Every economic theory is burdened by a temptation of pundits to pick and choose what they wish to believe. Keynes, von Mises, and Piketty are cases in point. Each has an economic view that resonates with some but appalls others. Robert Reich, though not an economist, is undoubtedly appalled by von Mises, and less so by Keynes and Piketty. This review is no less subject to the temptation of “pick and choose”.
In broad outline, von Mises objects to any interference in free trade. Von Mises decries nationalist tariffs, industry subsidization, planned economies, and political interference with business failures. Keynes endorses government intervention in economic crises. Piketty argues that the widening gap between rich and poor foment revolution. Each economic belief is supported and faulted by chosen historical events.
Von Mises theory may be proven based on the false economies of communism that led to the collapse of the U.S.S.R. Equally, von Mises theory can be attacked with the evidence of America’s subsidization of the oil, transportation, and technology industries that led to huge economic benefits for the United States.
Keynes’ interventionist theory may be proven true by George Bush’s and Barrack Obama’s recovery actions after the 2008 financial crises. On the other hand, government intervention allowed many millionaire and billionaire fat-cats to escape prosecution for being the human cause of the 2008 crises. Though fines were levied, no corporate CEOs were jailed.
Piketty points to the French Revolution as credible historical evidence for consequence of an increased gap between rich and poor. On the other hand, improvements in energy, transportation, finance, and manufacture can be traced to business moguls like Carnegie, Rockefeller, Vanderbilt, and Ford. They may be history’s robber-barons but their drive and determination raised the standard of living for millions of Americans.
A common thread in an American capitalist economy is pragmatism. American capitalism has changed in every generation since 1776. Today, America is enduring the biggest economic and social change since the industrial revolution. It is change wrought by technology.
Like yesterday’s invention of the cotton gin, the steam engine, and farm machinery, jobs were lost. Today, it is robotics, and artificial intelligence that are changing the economy and the availability of jobs. Jobs disappear with each new labor-saving invention.
The consequence of unemployment is frightening and unsettling. However, the shape of the American economy will adapt just as it did with the industrial revolution.
There are modern Luddites fighting that change but as pragmatism takes hold, jobs will be created to fill the gap. Reich implies job loss can be overcome with government intervention. He suggests job creation can come from personal services like health care, elder care, child care; etc. Reich calls for government support of education to retrain labor, increase productivity through technology, and regulate private industry to correlate pay with accountable economic contribution.
Reich tentatively suggests government provide a minimum wage for all citizens based on a subsistence level of income. He argues that incentive to work will not diminish human motivation. He suggests Americans will continue to be motivated to do better than just get by in life. To many Americans, the idea of an unearned wage would be a fundamental mistake.
On the other hand, what if minimum wages are raised to a subsistence level. Not unlike the principle of Habitat for Humanity where family participation in building of a pre-qualified buyer’s house is required. A pre-qualified family (one that has employment and no bankruptcies) receives a below market price and mortgage on the house being built. However, the family must participate in the construction of the house. The mortgage payments are tailored to the income of the family. If they miss payments, they lose their house. On the same Habitat principle, a minimum wage worker who fails to do a good job, loses it; with no safety net (except in cases of mental or physical disability).
No one is likely to totally agree with any solution for the widening gap between rich and poor in the world but American capitalism has shown a willingness to pragmatically attack whatever creates conflict in the world. Sometimes the proposed solution is wrong. Some solutions do not work but America adjusts to eventually fit the circumstance. It is not a process without pain, but capitalist pragmatism is the most successful governmental system of modern times.
The biggest criticism one may have of Reich’s book is that he spends too much time explaining what is wrong with American capitalism. Yes, it is unconscionable that some CEOs are making 300 times what their employees make.
Yes, stock value is often unrelated to a CEO’s exemplary performance. Stock prices often increase because of stock price manipulation or other factors beyond the control of its executive officers.
Yes, labor is denied a seat at the table when corporate decisions are made. Yes, unions are disadvantaged by corporations that can be treated as individuals when unions are systematically sidelined and/or ignored.
Yes, corporate board members (often former members of Congress) are being paid hundreds of thousands of dollars for 4 meetings a year. How can they not be prejudiced to support corporate executives they are supposed to be overseeing?
Reich’s book would have been more interesting if he had spent more time on pragmatic solutions. The gap between rich and poor does foment revolution. One supposes Reich describes the problem in such detail because he presumes few understand what is happening in America. “Occupy Wall Street”, the national press, and the internet would beg to differ.
American capitalist pragmatism remains the best hope for equality of opportunity and qualified human freedom.
