DO NOT ACCEPT TO FILL AND EMPTY THE SAME HOLE, OVER AND OVER AGAIN, ASK WHAT THAT HOLE CAN DO FOR US.
Abstract: Whether employment comes from the public sector or the private sector does not matter: they equally provide with overall employment (a study of Krugman below shows this).
Instead I claim, somewhat contradicting Keynes, that the important notion is whether the jobs have public utility.
Corruption ruins public utility. Corruption consists into exaggerated compensation to the worthy, and compensation to the unworthy, with the overall aim to create power schemes (this is a philosophical, rather than just legal, definition).
Some common and casual ways of administrating society and providing topmost private jobs in the USA, amount to what would be viewed as intolerable corruption in most advanced countries.
This corruption is made possible in the USA by relatively weak democratic institutions, a deep, intrinsic democratic deficit (explained by the colonial and slavery past). Interestingly, this corruption is also entangled within the roots of American the health care, thus explaining why the USA has been less able than other advanced countries to solve its health care problem.
I give the specific example of lawyers made into richly paid hospital administrators, just because of their political connections. (This is going to hurt, but if you don’t want the heat, get out of the kitchen: others can be better cooks, courtesy of their more pristine souls.)
It is troubling that some of the people at the point of the proposed health care reform have a history of milking the present deplorable for gains that may have been legal, but were certainly exaggerated.
Rewarding lawyers for being on the boards of hospitals, although they seem to have had no medical qualifications, whatsoever, is a bit far out in la la land . (Notice that senior advisers in the White House are involved, and part of the present private health care system is involved too, but that the present public, governmental, Medicare system is not.)
Aside from exhibiting where some of the cost of US health care comes from, namely astronomical corruption, and mixing of the genres, this example points out that ethical improvement will not come from the private sector. Disconnecting ethics from money seems a must at this point. Fighting egregious corruption anchored in the mentalities would be another good start.
Improvement would come from building up the appropriate democratic institutions. The case of France, with her self-governing orders of doctors and pharmacists, comes to mind.
GOVERNMENT IS AS GOOD AN EMPLOYER AS ANY:
What is the basis of an economy? Well, water, food, material goods and services, in that order. A society should have enough energy to obtain enough of them all, sustainably. Part of that energy is provided by human employment. Robots taking care of everything are not just a danger on the technological horizon, it’s also a practical notion, because the plutocratic overlords of "Wall Street" have used China just that way: robot like serfs in China, allowing unemployment and disempowerment in the USA.
The argument has been made in the last 40 years, that the government was the problem, and private industry was the solution. To everything.
After some success in tiny and irrelevant European countries (EU assisted Ireland, defense challenged Denmark, etc.), Thatcher implemented that non-sense, Reagan followed, and then Bush, and Clinton, and Bush again. Sarkozy in France wanted to go that way, too, but, by then, the Thatcher-Reagan model ("Supply Side Economics") was collapsing for all to see.
Taxes pay for government, so government employment and taxes are roughly the same.
Paul Krugman produced in his blog a graph (below) that exhibits the disconnection between taxes and employment. In other words, government employment is just as good, or just as bad, as private employment at bringing the unemployment rate down.
GOVERNMENT, PER SE, IS NOT THE PROBLEM:
There has been quite a lot of commentary, starting with a rather shallow and silly cover article in ”The Economist” on using of a Texas-California comparison to claim that red (republican) states (supposedly low taxes) are doing better in the crisis than blue (democratic) states.
Let Paul Krugman slay the dragon that the notion of government is itself the problem. As he says in his blog: Texas is not the only red state (August 3, 2009):
"Some have pointed out that California, despite its liberal reputation, doesn’t have especially high taxes; others have pointed out that Texas, where almost a quarter of the population lacks health insurance, is hardly a model. [One could add that, with plenty of brain work production, California is a much greater contributor to the advancement of civilization than Texas.]
What I haven’t seen pointed out, however, is that Texas is not the only red state. Why not look at South Carolina, where taxes are almost as low as they are in Texas, but where the unemployment rate is 12.1%? Or Tennessee, which has some of the lowest taxes in the nation, and 11% unemployment?
See the relationship? Neither do I.”
