More About Steve Forbes and His Freedom Manifesto

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There’s a kind of dance that goes on constantly between groups of people. You could call it a sort of contest between liberty and order. Some will say that one is more important than the other, but i think people need both. The question is always how to balance one idea against the other. That’s a question that tends to become violent sometimes.

Steve Forbes, in Freedom Manifesto, favors the free market, and chooses restrictive government as the villain. That’s not entirely false, but not entirely true either. He values the innovation of the free market, and certainly lots of amazing things have come about that way. He’s a free market fundamentalist, believing that the market decides the value of everything as long as it’s left alone, through competition. I wouldn’t go that far.

There are different kinds of competition, for one thing, as when car companies of the USA decided to work to eliminate streetcars in major cities in favor of buses and cars belonging to individuals. Forbes would call this creative destruction, and if what replaced the trolleys were superior, he’d be right to do so. But not all such destruction is creative. Whether buses and cars are superior to streetcars is debateable, and I’d suggest that, in the context of a city, they’re not.

That leads to the question of value: what OUGHT we to value and invest in? Everyone will have different answers to that, and some of those answers we can eventually determine to be wrong. One of the current questions, not yet definitively answered, is whether the technology of “fracking” is a good one.

Fracking uses millions of gallons of water, with a certain amount of chemicals and sand, to fracture underground structures so that oil and natural gas can be obtained. I’m inclined to suggest it’s not good, that we ought to be seeking other forms of energy that don’t pollute, but I don’t know enough to say that definitively. Cheap energy, in the form of oil, coal and natural gas have brought lots of benefits to us, but lots of unintended side-effects as well. People may doubt the science of climate change, but wouldn’t it be smart to try to eliminate that threat, even if we’re not entirely sure how true it is? There’s no question that pollution isn’t good for humans or other forms of life. Why not find a way to eliminate pollution, while retaining the good things about our technology?

For one thing, because doing so would be expensive. We’re not hesitant to invest in something we believe to be necessary: wars, for instance. But enough people prefer to believe that profit is more important than living pollution-free, so we don’t invest in technologies that arguably will save the lives of our children, and possibly of the whole planet. If the innovation Forbes admires were invested in this problem, solutions would most likely be found. In fact, such investment has taken place in other countries, and while the investment hasn’t been consistent, and the solutions aren’t definitively better than the carbon-based technology (its infrastructure and business models already in place) it’s very possible that further investment would find ways to make a transition to a more healthy form (or forms) of energy. Carbon-based energies therefore have the advantage of being convenient, though their disadvantages aren’t trival.

Forbes doesn’t want government to stifle innovation with too much regulation, and that’s a reasonable concern. But SOME regulation is necessary. He recognizes this as well, and cites a study showing that Americans are generally more trusting of people they don’t know than are the Japanese. He attributes this to our free market form of economy, and says that this attitude is rare in the world, and that the less trusting attitude tends to go with places where government is authoritarian. That may also be true, and if so it’s a tribute to our economic system. But our economic system doesn’t always work the way it should.

The Glass-Steagall bill was enacted during the Great Depression to prevent the Depression from ever happening again, by barring commercial banks from speculation on the stock market. Glass-Steagall was repealed in 1999, and it took less than ten years for the stock market to crash again. That’s an example of regulation that’s necessary on a large scale. On a small scale, consider traffic regulation, as Forbes does. That’s pretty obviously necessary as well. Traffic accidents happen in spite of regulation, but how many would happen if there was no regulation at all? It’s not hard to guess: WAY too many.

So what would our economy look like if there were little or no regulation? Forbes thinks it would look better than it does, that there are always bad people in any walk of life, but only a minority, and that corporations do better at responding to changing conditions than the government does, since they’re made of people doing what they do volunatrily.

I think there are whole industries that are less than good (to put it politely). More than 20 years ago I visited the state of Mississippi, staying the night in Vicksburg. As I drove through the downtown area I saw a WHOLE LOT of rent to own stores. It seemed pretty obvious to me that this is how a lot of poor people buy things. They pay a certain amount each month, and that goes towards their eventually owning whatever they’re buying. That’s not necessarily bad, but I have a suspicion that when people buy things that way they wind up paying a whole lot more than if they could afford to buy the thing outright. If the interest they have to pay each month isn’t exorbitant, that’s okay. But I suspect it is.

