First, Helen Dewitt (in a Berlin fashion week spread!) on how things used to work in Britain:
I started thinking about it when Britain introduced the National Lottery. Before the Lottery there was an investment scheme called Premium Bonds which gave participants the chance to win a million pounds: you had to buy a minimum of 100 Premium Bonds for Ł1 apiece, you were assigned 100 numbers, and your numbers went into the draw every week. You could get your Ł100 back at any time. You could leave them going into the draw for years. You could buy up to Ł20,000. In other words, you were gambling the interest you could otherwise have earned if you had left that Ł100 in a bank. When they brought in the Lottery, they reduced the frequency of draws in Premium Bonds to once a month. They also promoted the Lottery very heavily – it was widely advertised, tickets could be bought over the counter in newsagents, people could pick their own numbers. So it was much more entertaining, but you were almost certain, not just not to win, but to lose the money you put in. That was interesting in itself, and also seemed to be connected to other things that were going on in Britain at the time.
Given what we know about incentives, beliefs, identities, risks and rationality in modern society, it is hard to argue that the lotteries are anything other than a tax on the poor. God knows the 1% aren’t buying tickets. Of course, it doesn’t feel like a tax to the participants, but rather feels like gambling. But marginal expected loss (the proportion of every dollar paid that the government keeps, averaged out over all participants, including the winners) of the lottery is so high that calling it gambling pushes against the fair definitions of the word. Your chances are better betting on black at Vegas.
It’s interesting to wonder how people characterized their purchase of Premium Bonds under the old system. There is a good argument that people felt at least in part that they were investing in the country, and in the good of society. It’s that, along with the clearly much lower withholding rate of the bond, which make the scheme seem less egregious in light of marginal tax rates on the rich.
But these ruminations lead to a thought, not about how to tax the poor less, but how to tax the rich more. The last thirty years of relative political influence of the world’s well-to-do indicate that, in aggregate, they are not particularly prepared to pay higher taxes, even when it is clearly intended for the overall benefit of the population. So the question is, is there some way that paying taxes to the government can be made to feel like gambling, or like investing on their own account, for society’s wealthiest members? The rise of social impact bonds seems to suggest one possible avenue of pursuing such “behavioural” policy-making. The only problem with these schemes, as with a large portion of private-public partnerships, is that the private party often seems to be the one leaving the table with all the chips.
Over on the New York Times economix blog, an argument for high taxation and robust government spending using data from, of all places, the Republican-supporting Heritage Foundation in response to those who think that those who pay low taxes are ‘lucky duckies.’ As an example of the cute analysis:
Equatorial Guinea: According to the Republican-leaning Heritage Foundation, those who live in this small country in sub-Saharan Africa are lucky duckies indeed. Because of recently discovered oil deposits, the citizens of Equatorial Guinea pay less than 1 percent of the gross domestic product in taxes. The comparable figure for the United States is 26.9 percent of G.D.P., according to Heritage.
However, Equatorial Guinea doesn’t seem to be a very pleasant place to live. The people are poor and have little freedom. Heritage says that “persistent institutional weaknesses impede creation of a more vibrant private sector” and “the rule of law is weak.” This sounds suspiciously as if government is too small to do its job properly. But I’m sure that the citizens of Equatorial Guinea don’t mind having a dysfunctional government; after all, they’re lucky duckies.
Perhaps the most interesting part of this short piece – one of the clearest, quickest arguments for the idea that working markets requires a strong, effective government – is that it comes from Bruce Bartlett, a former policy advisor to Reagan, Bush Sr., and Ron Paul. It demonstrates that even someone who has worked with a headstrong libertarian type sees the need for effective government presence in any good society.
The conclusion of his article demonstrates another point however. Bartlett believes that high taxes and low regulation (like Denmark) are preferable to lower taxes and less ‘business freedom.’ So it’s worth keeping mind that, even convincing people that government is important and necessary to a functioning economy doesn’t mean they’ll be convinced that it should be on the side of a functioning society. Still, if you can lead a duck to water…
Monday’s schedule included a well-organized forum held at the new Centre for Law in the Contemporary Workplace (I attended by videoconference). The discussions centred on the issues raised by the Supreme Court’s decision in Fraser, especially the extent of the constitutional protection for collective bargaining under the Charter of Rights and Freedoms.
Fraser‘s relevance to my own research derives not only from its focus on freedom of association, but on the Court’s increasing reliance on international labour law. As has become typical of discussions of this issue since the release of the BC Health Services decision, the most controversial comments came from Brian Langille, law professor at the University of Toronto. Without getting into too much detail, Langille’s criticisms (and his indictment of the majority was scathing) reiterated two themes of his recent work. First, he suggested that the court had lost sight or failed to correctly answer the fundamental question: “what is it we are trying to do?” Second, he suggested that the court did a bad job of two forms of derivation, both the transposition of international responsibilities into constitutional commitments and the translation of constitutional principles into constraints on government law-making.