Well done, Paul. California has a unique, weird fiscal valve: to lower taxes is easy, to rise them require two-thirds votes, so is nearly impossible. I view this fiscal contraption as racism in disguise: because California does not control its frontiers, it has stooped to mistreating the less advantaged, in the hope to stem the tide towards the Golden State, the fastest growing state in the world (up to the present crisis).
EXPORT JOBS, IMPORT KNOW NOTHING:
So what brings employment down? As I already hinted, the massive exportations of jobs to China does not help. It is said that Boeing, long the quintessential American corporation, which made the victory in World War Two possible, with its excellent heavy bombers and flying fortresses, is now mostly employing foreign workers. (This, officially because "Wall Street" believes that it is not as profitable to employ American engineers as employing foreign ones; the truth is, of course, much worse.)
But there is more. There is corruption, and it runs so deep that the very concept of what a democratic American institution could be is in question. Before i come back to that, let me scratch Keynes in passing.
MAKING AND FILLING HOLES IS NOT ENOUGH:
Keynes’ suggested, apparently not tongue in cheek, to go to the extreme of digging and filling holes to provide employment:
"If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing."
But holes are, of course, no help in the long run: digging holes may damage the soil, ruin the water one drinks from and does nothing for the long term energy balance. Dig and fill holes long enough, and you will die of thirst and hunger, in the dark.
So Keynes’ notion was completely erroneous: it is not innocuous to do whatever to lift employment. Why? Because digging holes and refilling them has no public utility.
What is true is that it does not really matter what organization, public or private, provides with employment, as long as the employment has public utility. It is also true that if private enterprise is unable to provide enough employment, or enough public utility, it ought to be replaced by the government, or just outlawed, all together (that is what ought to happen with a lot of the financial industry; in a vague concession, there is talk to do just that for so called "flash" or "high frequency trading").
Hence who provides with meaningful, public utility employment, is irrelevant, as long as there is enough of it. It does not matter if it is private, or if it is public. Corruption and inefficiency, and lack of public utility should, instead, be the focus of worry. Wars as in Iraq and Afghanistan have no public utility.
CORRUPTION R US.
Then the problem becomes to make sure that one is having an efficient government.
Corruption in the USA is astronomical, by European standards. I know, I have seen the American glorification propaganda about the USA having little corruption, and France much more. But of course it depends upon what the country affected considers to be illegal. Some practices which are common and lauded in the USA, would be intolerable in France. Even before the justice system could strike, common people would.
Let me give an example, to focus thought. In the USA, lawyers can find themselves heading hospitals, if they have the right political ties. Imagining a French hospital full of French doctors taking orders from immensely paid lawyers, just because they were politically appointed, is completely unimaginable. The French doctors would bust the doors of the board, and throw the parasites out. Or, then sequester them, and give them an earful. Trust the French police to be highly circumspect, when workers or employees get angry (they are trained and have orders that way).
- Let’s take a particular example, to picture better what I am talking about. Here is the case of Valerie Jarrett, a lawyer, with no other degree whatsoever. Jarrett is one of three Senior Advisors to President Obama. She is Assistant to the President for Intergovernmental Affairs and Public Engagement.
(The following quote is straight from Wikipedia):
Valerie Jarrett got her start in Chicago politics in 1987 working for Mayor Harold Washington as Deputy Corporation Counsel for Finance and Development.
Jarrett continued to work in the mayor’s office in the 1990s. She was Deputy Chief of Staff for Mayor Richard Daley, during which time (1991) she hired Michelle Robinson, then engaged to Barack Obama, away from a private law firm. Jarrett served as Commissioner of the Department of Planning and Development from 1992 through 1995, and was Chair of the Chicago Transit Board from 1995 to 2005.
Until joining the Obama Administration, Jarrett was the CEO of The Habitat Company, a real estate development and management company which she joined in 1995… Jarrett was a member of the board of Chicago Stock Exchange (2000–2007, as Chairman, 2004–2007).
She is also the Chairman of the Board of Trustees of the University of Chicago Medical Center, Vice Chairman of the Board of Trustees of the University of Chicago and a Trustee of Chicago’s Museum of Science and Industry. Jarrett serves on the board of directors of USG Corporation, a Chicago based building materials corporation.
