go to work at lobby shops that pay them enough to drive a Bentley and live in one of those horrifying weird $3 million suburban piles in Arlington.

Splendid Washington

Ozymandias

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Sugar, Carbs, and Fat. And Cronyism.

Recently, 45 international medical and scientific societies, including the American Diabetes Association, called for bariatric surgery to become a standard option for diabetes treatment. The procedure, until now seen as a last resort, involves stapling, binding or removing part of the stomach to help people shed weight. It costs $11,500 to $26,000, which many insurance plans won’t pay and which doesn’t include the costs of office visits for maintenance or postoperative complications. And up to 17 percent of patients will have complications, which can include nutrient deficiencies, infections and intestinal blockages.

It is nonsensical that we’re expected to prescribe these techniques to our patients while the medical guidelines don’t include another better, safer and far cheaper method: a diet low in carbohydrates.

Once a fad diet, the safety and efficacy of the low-carb diet have now been verified in more than 40 clinical trials on thousands of subjects. Given that the government projects that one in three Americans (and one in two of those of Hispanic origin) will be given a diagnosis of diabetes by 2050, it’s time to give this diet a closer look.

. . .

Yet there’s another, more effective way to lower glucose levels: Eat less of it.

Glucose is the breakdown product of carbohydrates, which are found principally in wheat, rice, corn, potatoes, fruit and sugars. Restricting these foods keeps blood glucose low. Moreover, replacing those carbohydrates with healthy protein and fats, the most naturally satiating of foods, often eliminates hunger. People can lose weight without starving themselves, or even counting calories.
Continue reading the main story

Most doctors — and the diabetes associations — portray diabetes as an incurable disease, presaging a steady decline that may include kidney failure, amputations and blindness, as well as life-threatening heart attacks and stroke. Yet the literature on low-carbohydrate intervention for diabetes tells another story. For instance, a two-week study of 10 obese patients with Type 2 diabetes found that their glucose levels normalized and insulin sensitivity was improved by 75 percent after they went on a low-carb diet.

Before You Spend $26,000 on Weight-Loss Surgery, Do This

The link between a high-sugar diet and the development of metabolic problems had begun emerging in the 1950s. In 1965, a group called the Sugar Research Foundation (SRF) funded a study assessing previous studies on this possibility. That literature review, published in the prestigious New England Journal of Medicine in 1967, concluded that fat and cholesterol were the real culprits when it came to coronary heart disease.

“The SRF set the review’s objective, contributed articles for inclusion, and received drafts,” according to a new paper published in JAMA Internal Medicine “The SRF’s funding and role was not disclosed.”

The New York Times wants this to be a story about junk-food bigwigs screwing with science to the detriment of American health. And it is, in part. But beyond that, the findings also indict “dietary science” that the U.S. government has been pushing for decades, and still continues to push.

As we know now, high cholesterol levels in the blood may portend heart problems, but consuming high-cholesterol food—such as eggs, long demonized as a heart-health no-no—doesn’t correlate to high blood-cholesterol. And saturated fats come in many forms, some bad for you and others some of the healthiest things you can consume.

But for decades, conventional wisdom in America said that dietary fats and cholesterol were to be extremely rare in a nutritious diet. Meanwhile, sugar got a rep for rotting your teeth (and maybe packing on a few pounds) but was otherwise considered benign. And this demonization of fat actually helped increase U.S. sugar consumption, as health conscious Americans replaced morning eggs and sausage with carbs like bagels, or turned to low-fat and fat-free offerings where added sugar helped fill the taste void.

Drafter of U.S. Dietary Goals Was Bribed by Big Sugar to Demonize Fat

End sugar and all other government subsidies.

Ozymandias

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Crony Capitalism in DC. Again.

Five years ago, a new quirky-sounding consumer-rights group set up shop in a sleepy corner of Capitol Hill. “Consumers for Paper Options is a group of individuals and organizations who believe paper-based communications are critically important for millions of Americans,” the group explained in a press release, “especially those who are not yet part of the online community.”

This week, Consumers for Paper Options scored a big win, according to the Wall Street Journal. Securities and Exchange Commission chairman Mary Jo White has abandoned her plan to loosen rules about the need to mail paper documents to investors in mutual funds.

Mutual funds were lobbying for more freedom when it came to mailing prospectuses — those exhaustive, bulky, trash-can-bound explanations of the contents of your fund. In short, the funds wanted to be free to make electronic delivery the default, while allowing investors to insist on paper delivery. This is an obvious common-sense reform which would save whole forests of trees.

Consumers for Paper Options fought back. The group warned that changing the default from paper to electronic delivery would “Confuse potentially millions of investors who suddenly stop seeing important printed fund performance material from investment firms.”

. . .

This is almost laughable: A D.C. lobbyist forming a sham “consumer” protection to fight for federal rules requiring more paper and envelopes be wasted, while getting paid by the envelope lobby.

But the envelope CEOs and the paper lobbyists aren’t the only ones who care about keeping this junkmail flowing. Those paper mills that exist in the U.S. are deeply threatened by digitization. Among the shrinking list of things that go on paper these days are things the government forces people to put on paper. Allow mutual funds to mail fewer prospectuses, and those paper mills will lose a significant amount of work.

The employees at these mills will see their hours reduced, if they’re not simply laid off. The added costs of mailing me unwanted paper nibbles away the value of my retirement account, but is a tiny uptick in my 401(k) really worth laying off paper mill worker in East Millinocket, Maine?

