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Golems With Money

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In Jewish folklore, a golem is a mythic creature made from mud. Although the power to create a golem is thought to be reserved to the especially holy, the golem is bereft of speech and can never be more than the shadow of a human. In modern literature, golems often acquire terrible powers, and in the 1921 Czech play “R.U.R.”, robots take on this role and eventually conquer their human masters.

Corporations have become the golems of our time. They are the creations of man, endowed with limited powers for the purpose of serving humans in our attempt to improve the world. But those limited powers have been enough, combined with their singular focus on profit, to enable them to assert a power greater than our own.

In the early days of corporations, they were chartered by the Crown, and later by individual states of the United States. The chartering authority had the power to specify what they could or could not do, how they would be governed, and how long they would last. As they became more plentiful, the states passed general corporation laws enabling anyone to form a corporation under conditions set by the law. The essential characteristics of a corporation under any of these laws are perpetual life, limited liability on the part of the stockholders, and the power to sue and be sued in court as an entity.  The power to sue and be sued in court was said to derive from the corporation’s status as a “persona ficta” — not a real person, but considered to be one before the law.

After the Civil War, the Constitution was amended to ban slavery and to establish the rights of persons in the United States to due process and equal protection of the laws. Less than 20 years later, in 1886, the Supreme Court held that the word “persons” included corporations. The court’s decision contained no rationale for that holding — here is the entire passage:

One of the points made and discussed at length in the brief of counsel for defendants in error was that “corporations are persons within the meaning of the Fourteenth Amendment to the Constitution of the United States.” Before argument, MR. CHIEF JUSTICE WAITE said:

“The Court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution which forbids a state to deny to any person within its jurisdiction the equal protection of the laws applies to these corporations. We are all of opinion that it does. “

That was it.  Corporations were now “people.”  Mind you, ten years earlier the Court had struck down civil rights legislation as unconstitutional and rejected an equal protection argument that would have allowed women to vote.  Ten years later the Court would uphold “separate but equal”.  The corporations didn’t need civil rights legislation — they had the Supreme Court.

Fast forward to the present.  Corporations are people, but people with perpetual life and limited financial liability for their actions.  These attributes permit them to accumulate piles of money larger than any individual could ever earn.  This power is needed to engage in the commercial activity for which corporations were created — building huge factories, railroads, bridges and entire villages of office buildings.

Not content with money, power and eternal life, the corporations now sought to acquire the facility of speech.  They cannot, of course, speak by themselves, but by using money to hire people as their agents to speak and write for them and in their name.  Qui facit per alium facit per se.  And in due course the Supreme Court let it be so.

With money, power, eternal life, and speech, it might be pardoned the corporations that they began to think of themselves as just like real people, only better.   And if ordinary mortals can vote, why not their betters?  A stumbling block was that the election laws all restrict the vote to actual human beings.  The corporations might have argued that these ancient laws were just as quaint as the Geneva Convention.  But they took a different route.  After all, if you have the right to vote, you can only exercise it once each election, in the municipality where you reside.  But corporations reside everywhere.   Surely they needed something more appropriate.

And so it came to pass that they hit upon the idea of using money to flood the public forum with speech, enough to line the campaign chests of Senators and put their message on every television set in the land. And that is where we find the Citizens United case.  Although it is only supposed to decide the narrow legal question before it, the Court majority was so anxious to decide the constitutional issue that it ignored the positions actually argued by the parties and held that corporations have the unlimited right to spend money in election campaigns, regardless of whether the corporation’s business was affected by the election, and regardless of whether it even does business in the state where the election is being held.

It will be observed that this right is equivalent to the power to accumulate unlimited amounts of money over an unlimited period of time and spend it in unlimited amounts to affect an election.  That right is greater than the right of the candidates themselves to raise and spend money in federal elections.  And in all this din, the speech of the individual is not even loud enough to be heard.

Now the golem has immortality, speech and an amplifier, too.  It appears to lack nothing besides worshipers, and with the advent of corporate evangelists that can’t be far behind.   Where can this end but in a world where we must bow down to our new masters?

Is the filibuster unconstitutional?

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This is a comment I posted to an insightful DailyKos article:

I think the argument is persuasive.

First, many have noted the other constitutional provisions that require a supermajority in some instances, such as expelling a member or overriding a veto. (There are also sub-majority rules, such as permitting one-fifth of each house to demand a recorded vote.) Since a cloture vote is a vote to “call the question,” and the general rule is that a majority may govern, it is inconsistent to allow the majority to be frustrated in bringing a bill to the floor. (This would also weigh against the right of a single senator to put a “hold” on a bill.)