Ludwig von Mises is a twentieth century Machiavelli. This audio-book details a theory of economics that will offend modern liberals, expose weakness of libertarians, and vilify the new American President’s nationalist policies. The venality of treating government as a business is a mistake of monumental proportion.
Approaching von Mises as a devil incarnate is unfair. His beliefs are pilloried by today’s liberals as loudly as aristocrats and rulers vilified Machiavelli in the 16th century. Like Machiavelli, von Mises looks at the world as it is; not as it ought to be. His observations cut at modern liberal, as well as anarchic views of highly regarded liberals like Ralph Nader, Martin Luther King, Norm Chomsky, and alleged conservatives-like President Trump. In von Mises book, Roosevelt’s New Deal is a socialist mistake. Additionally, von Mises vociferously disagrees with John Maynard Keyne’s economic interventionist creed. Ironically, Donald Trump may be the most interventionist President since FDR with scatter brained economic plans that von Mises would equally vilify.
Von Mises observations have credibility based on facts drawn from history. What they do not have is social conscience. Von Mises suggests social conscience is a fiction perpetrated by socialists and populists to distort the value of capitalist economies. Like Machiavelli, von Mises observes the nature of human beings, and recognizes their inherent irrationality and moral weakness.
Von Mises illustrates numerous examples of human irrationality; beginning with market consumption, and ending with entrepreneurial ambition. Donald Trump exemplifies von Mises’ argument that humans are irrational, greedy, power-hungry, and vain.
For President Trump to believe taxing imports by 20% makes Mexico pay for a useless five-billion-dollar wall is absurd. The American consumer will pay for that wall in increased cost of Mexican produce and manufactured goods.
Von Mises criticizes famous economists like David Ricardo for introducing politics into economics. Von Mises argues that the drive for money, power, and prestige are inherent in an entrepreneurial capitalist system. With the introduction of politics into economics, the power of consumer’s free choice is diminished.
Von Mises argues that government officials who profess social conscience distort free enterprise by picking winners and losers. When politicians pass legislation that aids one entrepreneur over another, it distorts the driving force of capitalist economies. Even if capitalism appeals to baser instincts of humankind, if capitalism is left free, von Mises believes consumer choice will ameliorate capitalist greed, abuse, and vanity.
Von Mises vilifies government leaders who impose tariffs on international trade. He explains that the fallacy of government leaders who pass favoring legislation is that the real mover of the economy is the consumer; not the producer. If the consumer chooses not to buy an entrepreneur’s product or service, he/she fails.
The logical extension of von Mises’ theory is that any government plan or action that affects an entrepreneur’s willingness to take a risk is bad for society. The practical consequence of his theory is that charlatans will game the capitalist system but in the long run society will benefit from the creativity of entrepreneur-ism. His theory expects bad actors like Bernie Madoff will prosper but that bad aspects of entrepreneurial self-interests are offset by general economic progress.
To von Mises, efforts to organize labor is an interference with capitalist entrepreneurs because labor is not taking a risk. Von Mises argues that labor value will find its own level by being an automated tool of the entrepreneur; subject to hunger and deprivation if they choose not to participate.
Von Mises point is that the entrepreneur will pay what he/she must to have labor available, but no more than what the end-product’ consumer is willing to pay. (This judgement presumes the entrepreneur is neither inordinately dishonest, power-hungry, or vain.) What the entrepreneur is willing to do is take a risk on the consumer’s willingness to buy. If the consumer buys, the entrepreneur is successful; if not he loses his business.
Von Mises believes labor has a choice. They can work for low wages or remain idle. The fallacy of that argument is the inherent unfairness of not having enough income to live. Von Mises suggests the laborer can wait. Waiting implies his/her family may starve, become homeless, or choose to commit crime to survive. History illustrates how inequality creates revolutionary discontent.
Unions offer a vehicle for leveling the power between businesses and labor. To not allow unionization is tantamount to favoring businesses that are no longer competitive but, today, are legally recognized as the economic equivalent of individuals. Not to give unions a place “at the table” is morally, ethically, and economically unfair; particularly in industries that are no longer entrepreneurial. Many businesses have become large bureaucracies; not unlike wasteful government agencies that are self-perpetuating but unnecessary and/or unprofitable.
Another von Mises’ observational factoid is that government policy should have no role in subsidizing new inventions, new drugs, the ecology of the world, or the elimination of slavery because such policies interfere with pure capitalism. This reinforces absurdist arguments of libertarians.
American creativity has historically been benefited by government subsidization of technological advances. (President Putin noted in a 60 Minutes’ interview that creativity is his most admired quality in the American community.) The speed of improvements in health, education, and welfare historically increased with government subsidization of drug research, public education, and the energy industry.
