Morality and Morality Plays

My favorite Nobel Laureate in economics, Paul Krugman, is fond of saying, "economics is not a morality play."

Late last year, he explained exactly what he means: "economics is not a morality play. It’s not a happy story in which virtue is rewarded and vice punished. The market economy is a system for organizing activity — a pretty good system most of the time, though not always — with no special moral significance. The rich don’t necessarily deserve their wealth, and the poor certainly don’t deserve their poverty; nonetheless, we accept a system with considerable inequality because systems without any inequality don’t work."

Republicans who claim to be good Christians will certainly recognize the principle as stated in Matthew 5:45: "That ye may be the children of your Father which is in heaven: for he maketh his sun to rise on the evil and on the good, and sendeth rain on the just and on the unjust." In fact, the Book of Job in the Hebrew Bible (Old Testament) is devoted entirely to this theological problem.

This is not the same as saying that there are no moral issues involved with economics. Reinhold Niebuhr, the great 20th century American theologian, in his 1932 book Moral Man and Immoral Society explained: "human society will never escape the problem of the equitable distribution of the physical and cultural goods which provide for the preservation and fulfillment of human life." A few pages later, he explains the particular aspects of our own history and that of democracy in general that generate moral complexity: "...the creeds and institutions of democracy have never become fully divorced from the special interests of the commercial classes who conceived and developed them. It was their interest to destroy political restraint upon economic activity, and they therefore weakened the authority of the state and made it more pliant to their needs....[therefore] the economic, rather than the political and military, power has become the significant coercive force of modern society."

Franklin Delano Roosevelt was making much the same point in 1936 when he said: "We know now that Government by organized money is just as dangerous as Government by organized mob." And he did not yet have to deal with the power of today's multinational corporations who seem answerable to no national power.

But when Krugman says that an economic system must have a certain amount of inequality in order to work, we are still left to wonder what is meant by an economic system that works. Works for whom? Works to what end?

These are fundamentally moral, not technical, questions.

I Didn't Know The Gun Was Loaded

Listening to congressional Republicans downplay the danger to the nation of failing to increase the debt limit reminded me of a popular tune from the 1940's. If things go bad, they can always sing it:

What's Wrong With The Economy Today?

Economist Jared Bernstein has posted an analysis of the economy entitled "So Really, What's Wrong With This Economy?"

I promise - Professor Bernstein hasn't been reading my blog. But regular readers will recognize most of the themes. That's because "saltwater economists" are in agreement on what's wrong and what needs to be done about it.

We are also pessimistic that our government will do the right thing.

Once Upon a Time in America

Economist Mark Thoma has put up a quote from Franklin Delano Roosevelt's political campaign for reelection:

July 08, 2011

"Instead of Twirling Our Thumbs We Have Rolled Up Our Sleeves"

Mark Thoma sends us to Ronald Dworkin quoting FDR:

How FDR Did It: For nearly four years you have had an Administration which instead of twirling its thumbs has rolled up its sleeves. We will keep our sleeves rolled up. We had to struggle with the old enemies of peace—business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering. They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob. Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred. I should like to have it said of my first Administration that in it the forces of selfishness and of lust for power met their match. I should like to have it said of my second Administration that in it these forces met their master.

Posted on July 08, 2011 at 10:19 AM in Economics, Economics: Macro, History, Obama Administration

A personal note: one day just before my eighth birthday in April 1945, my mother showed me the headline of a newspaper. "I want you to remember," she said, "that a great man died today." That great man was FDR. We were living in Greenwood, Mississippi.

Never before or since did she speak to me about another political figure.

Financial Regulation: Who and How?

One of the biggest challenges in government at every level is how to regulate complex economic and industrial institutions without putting the fox in charge of the hen house.

The answer, as it has been since the time of the Greek philosophers, is to have people in charge who combine knowledge and ability with integrity. The ideal of the "philosopher king."

More easily said than done.

You may not think of the Federal Deposit Insurance Corporation (FDIC) as a likely place to find a philosopher-king. Think again.

Joe Nocera, a financial reporter and op-ed writer for the New York Times has just published an exit interview with Sheila Bair, who just completed her five-year term as head of FDIC. His article is well worth reading.

The comments by readers are also worth reading.

The article answers a lot of questions about how we got where we are with the economy and who might have been able to keep things from being as bad as they are.

Read My Lips: No New Jobs!

Today's employment report from the Bureau of Labor Statistics was dismal. Unemployment rate increased to 9.2%. Percentage of population employed is down. Wages are down.