Second, the Constitution allocates power to the Congress and to each house of Congress as a body, not to individual members or blocs. Even though the cloture rule is a rule of the Senate, the political question rule does not automatically exclude further analysis; courts have intervened in that area in the past. Imagine if the Senate adopted a rule explicitly requiring a two-thirds vote to pass any bill, not just to override a veto. That would virtually stop Congress from exercising its power (and duty) to adopt legislation. It would be just as unconstitutional as if the President issued an executive order stating he would not sign any bill that had not passed by a two-thirds vote. For any branch of government to tie its own hands throws the entire system out of balance.

Third, the rights of the senators’ constituents (quaintly known as “the people”) need to be considered. Just as the “one man, one vote” decision held that House districts must be fairly apportioned so as to give all Americans a roughly equal voice, we need to consider the rights of those voters who elected 51 of the senators. The Court has ruled that it is a denial of equal protection to permit a few voters in the 13th Congressional District of New York to elect a representative but to require a greater number of votes in the 14th Congressional District.  So what would the Framers make of a rule that, as applied, gives a senator who is opposed to a bill 50% more voting power than a senator who favors the bill?

The Framers took elaborate account of state and sectional interests in setting up the constitutional scheme (particularly in giving each state two senators), and to that extent they approved a check on an overall national majority. But the Framers would have balked at any rule of the Senate giving a senator from, say, Connecticut one and a half votes and a senator from New York only one. Yet that is the effect of the cloture rule giving 41% of the senators the power to thwart the will of 59%.

The Constitution gives Congress the power to “make all Laws which shall be necessary and proper” for the conduct of government. Congress cannot effectively exercise its role in the checks and balances system if it does not exercise that power. The constitutional imperative is that the government be allowed to govern, not that internal rules be sacrosanct.

FDR: The Four Freedoms Speech

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The basic things expected by our people of their political and economic systems are simple. They are:

Equality of opportunity for youth and for others.

Jobs for those who can work.

Security for those who need it.

The ending of special privilege for the few.

The preservation of civil liberties for all.

The enjoyment of the fruits of scientific progress in a wider and constantly rising standard of living.

These are the simple, the basic things that must never be lost sight of in the turmoil and unbelievable complexity of our modern world. The inner and abiding strength of our economic and political systems is dependent upon the degree to which they fulfill these expectations.

Many subjects connected with our social economy call for immediate improvement. As examples:

We should bring more citizens under the coverage of old-age pensions and unemployment insurance.

We should widen the opportunities for adequate medical care.

We should plan a better system by which persons deserving or needing gainful employment may obtain it.

I have called for personal sacrifice, and I am assured of the willingness of almost all Americans to respond to that call. A part of the sacrifice means the payment of more money in taxes. In my budget message I will recommend that a greater portion of this great defense program be paid for from taxation than we are paying for today. No person should try, or be allowed to get rich out of the program, and the principle of tax payments in accordance with ability to pay should be constantly before our eyes to guide our legislation.

If the Congress maintains these principles the voters, putting patriotism ahead pocketbooks, will give you their applause.

In the future days, which we seek to make secure, we look forward to a world founded upon four essential human freedoms.

The first is freedom of speech and expression — everywhere in the world.

The second is freedom of every person to worship God in his own way — everywhere in the world.

The third is freedom from want, which, translated into world terms, means economic understandings which will secure to every nation a healthy peacetime life for its inhabitants — everywhere in the world.

The fourth is freedom from fear, which, translated into world terms, means a world-wide reduction of armaments to such a point and in such a thorough fashion that no nation will be in a position to commit an act of physical aggression against any neighbor — anywhere in the world.

That is no vision of a distant millennium. It is a definite basis for a kind of world attainable in our own time and generation. That kind of world is the very antithesis of the so-called “new order” of tyranny which the dictators seek to create with the crash of a bomb.

— Franklin Delano Roosevelt, January 6, 1941

Rotisserie League Cabinet

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It’s too late now, of course, since Obama has already designated most of his Cabinet choices.  Some of them are fine, some are OK, and some are unknown.  But the Cabinet should be a source of pressure against the inevitable tendencies toward centrism and accommodation. It wouldn’t be a bad idea for progressives in Congress to set up a shadow Cabinet to point-guard every member of the real Cabinet (and other agencies) and blow the whistle when good things aren’t being done.  Here are my nominees — blanks indicate positions for which I’m still open to suggestion:

State Dept.:  Nicholas Kristof, the NYTimes columnist whose annoying persistence has kept a world focus on the disastrous events in Darfur.

Treasury Dept.:  Paul Krugman

Defense Dept.:  Sen. James Webb, former Secretary of the Navy

Justice Dept.:  David Cole, who has surveyed the panoply of legal abuses in the Bush administration and knows where the problems are.

Interior Dept.:

Commerce Dept.:

Labor Dept.:   Thomas Geoghegan, longtime labor lawyer who is now running to succeed Rahm Emanuel in Congress.