The fallacy of von Mises’ theory lies in the framework of theorists. It ignores human existence by hiding behind the un-quantifiable nature of society. One may argue that America’s Civil War had nothing to do with the elimination of slavery. (Von Mises suggests that slavery was abolished because it became too expensive; not because it was morally and ethically reprehensible.) One may argue that Roosevelt’s New Deal was a failure. One may argue that the Marshall Plan after WWII rewarded failed nations. One may argue that George Bush’s and Barrack Obama’s decisions to bail out the American economy interfered with pure capitalism. History suggests von Mises is both right and wrong. Government intervention can be good as well as bad.
Von Mises lived into the 1970 s. How could he ignore the moral and ethical iniquity of slavery, the value of the Marshall Plan, government subsidization of the American banking system, financial incentives for the energy industry, and the billions spent to advance technological inventions? There are good examples of government intervention. On the other hand, building a wall between Mexico and the U.S. and levying a 20% import tax is a bad government intervention.
American capitalism works because of the checks and balances written in the Constitution. Von Mises theory is based on valid observations but social conscience, whether statistically measurable or not, must be a part of decisions that affect the lives of millions. Mistakes will be made, and have been made, but economic statistics cannot be substituted for pragmatism.
James Salzman makes a case for “Drinking Water” as the 21st century’s most underappreciated and coveted natural resource. Without food, you die in 3 weeks; without water, you die in 3 days. Unlike food productivity, clean water technology lags behind human population. The facts seem quite clear but solutions are elusive.
Salzman reflects on the ancient origin of bottled water. While coveted in the past for religious and medicinal benefit, bottled water is ubiquitous today. Contrary to many people’s understanding, public water systems are more stringently regulated for contamination than private water bottle distributors.
It is as unlikely to ingest known carcinogens from American public water as privately bottled water. Salzman notes that neither distribution system guarantees non-carcinogenic water because no water source is perfectly pure. But public water systems, particularly in the U. S., require frequent testing for quality and safety. Public water systems regularly test water for known carcinogens, while private bottling systems are largely self-regulated.
Salzman recounts a history of Perrier as a company that had to recall their product when it was initially suggested as a standard of measurement for the quality of an American city’s water system. Perrier, when tested, was found to have unacceptable levels of arsenic in its bottled water. Perrier corrected the problem but no one would have been the wiser without America’s mistake in suggesting and then testing Perrier as a standard for water quality.
Salzman explores terrorist threats to public water systems without being unduly hyperbolic. There is potential for introduction of germs or other carcinogenic substances but water systems are either aggregated in defined spaces or drawn from aquifers that guarantee significant dilution before delivery to consumers. These two conditions do not mean death cannot be a result of a terrorist act but mass murder from contamination is probabilistic, if not unlikely.
The more likely threat to a water system is pollution. Salzman argues that runoff from industrialization and new technologies like fracking are a bigger threat to water source contamination than radicals’ sabotage. However, even with intent or inadvertent contamination, Salzman suggests water treatment improvements can turn fouled water into drinking water. The key is early detection, and immediate water service interruption, at least, until a technological fix can be executed.
Water, like food, is necessary for life’s sustenance. Incidents involving American and Canadian natural water sources are given as examples of protectionist tendencies on the part of local populations. Salzman tells the story of a mountain town in America where a bottle manufacturer (Nestle) offers to buy river water from the town. The price offered is pennies on the dollar for every bottle manufactured, and jobs for a town hurt by decline in the lumber industry. The town rises up in arms at the low-ball offer and objects to an outsider’s virtual theft of the community’s natural resource. A similar story is told of the Canadian government’s objection to use of Lake Superior’ water for desperate communities in undeveloped countries. The private non-profit organization formed to suggest the plan is quashed by Canada’s objection to the use of Lake Superior’s water.
Salzman catalogs the labor-laden plight of undeveloped or rapidly industrializing nation-states in their search for “clean” water. Water pollution causes great hardship and death in third-world nations. In many of these countries, there are no water lines within communities. Every drop of water must be carried from its source to a family’s home for drinking, cooking, and bathing. In many cases the source of water is not only distant, but polluted. In a March 2010 “World Water Day” report, it is estimated that 2 million tons of sewage, industrial waste, and agricultural chemicals are discharged into the world’s water.
America is also threatened by what is happening in the undeveloped world. The threat is both the same and different. It is the same in that water is needed to live. It is different in that the convenience established in the United States for water distribution and water treatment are compromised. Without question, America is far ahead of most countries in water distribution, treatment, and quality control but the infrastructure, according to Salzman, is old, falling apart, and causing contamination because of waste infiltration near water resources (see Camp Lejeune, North Carolina) and public distribution system failures (see Flint, Michigan water crises). The EPA estimates “…$335 billion is required to replace aging water infrastructure over the next 20 years.”