I recently walked into a local store thinking about buying a laptop, saw the prices on them, and walked back out again. The prices were a lot higher than the other stores I’d been looking in, and the only apparent advantage to buying there was the low monthly payments you’d have to make. But you’d clearly end up paying a lot more for the product. That’s taking advantage of various people’s ignorance. Maybe I’d stop short of banning it, but I don’t like it.

The same for borrowing on the title of your car. I’d prefer not to lose my car that way, and I suspect it would be very easy to do. This business model is based on  on what is called loan-sharking. The only immediately discernable difference is that this is legal, though I’m not so sure it should be.

Another way to make profits is to pay your employees very little. There’s quite a history of that in this country, as well as the rest of the world. With industrialization came the attempt by workers to organize unions, to which employers often responded violently. That was in the 19th and early 20th centuries. Since then unions have been resisted more in the legislative arena, by states enacting what are called Right to Work laws. Just how these work, I’m not entirely clear, but I just saw a statistic saying that the 10 poorest states in this country are all  Right to Work states. Let’s leave the significance of that open.

Other ways to reduce what workers are paid have been downsizing and exportation of jobs. Downsizing was very fashionable in the mid-1990’s, to the point of it being publicized as a panacea. The odd thing about it was that companies that were making good, sometimes record profits were practicing it. You’d expect downsizing in a company that wasn’t doing well. When companies are doing well, downsizing takes on a different significance. It’s no longer about cutting expenses so the company can survive and eventually make good profits again. It’s become depriving employees of their share of the profits they helped to make. Americans may be trusting, but that kind of behavior suggests they shouldn’t be.

Exportation of jobs seems similar. Forbes admires the late Steve Jobs, and so do many others, apparently. There’s a lot to admire in a man who helped found one of the most successful computer manufacturers, making ground-breaking products in the industry, but Forbes doesn’t mention the Foxconn  factory in China where components for IPods are made for Apple, among others. Workers there (one factory employing 200,000) were forced to live at the factory, to work about 60 hours a week for about $100 a month, and pay for rent and food out of that amount (about half their pay). There were also reports of child labor there, and a high suicide rate. A different report said that workers had to make reptetitive motions to such an extent that they lost the use of their hands. Wikipedia (source of the first few allegations) also said that a reporter from Reuters was assaulted by by security guards at the Foxconn facility for trying to take pictures. The above may explain why Apple’s profit margin is high.

Now I begin to read tha manufacturing is returning to this country, and that manufacturers say that their previous outsourcing was a mistake. It’s true that making mistakes is the way we learn, but these mistakes came at least partly at the expense of American workers. Is there any doubt that these jobs contributed the the bad economy of the last four years?

But let’s also consider that the free market provides what people want. What people want often turns out not to be too good for them, like fast foods and sugary drinks. I’m not going to suggest banning such things (that’s what Forbes says big government does), but it does seem to underline that freedom includes the freedom to do gross things. On the psychological level gross things include TV programs like Jerry Springer, which I watched–exactly once. If there’s such a thing as air and water pollution, isn’t there such a thing as mental pollution? Again, I’m not going to suggest banning TV shows that I don’t like. There wouldn’t be many left. But I will suggest that the free market isn’t an unmitigated blessing.

Forbes also says that CEOs deserve high pay because it’s a tough job, and if they couldn’t make that much they’d do something else.  I expect the CEO of a corporation to make more than the average worker, but I don’t recall that there was any lack of CEOs in the 1950s or 60s when the CEO made only about 100 times as much as the lowest-paid employee instead of 3-400 times as much now. And with bonuses that seem to come even if their company isn’t doing well. Have CEOs started feeling ENTITLED to be overpaid? Executive pay going up while laborers pay goes down is also a feature of the free market. Does that make sense for the country as a whole?

I haven’t managed to address all the points Forbes makes. I can’t disagree with a lot of them, but there are also a lot of them I can’t agree with. Politicizing the question makes it more difficult to see the whole picture. Most of us have biases in one direction or another. I don’t want to see my country run for the benefit primarily of corporations, whose interests are not the same as those of individuals. I also don’t want to see the country run for the benefit primarily of the government. The interests of government and corporations seem to coincide more than the interests of either do with those of individuals and communities. I prefer not to blindly trust either.

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