The creditor class, especially the 1% at the top who own 50% of the nation's financial assets are delighted.

I wish I could say the news is surprising. It isn't. Nothing new here.

I have some more dismal predictions:
1. If the deficit hawks in Washington succeed in reducing government spending, the economy will contract further;
2. Wages will either remain stable or decline further;
3. Unemployment will increase and there will be a further decline in employed persons as a percentage of the population;
4. Our present position as 23rd in the world in terms of quality of infrastructure will decline.

There will be more bad news.

Because we will spend no more to stimulate the economy, our debt will actually increase.

No light at the end of the tunnel.

Oriental Town Charter 1899 - Road Work

At last Tuesday's meeting of Oriental's Town Board, at least two of the commissioners seemed to believe that the 1899 Charter governs, no matter what subsequent changes have been made to North Carolina laws.

Just to remind readers, the charter states that the town "shall be subject to all the provisions contained in chapter sixty-two of the Code of North Carolina...." So what does that mean?

The charter itself requires all of the town's officers to be qualified voters in the town. It requires that elections be held annually on the first Monday in May. It provides that commissioners have the right to collect taxes by levy and sale of property.

Under the charter, the mayor "shall have the power to cause all persons failing to pay fines, or who shall be imprisoned for violation of any town ordinances, to work it out on the streets...."

Under chapter sixty-two of The Code, the criminal jurisdiction of the mayor is the same as that of justices of the peace. Penalties for violating an ordinance were up to fifty dollars or up to thirty days in jail.

Anybody out there think the mayor still has that authority because of our 1899 charter?

Oriental Town Board Closed Sessions

Last night the Town of Oriental Board of Commissioners went into closed session "to discuss personnel matters" and someone mumbled the paragraph "143-318.11 (a)(6)" as the alleged authority.

Not good enough, on two counts:

(1): The open meetings act requires the public body to act only on a motion that explains the purpose of the closed session in plain English. Western Carolina University has helpfully provided a model motion for closed sessions under North Carolina Law here. Under section 143-318.11, there is NO general permitted purpose called "personnel." As you can see from the model, the public body must provide more information concerning the purpose under 143-318.11 (a)(6), selecting one of the following:

"+ consider the qualifications, competence, performance, condition of appointment of a public officer or employee or prospective public officer or employee.

+ hear or investigate a complaint, charge, or grievance by or against a public officer or employee.

+ plan, conduct, or hear reports concerning investigations or alleged criminal conduct."

So the motion to go into closed session was improper on its face;

(2) Assuming that the actual purpose was to "consider the qualifications, competence, performance, condition of appointment of a public officer or employee or prospective public officer or employee," and that it concerned the possible hiring by the Town of a police officer, the closed session was improper because it usurps the statutory powers and duties of the town manager under NCGS 160A-148. I have mentioned this before here and here.

I reminded the commissioners last night that they attended a special workshop August 17 2010 at 11:00 a,m. at Town Hall for the purpose "to learn the difference between Council/Manager and Council/Mayor forms of government...." The explanation was provided by Mr. Hartwell Wright, human resources consultant with the North Carolina League of Municipalities, accompanied by Ms. Lisa Kinsey, NCLM Member Services and Marketing Representative.

According to my notes from that session, Mr. Wright made it quite clear that in a council-manager government, the manager hires, fires and supervises all subordinate offices, including police, unless the town's charter is specifically amended. Otherwise, North Carolina General Statutes 160A-148 apply.

One of the commissioners said to me, "I'm looking at the Town Charter and it says we elect the constable." The same paragraph also stipulates that town officers (including the constable) must be a qualified voter in the town. The charter stipulates that municipal elections will be held every year on the first Monday in May, that commissioners have the power to collect taxes by levy and sale of property, and that the mayor has the power to cause all persons who fail to pay fines or imprisoned for violation of town ordinances to work it out on the streets. None of those provisions still apply.

The charter specifically cites chapter sixty-two (62) of the Code of North Carolina, vol. II as the source of the town's powers, rights, privileges and immunities, "as amended by subsequent acts of the general assembly."

That refers to The Code of North Carolina, Enacted March 2, 1883. I have a copy of chapter sixty-two of that Code, and provided a copy to the town manager some years ago to file with the charter. A reading of chapter sixty-two of the Code makes it apparent that very few of its provisions still apply to municipalities. The Code was long ago replaced by North Carolina General Statutes.

I'm reminded of a question raised forty-eight years ago by another old codger:

"Can't anybody here play this game?"
- Casey Stengel