Salzman shows that solutions for these water crises are elusive and politically complicated. Solutions range from desalinization of sea water to pushing icebergs to continental seaports. There is the idea of treating sewage to provide “clean” drinking water. There is the idea of mining water from asteroids or other planets. There is utilizing better conservation measures. There is the idea of privatizing water production to incentivize the business community to enter the water business. There is the idea of raising prices for water to incentivize the consumer to be less wasteful. There is technological improvement that removes carcinogens from accumulated rain water and contaminated aquifers. Every solution has its drawbacks; most of which revolve around cost and fair distribution of this essential ingredient of life; i.e. water for human survival.
Solutions to the world water crises can only be implemented through politics and political will. The question is–Are humans up to the task without resorting to their baser instincts; i.e. like war and a misunderstanding of Herbert Spenser’s interpretation of Darwin’s survival of the fittest?
Data and Goliath: The Hidden Battles to Capture Your Data and Control Your World
Written by: Bruce Schneier
Narrated by: Dan John Miller
Bruce Schneier’s book is about battles with government and private industry for personal privacy and freedom in the information age. The seriousness of the subject is diminished by millions of us who revel in the knowledge, accessibility, and convenience of the internet. However, Schneier explains how our appreciation and use of the internet threatens privacy and freedom.
Perfect as an adjective for human is an oxymoron. All human beings are emotionally and intellectually imperfect. Human beings conduct their lives within normative social boundaries. They are generally not criminal, sexually perverted, or psychologically impaired. However, all human beings transgress some social boundaries. Most individuals feel appropriately guilty for their transgression; suffer the personal and societal consequence, and then get on with their lives. This loose definition of humanity seems a fair description of all human beings. However, Schneier argues that use of the internet categorizes, spindles, and mutilates human lives. Like a forest being attacked by borer beetles, the internet infects the public; not with malicious intent, but with a hunger for money, power, and prestige.
The borer beetles of the internet are well-known; e.g. Apple, Microsoft, Facebook, Google, Amazon, the Federal Government, and a host of smaller species. Some borer beetles can kill a forest, while others benefit nature’s ecology by getting rid of weakened trees to regenerate healthy trees. Schneier suggests America is at a crossroad where captured data from the general public will either grow into a society’ killer or a humanized friend.
Schneier suggests or implies government, eleemosynary, and private entities continually gather personal information and mine it for public and private purposes. The government’s objective is to protect American citizens from crime and terrorism. Churches and charities’ objective (though not specifically addressed by Schneier) is to evangelize and increase donations for “good works”. Private industry’s objective is to increase profitability.
On some level, Schneier suggests there is no harm; no foul. On another level he argues, surveillance, big data collection, and unregulated invasion of privacy attacks the foundation of democracy. Though the right to privacy is not explicitly protected by America’s founding documents, Schneier suggests the internet encroaches on the 4th 5th and 9th articles of the Constitution.
Schneier acknowledges the benefits of the internet; e.g. educational opportunity, communication timeliness, shopping convenience, banking access, and interconnection. Every article written in this blog is benefited by information available on the internet.
Convenient purchase of consumer goods requires no trips to a local vendor. The bank writes checks with a few taps at a computer terminal. A personal Ipad, Iphone, and laptop communicate with each other via Bluetooth with input required only once; on one device. A wonderful life with no harm, no foul—right? Schneier notes there is a price paid for these benefits. Unquestionably, the internet is a great source of valuable information and convenience. However, it is also a vehicle for illicit activity. The internet reveals personal information about users that embarrass, bully, and sometimes ruin lives. It disseminates bigotry that recruits like-minded miscreants. It provides access to bank accounts, credit cards, and other financial instruments for fraudulent use.
Every purchase made on the internet becomes a factoid in the history of a purchaser. All of these factoids are accumulated and used by privately owned search-engine companies (like Google, AOL, and Amazon) to profile personal habits and preferences. That information is sold to retailers for a fee. Private retailers use that information to customize their sales pitches to consumers. The retailer adjusts prices according to the buyer’s purchasing and income profile.
To increase income, the search engine owner sells the retailer a first position on internet searches. That first position increases probability that the profiled consumer will purchase from that retailer who has enough information to estimate how much you are willing to pay. The public is being manipulated by retailers that know where you are, what you buy, and what you are willing to pay, or are capable of paying. Retailers who purchase data from search engine owners can estimate (if not know) your net worth, sexual orientation, educational achievement, and personal preferences.