Jarrett’s previous year’s income, in a 2009 report, was a $300,000 salary and $550,000 in deferred compensation from The Habitat Executive Services, Inc. The Wall Street Journal also reported she disclosed payments of more than $346,000 for service on boards of directors that reflect her political ties, and work in Chicago real estate and community development. She was paid $76,000 for service as a director of Navigant Consulting, Inc. a Chicago-based global consulting group with governmental clients. She received $146,600 from USG, and $58,000 to serve on the board of Rreef American REIT II, a real estate investment trust based in San Francisco. The Chicago Stock Exchange, Inc., paid her $34,444."
Ms Jarrett is a jack, or should I say, a jarrett, of all trades: law, finance, medicine, real estate, government, she knows it all, she does it all. But always for an impressive fee: this jack, or should I say, jarrett, is always well rewarded for its amazing mental qualities. America needs just one worker: Jarrett. With just one degree, law. Then the hospitals will know what to do.
SOCRATES WOULD HAVE BEEN ANGRIER THAN EVER:
Socrates complained extensively about the fact that men were elected for doing jobs for which they were not properly trained. He thought that was a disaster for Athens, and a parody of the democratic principle. But at least those men had been elected. What Socrates found childish was the supposition that the electoral process would make an expert of someone who had no expertise. As he famously pointed out:"When you need a shoe repaired, you go to a shoe maker." Well, in the USA, when you want your patients cured, you go to Jarrett.
In the USA, there is no need for elections. A selection by fellow politicians it all it takes. The People at large is best not consulted, say the politicians, and then they splurge. (Reminder: the average Senator or Congressman is a multi millionaire; about 5 million dollars for the average Senator, that is more than 50 times the worth of the average American family.)
After Mr. Obama was elected Senator, Jarrett selected Ms. Obama as a fellow lawyer to sit on the board of the hospital, and Ms. Obama’s income more than tripled above $300,000, with a side position on company associated to Wall Mart (of Hillary Clinton’s fame). Now that is two lawyers without medical degrees, or any sort of scientific background on the board of an hospital, making medical decisions.
Ms. Obama, according to press reports, organized one of these busing schemes US hospitals are becoming famous for (to shoo poor patients so far away that they get discouraged from the long bus rides, thus reducing health expenditures on those of little worth).
HOW EUROPE ANSWERED SOCRATES:
Around 732, confronted to superstitious savages, the Franks chose the name European to qualify themselves. That was a program by itself. It meant continental Greece, in other words: Athens.
Socrates had confronted the political organization of democratic Athens, to the price of his life.
The preceding glimpse on how the American society is organized causes pause. It is obviously not a question of democracy anymore (who ever elected Jarrett to play doctor without a licence?).
Socrates’ bitter complaints were addressed by European society. Slowly, during the Middle Ages, guilds, confraternities of workers, fraternities, orders (from French ordres), colleges (from Roman collegia), systems and associations rose. Those became institutions of experts and competent job holders or officers.
Example were: Justice, the Order of Doctors, the Universities (from the Cathedral schools, and the school system imposed on the Catholic Church by Frankish law), countless craftsmen guilds, etc…
Inside such institutions, competence was self regulated: the institutions were democratic inside, onto themselves. Outside, they were, well, institutions: knowledgeable, full of indispensable expertise, but also immovable, and very powerful. Their role in society was carefully regulated, but also unimpeachable. They imposed democracy, with their equalitarian selection processes: by 1300 CE, the closest advisers of the redoubtable king of France, terminator of Templar knights and pope alike, Philipe Le Bel’s, were top lawyers without any aristocratic background (they were ennobled later).
Members of the democratic institutions are democratically elected (through their merits), and are eminently qualified (through their merits). The invention of democratic institutions married competency and democracy. It put Socrates’ objections to rest.
In the Occident, democratic institutions became their own bosses, and were fun. Because they were irreplaceable in the socio-economy, the sovereigns had to back off, they were forced to share power with them.
OF THOSE WITH WEAK DEMOCRATIC INSTITUTIONS: CONSTANTINOPLE, ISLAM, USA:
The caesaropapism of Constantinople and Islam prevented the rise of democratic institutions. These ill fated polities spent their authoritarian existence, jumping from one dictatorship to the next, and ultimately whatever was left of civilization wilted and died. (The Ottoman empire and Egypt tried to compensate the absence of institutions by importing Europeans, either as guest workers, engineers, or slaves.)