Health and Human Services:

Housing and Urban Development:  Dennis Kucinich, who knows how real people live their lives and has executive experience as mayor of Cleveland.

Transportation:

Securities and Exchange Commission:  Harry Markopolos, the investment professional whose documented warnings about Bernie Madoff were ignored, probably because the SEC staff couldn’t understand the math.

Surgeon General:  Joycelyn Elders, the former Surgeon General that Bill Clinton had to throw under the bus because she advocated birth control for teenagers and admitted knowing something about sex.

Three Financial Myths That Need to Be Changed, Now

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No, it wasn’t 9/11 that changed everything: it was Lehman Brothers.  With that firm’s failure, the plug was pulled from the warm bath that we imagined ourselves to be living in.  Now we’re seeing industries fail faster than Congress can stuff money into them, and our major creditor, China, is warning us about piling up too much debt and threatening to take away our car keys.

We are saving too little and piling up too much debt.  And the rationales voiced by the politicians for their bailout plans are starting to wear thin.  We need to free ourselves of myths that have sustained too much national economic policy.

1. Consumer spending will lift us out of trouble.  Actually, consumer spending is getting us into worse trouble.  It may turn out that Detroit’s problems began before the First World War when Henry Ford raised his employees’ wages generously, correctly calculating that this would not only buy loyalty but also turn them into consumers able to buy their own company’s products.  The trouble is that when you encourage consumer spending, you are diminishing the real value of wage increases.  If we mindlessly pump money into the consumer sector, it may generate business but soon will lead to demands for more wage increases from the same employers who are about to go under now.

2. Consumer and mortgage debt is good.  The subprime loan phenomenon is only a small part of the mortgage balloon that has expanded beyond recognition since 1935.  Federal policy shifted the standard mortgage from 15 or 20 years to 30 years, reducing the monthly payment and enabling house prices to rise.  Federal support of homeownership grew dramatically as a way to boost housing construction for returning veterans of World War II.  Mortgage industry demands led Congress to authorize variable rate mortgages and other exotic products in the 1980s, leading directly to no-money-down financing and “no-documentation” loans in the 1990s.  But when all these policy decisions cause home prices to rise, the amount of house you can afford stays the same — it’s just that the price has gone up, the mortgage payment has gone up, and you have been made able to afford it by deducting the interest and spreading out the payments.

Even apart from the current crisis, these props for the homeownership policy no longer make sense.  No one stays in a home for 30 years anymore, so there is absolutely no pretense that a 30-year mortgage will ever be repaid on schedule.  And allowing a tax deduction for interest makes owned housing more affordable, but does nothing for those who have chosen to rent their housing — either because they cannot afford to buy, or because their jobs require them to move frequently.  What these loan products do is to force consumers to invest a large part of their net worth in a single highly leveraged investment, a home which may rise in value (especially in a bubble) but which may also decline in value, disastrously.

Nor is credit card debt a good way to make consumers more secure.  Thanks to Congress, state usury laws have been wiped out as constraints on the amount of interest credit card issuers can charge.  Much of the debt that winds up on credit cards carries a rate of interest that would be considered loansharking if the banks were not licensed — and recent changes to the bankruptcy laws make it much harder to wipe out credit card debt in bankruptcy.  (Astoundingly, even those giveaways have apparently not rendered credit card issuers immune to the financial crisis.)  Any bailout “solution” that increases the debt load on ordinary consumers should be regarded as suspect.

3. All spending is equal.  We measure our economic health by gross domestic product, consumer spending, and other macro measures that fail to distinguish between buying a new refrigerator or buying a video game system.   There is nothing in our economic policy that encourages people (or businesses, for that matter) to spend money on necessities rather than on discretionary items.  We saw this recently when failing banks continued to fund lavish conferences at exclusive retreats for their executives.  It’s all deductible as a business expense, so why not?

It’s hard to construct a federal policy that encourages saving.  The only real way to do so is to end the federal policies that discourage it, and force lenders through better state and federal regulation to do their job of granting credit only to those who can repay it.

1. Lower Credit, Increase Saving. One first step in countering the pernicious effects of these myths would be immediately to repeal the two most significant federal laws that protect the credit card industry — federal preemption of state usury laws and federal bankruptcy laws that treat credit card debt differently from other types of debt.  This would result in a vast reduction of consumer credit, and in the short run would reduce consumer purchasing.  In the long run it would increase consumer saving as a means of accumulating the money needed to buy things that are truly necessary.

2. Make Mortgages Solid; Make Renting An Option.  Allow a tax deduction for rent paid to a landlord.  Reestablish standards that require a 20% down payment for most mortgages.  Make the “slicing and dicing” of mortgages illegal and force a licensed bank or mortgage lender to keep its money on the line for the entire amount of the loan.  End federal preemption of state laws that regulate the more exotic types of mortgages.  These four measures would reduce the volume of mortgage money available and channel it into loans that really can be paid back, stablizing home prices at a more realistic level while putting the rental option on an equal footing with homeownership.