The internet is a money machine for search-engine owners. First, the search-engine owner raises revenue by selling personal information and then increases income by selling positions on search-engine web pages. The retailer benefits by having personal consumer information and a primary position on web-page searches. It increases the retailer’s odds of being seen on a search and the consumer’s likelihood of purchase. Schneier implies the consumer is being controlled by Goliath’s data collection. Goliath is a two-headed dog guarding the entrance to Sartre’s “No Exit” hell. The David in this battle is the consumer with only hope and a sling shot to defend himself. The sling shot has no ammunition and no target because no remuneration goes to the consumer and the information has been stolen anonymously.
The internet is a supersonic communications vehicle. There is no waiting for the mail. Instant messaging and the twitterverse are part of the spindling and mutilating process of the age. Thinking before one speaks is yesterday’s reality. Today, even in the race for President of the United States, speaking-without-thought is commonplace.
The internet is a worldwide recruiting vehicle for the extremes of society; some of which fly airplanes into skyscrapers in New York, bomb government buildings in Oklahoma, and murder innocents in Manchester. Internet access provides a forum to convince people of the iniquity (either false or true) of an enemy or government.
With the click of a mouse, and a newscaster’s ego fiction competes with truth to lead and mislead the public. Publicly shared television news programs created by professionals are now created by anyone with access to the internet. There is no incentive or structure to fact-check reports posted on the internet.
Schneier suggests government intrusion into private lives has gone too far as a result of 9/11 and other terrorist events around the world. Schneier implies that Edward Snowden is a hero; not a traitor. Snowden exposed the covert surveillance of the NSA (National Security Agency) in gathering information about private citizens without their knowledge; and without probable cause, or judicial consent. Schneier argues that big data surveillance, by private enterprise and the government, have colluded to compromise freedom and control the individual.
Schneier suggests that promulgation of fear, exacerbated by public access to the internet, causes the government to overreact. He notes how the Prime Minister of Great Britain, David Cameron, stated that he did not want to be accused of not protecting British citizens because of lax surveillance of private citizens. This climate of fear pervades the politics of our time. It is not the first time America abandoned the principles of privacy and freedom. Schneier notes the “Alien and Sedition Act” passed by Congress and signed by President John Adams, the incarceration of American Japanese during President Roosevelt’s administration, and the McCarthy witch-hunt for communists in the 1950 s. He suggests those were mistakes made then; with the same mistakes being made now.
Schneier offers solutions. He acknowledges the necessity of surveillance but believes public oversight should be strengthened. Government regulation should require judicial warrants for spying on an individual. He argues that mass data collection is an unwarranted invasion of privacy that has little value in defeating terrorism. Only after the fact did mass surveillance reveal the perpetrators of the Boston marathon bombing. He suggests the same is true for the shoe bomber and the terrorist attack of the disability hospital in California. Mass data collection does not protect the public.
Schneier suggests consumers should know who, in the private sector, is accumulating their personal information. Private citizens should have a right to opt out of private sector data collection by any internet user. He believes a set of rules should be established for government to follow when seeking individual surveillance. Schneier suggests those rules should be designed for transparency; legislatively adopted, and justified by legislators to their constituency.
Schneier infers there is tremendous value to be drawn from the internet. There is the value of education, and quick reference to the news and history of the day. There is the informational value of a world of different cultures that have common needs and aspirations. There is the potential benefit of mass data collection on medical history of individuals and their treatments for fatal injuries or illnesses. Medical successes will be more quickly codified for improved patient treatment of common maladies. There would also be the added benefit for a patient changing physicians with a comprehensive history available for review.
Schneier cautions that an individual’s data should be encrypted in ways that limit access to only those authorized by the individual. In general, Schneier is a proponent of encryption to secure the privacy of individuals.
Schneier’s book aptly describes the threats and benefits of big data. Terrorism is real but its threat cannot become an excuse for denying the privacy and freedom of the individual. Terrorism is just one of many risks in life.
Skunk Works: A Personal Memoir of My Years of Lockheed
Written by: Ben R. Rich, Leo Janos
Narrated by: Pete Larkin
“Skunk Works” is a paean to boys with toys. Ben Rich is an engineer that worked for Kelly Johnson at Lockheed. Kelly Johnson headed Lockheed’s famous design team that created the U-2 spy plane, and the famous Black Bird in the 1960’s. Being an engineer, Rich undoubtedly had a detailed understanding of the facts, but facts are dead things without a good story. Leo Janos is a writer that turns Rich’s facts into tales of Buck Roger’s daring-do.