The principle of caesaropapism says that there is no boss, but the boss, and God is his prophet. It does not matter how that one boss, and only one boss, the guy above, got there. (Hence the obsessive "religious" insistence that there is one God and only one God, and so and so is its sub-God, to be treated with the greatest abjection).
An example of such an institution was justice (which is not independent in Islam, because it depends upon God, who depends, in turn, upon the fascist politicians). Justice became independent and immensely powerful, right in the Middle Ages.
The USA was not a direct heir of caesaropapism: as an English colony when the monarch of England was monarch of France (as far as she/he was concerned), English America should have applied Frankish law.
Instead, though, the European tradition was broken in the USA.
WEAK AMERICAN JUSTICE:
An example again. In the USA, justice is not really an independent institution. That Americans think it is, and that it is more so than in Morocco, is not enough to make it so. Indeed, baby judges nurtured by an institution of justice as students do not exist in the USA: there is no such an institution as independent judgeship, there is not even an appearance of it. (There is in France: law students compete to enter the “Ecole Nationale de la Magistrature” –National School of Judgeship. Once, and if they are out, they start as student judges, so to speak…)
Just as to head a hospital, like Jarrett or Obama, it is enough to be a lawyer, in the USA, to be a judge, it is enough to be popular among the powers that be.
In the USA, lawyers become judges, and they are elected, not by their elder justices, but by people, or the politicians. For example Bush was impressed by the torture work of one of the torture lawyers in his administration, so he selected one of his torture lawyers to become a Federal judge. Other politicians thought that was a great idea, Senators approved it, and now the Federal "judge" (Bybee) sits pretty ugly in San Francisco. (Although he may well be the object of an international warrant of arrest for aiding and abetting torture, any time.)
Why did English colony, the USA break from the European tradition of democratic institutions? Because in the Seventeenth century, the future USA was left to its own instruments. It was founded as a "joint stock company", and the hyper wealthy owners had made the colony into a tax and legal heaven (meaning no laws, but laws for the rich). The English colony developed its own American institutions, starting with slavery. When you have slavery, you need justice itself to be enslaved. First things first.
STRONG FRENCH HEALTH CARE INSTITUTIONS:
Similarly to what happened with justice, France developed a strong "ordre" for medical doctors, the Ordre des Medecins. Medicine, as an institution, got used to taking orders only from itself.
There is also, in France, an ‘Ordre des Pharmaciens". This Order of Pharmacists is made of PhDs in Pharmacy in senior position. It has no lawyers, no political appointees, just pharmacy PhDs. It set up the transfer of a pharmaceutical practice from PhD in pharmacy to PhD in pharmacy (there is a distinction made with the transfer of the physical plant itself, by the way). The Order will carefully consider candidates among the PhD in pharmacy, including whether they already own a pharmacy, and if so where (so that nobody can corner the market). Ownership is limited to three pharmacies. So all pharmacists in France are owners, and their implantation are solid. This is important for health, since PhDs in pharmacy, after as many years studying as MDs, can prescribe drugs, and are often the first line of defense in a medical emergency. Their local durability insures trust and knowledge (although all transactions are registered by the electronic Carte Vitale, a credit card size green card with all information on the patient digitally therein; by the way, privacy laws in France are much stronger than in the USA).
The remarkable French health care system grew straight out of the independence and power of the Order of Doctors and the Order of Pharmacists. So it is self regulated naturally, as it has been for centuries.
The USA is clearly deficient in the power and independence of comparable institutions. So politicians in the USA can gain access all over the pie, and put their greedy fingers everywhere, and call themselves liberal, as they splurge , indeed, rather liberally.
P/S: One could say that is just demonstrated that government can create jobs, not that they are useful. But the example of corruption I gave was private, not public. Many advanced countries in Europe do very well with around half the GDP of governmental origin. Besides, when all is taken into account, this is also where the economy of the USA stand. For example firms in aerospace work mainly for the government (although Airbus does not, in Europe, its parent company, EADS, is the world’s largest defense –read government- contractor).