Is Mike Bloomberg starting to look like Henny Youngman?

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Another free-market solution to immigration

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We are used to corporations complaining about restrictions on the movement of capital. “We can’t enact a minimum wage because that would skew the market.” “We can’t force corporations to keep the manufacturing in the US because the market will be flooded with cheap imports anyway.”

Immigrants are capital moving on its own initiative. That form of capital needs to move as freely as any other. If American jobs are taken, well, call Customer Service and complain to whoever in the Third World answers the phone.

Pat Buchanan is right in one respect — every nation, including the US, needs to be able to protect its borders against unrestricted entry. But someday it will dawn on the politicians that you can keep a thousand people out, but not a million. The question is, how to handle those million people in a way that maintains border security?

We have made a big mistake in entrusting border control and naturalization to the same agency. They are entirely different functions. Immigration is the process of evaluating people who are already here, most of whom are good, honest people, to decide upon what conditions they may remain here or become citizens.

Here’s the simple plan: Anyone who wants to enter the US and is not on a terrorist watch list may enter the US if they follow the rules. The rules: Present yourself at a consulate or a border entry station, show the identity papers you have from your home country to prove who you are, and consent to have your photograph taken and submit a DNA sample, fingerprints and a retinal scan. Then prove you have a few thousand bucks to support yourself for the next few months — the same money you would have given to the “mules” to get you over the Rio Grande. If you do that, you get a Social Security number and a six-month visa entitling you to work. The employer must notify Immigration Control when you are hired and when you leave employment.

After six months, you must report back. If you have not gotten in trouble and have worked for at least half of that time, you get a five-year visa on the same terms. If you fail to report, or if you don’t meet the test, you go back across the border and can’t come back. If you get through the five-year visa successfully, you get a Green Card. Period.

Most of the people who try to get across the border want only one thing: to work and to be good, honest, productive members of society. They will jump at the chance to live here without fear and to work “on the books.” Those who don’t will be traceable and can be deported. The number who sneak across the border illegally will decline to a trickle. Problem solved.

We Counted Most of Your Votes — Happy Now?

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I posted the following in response to the Radio Open Source blog’s question to the effect of “Are you happy with the 2006 election results?”

These days, I’m happy when Democrats win, relatively speaking. But I’m not overjoyed.

First, Democrats in office don’t guarantee much of anything. With the “unitary executive” still in the White House, there is virtually no chance they will affect foreign or military policy. They would have to precipitate a constitutional crisis to do that, and they just won’t — the Democratic Party of Watergate is long gone. Moreover, Democrats cannot maintain party unity the way the Republicans have under DeLay and Frist. They would have to risk being tarred with the “liberal tax-and-spend soft-on-crime tree-hugger” label in order to reverse the massive transfer of wealth that has funded both Republican supporters and Republican campaign chests. And not many Democrats are willing to be called names in order to do the right thing.

Second, even if Democrats win now and in 2008, democracy is still in intensive care. The bogus voting machines and corrupt state election officials are still there. In the campaign arena, money trumps all other means of communicating with voters. The “pundits” who cover politics most intensively can no longer tell the difference between a bald-faced lie and a ham sandwich, or else are willing to let the conglomerate network owners silence them. Most voters have no appreciation of history or civics and stay away from the polls even as soldiers are fighting for their — or someone’s — right to vote.

Third, millions of votes nationwide simply do not count for much. I live in Massachusetts, where all the races were decided by significant margins. We get to vote for unimportant offices like Clerk of Courts, while we are unable to vote for members of agencies that affect our lives every day, like the Turnpike Authority and MBTA. Nationally, because of the Electoral College system, voters in most states are ignored. This system is a relic of the 18th century, when states as such had a much greater importance in our national life. Today, with voters moving several times in their lives, it is beyond ridiculous.

The Democrats will have a significant agenda in the House, and in the Senate too if they win it. And no doubt, the prosecutors will be busy putting Republicans in jail. But there has to be a greater agenda for our national democracy in the next two, four and six years. Here are my three priorities, which no national political figure has addressed:

1. Abolish the Electoral College and have a direct popular vote for President.
2. Overturn the Supreme Court decision striking down campaign finance reform on the basis of “free speech.”
3. Convince centrist Democrats and Republicans to form a centrist third party that would immediately have a sizeable caucus in Congress. Fringe groups can never gain traction, but a centrist third party will be able to abolish the two-party lock on the political process and form alliances with core Democrats and core Republicans on an issue-by-issue basis.

Let’s get some major political figures to even start speaking of these issues, and I’ll be happy indeed.

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