When it comes to international labour law, I think there’s a deep problem with Langille’s approach. His criticisms share a basic premise with formalist approaches to law, namely that rules can be correctly derived from higher-level principles; and that these principles can also help resolve conflicts between rules whose application would be in conflict in specific cases. Now, the original critique of this claim from the critical legal studies movement was that such derivation is non-deterministic: that there is no politically neutral, logically coherent process by which legal conclusions can be drawn regarding the application of principles in specific situations. However, it is not this claim which concerns me – even most “crits” have retreated from this version of the claim – but rather a precondition for its possibility. What bothers me is that in some cases, it is not the interpretations of the principles which are contested, but the principles themselves.
Lawmaking, after all, is a political process. The players and participants in the process want different things. In a review of Bauer, Pool and Dexter’s 1964 study of the political process surrounding antebellum US trade policy, Theodore Lowi notes an important finding:
The outcome depended not upon compromise between the two sides in Congress but upon whose definition of the situation prevailed. If tariff is an instrument of foreign policy and general regulation for international purposes, the anti-protectionists win; if the traditional definition of tariff as an aid to 100,000 individual firms prevails, then the protectionists win.
The advantage of Langille’s framing of the question – “what are we trying to do?” – is helpful insofar as it sets aside debates between formalism and functionalism, and implicitly sides with those who see no divide between principle and policy: both are cast simply as a matter of what the law is meant to do, and how it ‘works’ to accomplish that task. Once the problem has been defined and the successful policy choice promulgated into law, legal adjudication and administration can be made to cohere on the basis of a purposive interpretation of the resulting rules.
Unfortunately, purposive interpretation in international labour law is not so easy. I have spent much of the last week scanning the record of the last ten years of discussions at the ILO’s Governing Body, regarding the reform of standards and supervision processes. These are discussions of process, mind you, not discussions leading to actual international standard-setting. What these discussions reveal is unsurprising: action being taken and rules amended despite the absence of any consensus about problem definition. Without compromise at the level of problem definition – except for an agreement not to agree – the unfortunate result is a set of processes which reflect multiple, often incoherent logics. Each party tries to convert their interest into a principle, but neither principle prevails.
Such conflict of problem definition is just as likely to be reflected in international labour standards. While it is true that the ILO Constitution sets out high-level normative aims, the relevance of international regimes relies on their possession not only of a goal, but also an operative logic, i.e. an understanding of how specific norms will be realized by the policy or standard in question. Reading those Governing Body decisions has made clear to me that the resulting rules or procedures may actually embody conflicting norms which are inherent to the system, not accidental; the high-level aims may be purposefully vague and multivalent; and the resulting institutions may rely on multiple, incoherent logics. What a ‘correct’ derivation from the resulting texts might look like, in this type of situation, is without question a non-deterministic inquiry.
 The book is Raymond A. Bauer, Ithiel de Sola Pool, and Lewis A. Dexter, American Business and Public Policy: The Politics of Foreign Trade (New York, Atherton Press, 1963); the review is Theodore Lowi, “American Business, Public Policy, Case-Studies, and Political Theory” (1964) 16:4 World Politics 677
One could call a recent episode, in which the employees at a Mott’s factory in upstate New York’s Williamson face a $1.50 an hour pay cut combined with other benefits reductions just another day in the continued American slide toward inequality. Yet as noted by New York Times writer Steve Greenhouse, the strike is interesting because the concessions are being demanded at at time when the parent company, The Dr. Pepper Snapple Group, is showing healthy profits.
As noted by Leo Casey over at Dissent Magazine’s blog, there’s nothing new about the race to the bottom which has undermined middle class incomes over the past 40 years. Wages for the bottom 90% of the American workers have stagnated for the last 30 years, at the expense of the wages of the top 10%. That’s 20 years of growth for which all of the benefits have flowed to society’s richest.
There is no reasonable argument that this is fair – data shows that the change can’t be attributed to growing gaps in educational attainment.
Besides fairness, however, there is growing understanding, backed up by evidence and theory, that inequality is a large part of what caused the financial crisis. Former chief economist at the IMF Simon Johnson lays out arguments to that effect from Robert Reich and Raghuram Rajan, no economic slouches themselves. While admitting the long term fiscal problems faced by the United States, Johnson points out that the immeditate causes of the fiscal crunch was paying for the financial crisis – one facilitated by 30 years of growing inequality.
Johnson’s argument is about the implications of this understanding for US fiscal policy, but it also provides a useful perspective on the Mott’s strike. A recent book from Richard Wilkinson and Kate Pickett (you can read a defence against their critics here) has demonstrated the almost unbelievable numer of ways in which equality improves the lives of whole societies (that is, not just the poor); the work of Johnson, Rajan and Reich simply adds another reason to realize that the US has far from crossed the line from reasonable into irresponsible.
Some public advocacy groups have taken a hard tack on inequality, yet public awareness on the causes of inequality have as of yet gained much less traction, and policy responses seem focused on tax measures alone. It is all well and good to focus on individuals and their earnings, but ultimately distribution is a result as much, if not more, of the regulation of the market as it is of post-income readjustment. The Mott’s strike demonstrates just one of the myriad ways in which corporations – empowered and informed by legal rules and government policies – are allowed to increase their share of the total economic pie. It is this wealth which has increasingly found its way into the hands of America’s richest.