Lockheed became the talk of the century in the 1970’s; not for their incredible design work but for bribery. Italy, West Germany, Japan, Netherlands, and Saudi Arabia are paid $22 million dollars to buy airplanes designed by Lockheed. That American law violation leads to the resignation of the Lockheed board. Johnson and his team at the “Skunk Works” are not implicated. Johnson threatens to resign but remains to play a leading role in the design of over forty aircraft. The story of the “Skunk Works” largely ignores the scandal while recognizing the magical innovation of the storied corporation.
“Skunk Works” focuses on two great inventions, and some failures. The two great successes are the U-2 spy plane and their stealth aircraft design. Failure in the 1960’s is in Lockheed’s design and execution of drone technology and its work on a Navy stealth ship. In future generations, their “Skunk Works” research on drones and stealth work become useful innovations in many military hardware designs. But with the failure of a submarine design and the loss of three drones, one of which kills the pilot of the launching craft, Johnson’s gravitas is somewhat diminished.
To most Americans, the U-2 spy plane becomes well-known because of the Gary Powers capture in Russia. The U-2 is purchased by the American CIA, its first airplane purchase.
Because U-2 could fly at altitudes beyond the range of known radar, it is ideal for CIA Intelligence. Conventional fighter jets are unable to reach U-2 altitudes for a shoot-down and radar detection is presumed unlikely. President Eisenhower authorizes an overflight of Russia just before a summit. In 1960, Russia fires several ground-to-air missiles that hit the U-2’s tail section. Powers manages to escape the plane and is captured.
This is nearing the fourth year of U-2 flights without incident. Ben Rich suggests Lockheed expects failure for U-2 detection after two years because of technological improvements in radar detection. In fact, the U-2 is found detectable soon after its first use but time is needed to determine how the high flyer could be attacked. A decision is made by the Eisenhower administration to follow a flight path which earlier revealed important information to the CIA. Rich suggests the decision to follow the same flight path is a mistake. The Russians decide to launch several missiles based on previous radar sightings of the U-2 in that area. When Powers is shot down, he is presumed to be dead by the United States for two reasons. One, because of the high altitude of the intercept, and two because of a cyanide injection available to the pilot in the event of capture.
Powers manages to survive the ejection and chooses not to kill himself. According to Rich, a number of military personnel consider Powers a traitor for not killing himself. In any case, Powers is released two years later in a prisoner exchange. Powers is eventually recognized for his positive contribution to the United States for his missions in the U-2. Ironically, Powers leaves the Air Force and, years later, is killed in a helicopter accident as a weather reporter.
The story of the U-2 does not end with Gary Powers. Rich notes that the U-2 is used extensively for military surveillance in future years and by other countries. In spite of radar detection, the utility of the information from U-2 photographs is determined by Washington to outweigh risks that they feel can be mitigated with more caution about flight routes and use.
U-2 photographs became eminently important during the Cuban missile crises. It is an unusual airplane because of its wide wing span, less than 6’ height, extraordinary light weight, and ability to fly at 70,000 feet where the air is too thin for conventional flight. Picture details at 70,000 feet are remarkably clear as a result of Polaroid’s early technology.
Rich recounts the drive and intelligence of Kelly Johnson in selling and managing the design of a stealth bomber. This is the first plane to fly with a nearly invisible radar trail. Initially, Johnson pushes back on the idea of creating another airplane when missiles and current jet fighter technology are dominating government contracts. Johnson eventually recognizes the wisdom of his engineers and the value of having a nearly invisible plane capable of delivering both ground intelligence and lethal force. Johnson demands a plane design that can outperform comparable bombers while cloaked from radar. He sells the idea to the military.
Selling the idea is where the story begins to explain why government is an inefficient engine for production. The military agrees to support a prototype of the Black Bird, a new airplane with stealth capability, because of its potential. The contract is let with Lockheed but it requires a top-secret designation. Any person working on the project must have top-secret clearance. Finding qualified personnel to work on the Black Bird is time-consuming. Some top engineering scientists are disqualified. The few with the qualification are tasked with 70-hour work weeks because there are not enough people to do the work. Routine laborers are subject to extensive background investigation. Work is broken into small pieces with only a few knowing how the pieces fit together. A smooth production line cannot be created once a design is approved.
In addition to the labor issue, competing political interests make it difficult to get approval of superior product. Contracts for the F-111 employ thousands of workers in various states and each has its own political constituent representative. Rich notes that the Black Bird is a superior plane. By some objective measurements, he is correct. It is faster than the F-111. It can fly at higher altitudes. It can carry a bigger payload. It is nearly invisible to radar. The military wants to scrap the F-111 and increase production of the Black Bird. Even with those advantages, the Reagan administration chooses to resurrect the F-111 and decrease the number of Black Birds to be produced. Part of the reason is in the political pressure from States that produce parts for the F-111.