. . .

Here’s the thing about the federal rule requiring the mailing of the prospectus: It’s absurd and wasteful, and it differs only in degree from most subsidies whose defenders use the same “save the jobs” rhetoric.

In a federal mandate for waste, envelope lobby reveals Washington

Ozymandias and statolatry

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“Inequality”

Workers have choices, too, though some have more choices than others. But if you think that paying the CEO a lot drives down workers’ wages, wouldn’t you also think that other expenses would put downward pressure on wages, too? And which would produce the heavier pressure: $376 million for the CEO or $8.3 billion for the IRS?

. . .

Hillary Rodham Clinton, embracing the Left’s current fervor for Hugo Chávez–style economic populism and nationalism (weirdly, “the Left” includes the Republican presidential nominee, for purposes of this discussion — bang-up job, Republicans!), complains about inequality, and offers as a partial solution higher corporate taxes. Businesses respond to changes in their expenses in different ways. But who do you think is likely to take it in the shorts if you jack up Apple’s tax bill? The designers and programmers who are being offered new six-figure jobs eight times a week at companies all over the country and all over the world, or the parking-garage attendant?

. . .

Sometimes businesses go so far as to relocate their headquarters in response to taxes and other burdens; one way of doing that is the dreaded “corporate inversion,” in which a U.S. company uses a merger to relocate its legal domicile to some sweaty, exploitive, relatively low-tax Third World crap-hole . . . like Canada, the United Kingdom, or Ireland. Mrs. Clinton proposes to put a stop to that by enacting an “exit tax,” which is a really nice way of saying “ransom.” That might cause some trouble for existing businesses considering relocation, but what effect might it have ten or 20 years down the road? Do we really think the people who are smart, creative, and energetic enough to build the powerhouse corporations of tomorrow are going to be too stupid to figure out how to incorporate in Switzerland instead of Delaware?

Mrs. Clinton’s Blame Game

Ozymandias and Statolatry

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No Regulation Without Representation

When law in America can be made by executive “pen and phone” alone — indeed, by a White House press release — we’re faced starkly with a fundamental constitutional question: Is administrative law unlawful? Answering in the affirmative in this far-reaching, erudite new treatise, Philip Hamburger traces resistance to rule by administrative edict from the Middle Ages to the present. Far from a novel response to modern society and its complexities, executive prerogative has deep roots. It was beaten back by English constitutional ideas in the 17th century and even more decisively by American constitutions in the 18th century, but it reemerged during the Progressive Era and has grown ever since, regardless of the party in power.

Is Administrative Law Unlawful?

In this nation, we have a problem where Congress no longer represents the people. Because our representatives are more concerned about re-election, they have abrogated their authority to an unelected bureaucracy that passes rules We the People have no say over but that have a real effect on our daily lives. When we complain to Congress about these regulations, our representatives can play the good cop and claim they agree with us but there is nothing they can do because regulations are passed by the bad cop, bureaucracy.

. . .

It is time for We the People to stand up and let our voices be heard. No longer can our elected representatives allow an unelected bureaucracy do the job they were elected to do. We live in a republic, which means We the People are entitled to have our representatives vote on the laws that affect our lives.

The new slogan for this movement should be “No regulation without representation.” While some are pushing for a constitutional amendment that requires Congress to have a say in the regulation process, this effort should be extended to all 50 states. Each state should not allow its bureaucracy to pass rules absent the consent of the state legislature.

No Regulation Without Representation

Farewell to the Administrative State?

Is Administrative Law Unlawful?” by Philip Hamburger

Ozymandias

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Choice!

The Clintons raise money by peddling their power — selling policy, taxpayer funds and access. A by-the-books fundraiser isn’t so useful in that enterprise.

In this light, Donald Trump — who admits to playing the crony game as a donor and who promises to use government to punish uncooperative companies — looks like a street-level conman.

So there’s your choice America: the kingpin of a corrupt enterprise that sells public power in exchange for crooked contributions, or a scammy developer from Queens who is a client of her dirty game.

McAuliffe is just one of many shady Hillary fundraisers

Ozymandias

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“Lobbying”

What if you could bet on Wednesday’s NBA game between Golden State and Oklahoma City, and before the game or at least before the final buzzer, you could lobby the referees and the league to change the rules? Maybe you would bet on Oklahoma City and then lobby to abolish the three-point shot.

Hedge funds and other investment firms are playing that very game in Washington, D.C., these days. Recently, Capitol Hill has seen a blitz of lobbying on how Puerto Rico should handle its debt amid fiscal disaster, and how Treasury should deal with private investors in bailed out government-sponsored enterprises Fannie Mae and Freddie Mac.

Behind the barrage of lobbying, op-eds and public relations is a handful of hedge funds who have gambled one way or another on GSE stock or Puerto Rican debt, in the hope that they could pull enough strings in Washington to make big bucks.

. . .

Investors allocating capital according to which policy tweaks they think they can win doesn’t sound like the type of capitalism that maximizes economic efficiency. It’s just public-policy profiteering.

As government gets involved in more parts of the economy, hedge funds will increasingly engage in this public-policy profiteering. This will make lobbying on these arcane issues more common and more intense.

So maybe it’s a good time to be long on K Street.

Puerto Rico’s debt, Fannie Mae’s stock, and public-policy profiteering

Ozymandias

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