If Americans want to do something about inequality – and the crisis has shown that we all have a stake in America rebalancing its economic pie – then they have to do more than raise taxes on the beneficiaries of corporate largesse. They have to go after the largesse itself, with policies which ensure a fairer distribution between business and workers in their common enterprise. That requires a political strategy which focuses not only on the individual workers, but on the larger economic ramifications of short-term corporate policies.
It requires progressives not only to stand in solidarity with the striking workers, but to point out to American independents, fiscal conservatives, and anyone willing to listen, that is not only a matter of Mott’s shortchanging handful of workers. These policies, and those like it, have implications for American social outcomes, global financial stability and the nation’s fiscal health.
So even if it has the ring of comedy, we have to start pointing out the greater truth of the matter, much as John Stewart did when he called out the hosts of CrossFire: it’s not that the demand in Williamson for concessions are bad. It’s more than that.
Dr. Pepper is hurting America.
Even if it is not immediately recognized as such, Law, as it is idealized by the new law student, is the philosophy of state power. Not in the explanatory sense of political science, but quite literally the philosophy which the state itself cleaves to in the exercise of that power. The idealistic among these students will join the ranks of the profession in the hopes that they might take part in contributing to this philosophy their own prejudices, fantasies and ires. But no matter how beneficial the edifice of the law or how lofty one’s principles, a tenuous bargain is involved in entering the walls of law’s empire, and it is one which should not be accepted lightly.
One is of course aware of the role of the professor to, as it were, continually attempt to expose the tears in the wall between the philosophy of the state and philosophy proper, that is, the human philosophy of everyday life. But so too is it the job of the law student. And, if one is fearless in their thinking; if one can escape from the work-a-day practices of the profession which result, if without conspiracy, at distracting from this question; if one is willing to risk, which is not to say sacrifice, the comfort and security of professional certainty and relative class privilege, then so too can this be the role of the working lawyer. The job of the law professor, then, is not just to expose the breach. It is to put the pick in the hands of the profession itself.
McGill is raising the tuition of their MBA program to $30 000; an order of magnitude increase. Little surprise that Québec’s government is incensed, nor that the Globe and Mail editorial board is in favour. From the Globe’s argument:
McGill says the actual cost of running its program is $22,000 a year, of which tuition and government subsidies pay $12,000; other school programs have to subsidize the remaining $10,000. “We think that’s backwards,” says Peter Todd, the dean of Desautels. The MBA students have five years of work experience when they begin, and within a year or two double their salary, on average, and earn over $100,000. Other school programs shouldn’t have to subsidize this elite one.
Education Minister Michelle Courchesne says the province will claw back the extra money if McGill goes ahead. “They [McGill] say that charging $30,000 will let them increase the quality of their teaching and compete with other universities in Canada, the United States and others in the world. I cannot accept that argument because we have excellent schools.” Saying they’re excellent doesn’t necessarily make it so. It is true that McGill is 95th on the Financial Times list of the world’s top 100 business schools philosophy departments. But five other Canadian universities are ahead. All five charge vastly more. And no other Quebec business school philosophy department is in the top 100. “Our position has eroded because we haven’t been able to invest,” Mr. Todd says of McGill. “We’re arguably one of the best 25 universities in the world. We say it should have one of the best 25 MBA schools philosophy departments in the world. Quebec should want that and I think Quebec does want it.”
These all-too-cute editing nonetheless provides fodder for some head-scratching about a change which amounts to a complete refutation of the relationship the department has with society, and with the rest of the University. Why does it cost so much to educate these people, when there are no lab materials, no medical supplies, nor specialized software needed to educate them? Why should the prestige of this particular department be just as high as the university’s overall reputation, and not some other department? Why should we care what the Financial Times has to say about the work done in this department?
More importantly, if this program is essentially a training program for tomorrow’s corporate elite, then why is it offered by a university at all? The purely practical answer is that students willing to pay an $8000 premium on the delivery costs of the program provde a convenient cashcow for an institution constantly facing fiscal drought. To that, a modest proposal: the school could make even more money by simply selling degrees, ‘recognizing the excellence’ of those already successful in the business field, in return for a hefty fee – disposing of the need for a library, professors, or administrative staff.
The Globe’s averaging of salaries hide the students who would have otherwise done something thoughtful, something innovative, something revolutionary with the education they now received. Little time for that with a massive debtload to pay off. In his recent book on universities, Ian Angus argues that business has replaced the clergy in the tacked-on, gaudy addition housing the professional-school wing of the universities. Yet, paradoxically, even the divinity schools were never concerned only with turning out disciples willing to ply their trade in conditions of blind faith; even they saw doubt at the core of what they did. Here, then, we have a clear answer to one of those angels-on-a-pinhead questions philosophers are ever wrestling with: what is the price of professional certainty? It is $30 000 a head.