Of course, one has to remember this is a story written by a Lockheed engineer with a vested interest in the company for which he works. The cost of the Black Bird may be higher than the F-111. Rich is not conducting a cost-benefit analysis in his version of the story. However, unquestionably government involvement is clearly shown as an inefficient engine for either innovation or production.
“Skunk Works” is an entertaining and enlightening history of military weaponry. It also illustrates the difference between a scientific research company and an industrial production company. There has to be a decision maker in both circumstances but when one manages scientists and engineers, more autonomy is given to workers than in industrial production. Knowledge, more than rules of production, determine product. Additionally, the inefficiency of government is exposed. On the one hand, inefficiency offers more time for deliberative decision; on the other, it impedes productivity and increases cost.
Finally, the story opens the Pandora’s box of military competition among nations that leaves only hope that the destructive power of nations will not destroy life on earth.
The last chapters of Rich’s story argue that government bureaucracy gets in the way of military innovation. He argues there is too much oversight and too many regulations that increased costs and discourage innovative change. Of course, the other side of the argument is about what happens when profit becomes more important than honesty or morality. The defense industry, like all human enterprises, has its Bernie Madoffs (the stock broker maven who stole investment funds) and Angelo Mozillos (the ex-Coutrywide CEO who paid a fine for his questionable mortgage lending practices). Oversight and regulation are essential to all forms of society because of the nature of humankind.
DARK MONEY-The Hidden History of the Billionaires behind the Rise of the Radical Right
Written by: Jane Mayer
When corporations became people, a flood of money aggravated the worst instincts of democratic government. The inference of “Dark Money” is–with more money to influence opinion, those with the most gold, rule. Jane Mayer, the author, alludes to a veil that hides the names of wealthy people who contribute to chimerical foundations that pay to play politics in American elections, government policy decisions, and educational institutions. That veil comes from the Supreme Court’s decision to remove contribution limits by corporations that choose to influence American government. As long as contributions are not directly tied to particular candidates for office, the Supreme Court rules in “Citizens United v. Federal Election Commission” that any dollar limit on non-profit, and later, for-profit incorporation’s is a denial of free speech.
Mayer methodically researches the influence of a group of billionaires who believe all human beings can prosper when government is small and regulation of private enterprise is limited. Some of Mayer’s named billionaires are the Koch brothers, Richard Mellon Scaife, John M. Olin, the Bradley brothers, Sheldon Adelson, Paul Singer, the Waltons, and others. Mayer argues that these billionaires are behind the rise of a 21st century radical right.
Of course, the radical right has always been in America but Mayer implies that it is better organized and influential because of its sophisticated support, political spin improvements, and abundant financial backing. Mayer’s documentation is convincing. It is interesting to read; not because it is right or wrong, but because it reveals how public opinion can be manipulated by a wealthy minority.
The manipulation Mayer chooses to expose is a class of billionaires who believe the American Dream exists, and that its existence is dependent on individual ability, hard work, and accumulation of money, power, and prestige. It is also a belief that what is good for business is good for quality of life and the environment.
The argument of this conservative belief may be characterized in history as temporal but recurrent; i.e. England grew to be a great nation in spite of the London fog from industrial development and early suppression of indigenous nations that became part of the English empire. One might argue that London fog (industrial pollution) and colonialism diminishes when it no longer serves the environmental and economic welfare of the country. These billionaires believe they, and all Americans, have the right to do as they please until it no longer benefits society’s wealth, power, or position. What counts in this conservative movement is the right to do as the individual chooses until it is no longer in their self-interest.
Mayer systematically explains how several American billionaires financially support many organizations and individuals that endorse their conception of free enterprise. The support extends to scholarships for students choosing a conservative ideological education, media acquisitions that spin toward conservative principles, professorships in universities supporting conservative views, financial support for conservative aligned non-profit think tanks, and Political Action Committees that finance wannabe elected officials who endorse the rights of self-interest.
The story of “Dark Money” is as American as apple pie. It has been present in politics since the revolution of 1776. It has become particularly acute in modern times because of the Supreme Court’s decision and the rising gap between rich and poor. What is at the heart of this conservative movement is a delusion that self-interest (see Ayn Rand) always benefits humankind. It is a set of beliefs that argues individual self-interest benefits society through unregulated competition; i.e. conservative beliefs that survival of the fittest connotes value defined by money; influence defined by power, and goodness defined by prestige. An opposing philosophy suggests value is defined by individual quality of life; influence by what others choose to give the individual, and goodness by doing no harm to others while being expert at what one does.
“Narconomics” is about the business of illegal drugs. Tom Wainwright notes drug cartels are modern businesses that benefit one-percenters while liberally rewarding middle class managers with money, power, and prestige. However, these one-percenters brutally terrorize employees and kill their customers. These business moguls systematically bribe and brutalize the public.
The manufacture and sale of illegal drugs is a growth industry, diversifying its practices and products while becoming global enterprises. An irony of Wainwright’s story is the ugliness and economic success of an illegal business is abetted by governments that support the war on drugs. The substance of Wainwright’s book is that cartels are run with many of the fundamental principles (aside from terror and murder) that make international companies like Wal-Mart richly successful.
Wainwright’s point is that like Wal-Mart, drug cartels have become so dominate in the market that they can dictate terms to suppliers and buyers. Cartels have a monopoly that controls pricing and distribution of a coveted product. The size of the Cartels allows control of prices at both ends of the business cycle. They can dictate what they will pay farmers to produce. They can sell at what consumers are willing to pay. Cartels are able to victimize both producers and buyers. Their dominate position in the illegal drug market allows them to globalize their business. Like Wal-Mart, they are using the world wide web to expand their market.
Though policies like the war on drugs and alcohol prohibition were meant to save people from themselves, Wainwright suggests they failed. Human beings naturally desire money, power, and prestige in varying degrees. When desire for money, power, or prestige is unmet, humans compensate with drug use; or other escapist behaviors. Wainwright analyzes “Narconomics” to show how it capitalizes on fundamental human drives and weaknesses. He goes on to suggest how drug cartels can be destroyed.
Wainwright argues that understanding drug cartel business practices will show how their industry profits can be disrupted. Wainwright suggests changing the focus from a war on drugs to a policy for treating, educating, and rehabilitating users. Rather than spending billions to militarize national police forces and prisons, Wainwright suggests those dollars be spent to treat, rehabilitate, and educate accused and/or incarcerated users. In destroying the drug cartel’s consumer base, they lose profit. Without profit from customer purchases there is no money, no power, and no prestige. There is only a failed business model.
The appointment of Jeff Sessions as Attorney General of the United States does not bode well for Wainwright’s capitalist idea of attacking the drug industry at its core.
Wainwright goes on to suggest that drug use be decriminalized and regulated by the government. This is no panacea but history shows that the war on drugs is a failure. The heart of success for drug cartels is its adoption of business practices that generate profit. Several drug cartels have become phenomenally successful. Sadly, the reality of the fundamentals of well-run business organizations is that they do not disappear. Remove the source of profit and businesses fail or change. Wainwright implies well-run drug cartels will change.
Wainwright explains that the business of illegal drugs is a global enterprise. A global level of government cooperation is needed for effective elimination of drug cartels. No single nation can eradicate cartels because of globalization. One nation’s success in the drug war only compels cartels to move to neighboring countries. The solution lies in treating, rehabilitating, and educating drug users. Only with decriminalization, user medical treatment, and public education will the source of profit for drug cartels be cut off.
The fact that drug cartels are run like businesses reveals an infrastructure that allows diversification. Once profits are reduced for drug manufacture and distribution, well-run cartels will change to survive. Wainwright notes that drug cartels have already diversified; i.e. they are human traffickers, and extortion consortiums. The glimmer of hope is that human trafficking and extortion do not pander to the human desire for escape offered by drugs. Government agencies and the general public are equally repulsed by human trafficking, murder, and extortion. Governments and the general public are more likely to cooperate in eradicating that type of criminal activity; less so with drug addiction.
Wainwright offers a compelling argument for attacking drug cartels by removing the source of their profits. The source of profits is the consuming public; not the illegal drug manufacturers and distributors. The illegal drug manufacturers and distributors are just the cost of doing business; not the source of profit.
Decriminalize drug use, cure the public of its need for drugs, or at least treat the addicted, and drug cartels have no motive to be in the business. There is no simple or cheap alternative to “the war on drugs” but there is a history that shows war on manufacturers and distributors of illegal drugs does not work. As long as the consumer wants the product, manufacturers and distributors will figure out how to supply the demand. Consumer demand is the driver behind the wheel of “Narconomics”. Treat the drug addicted, decriminalize and govern the use of drugs, and educate the public on the consequence of drug use. These actions, like the ban on smoking in public areas, will not end addiction but it will change the drug cartel industry into a criminal enterprise that most will recognize and despise.