The anarchist viewpoint is even simpler: be suspicious of large concentrated power sources. The government is much larger and much more concentrated a power source than even the larger corporations, therefore we should be more worried about it. And we should expect these large power structures to cooperate to screw over the general populace.
This is a great example of the cooperation of government and the private sector to their benefit and everyone else's loss:
Trying to defend the mortgage giants, Paul Krugman of the New York Times recently wrote, "What you need to know here is that the right -- the WSJ editorial page, Heritage, etc. -- hates, hates, hates Fannie and Freddie. Why? Because they don't want quasi-public entities competing with Angelo Mozilo."Yeah, it would be nice if groups of people organized democratically in large groups to do good. But that ain't what government is.
That's a howler even by Mr. Krugman's standards. Fannie Mae and Mr. Mozilo weren't competitors; they were partners. Fannie helped to make Countrywide as profitable as it once was by buying its mortgages in bulk. Mr. Raines -- following predecessor Jim Johnson -- and Mr. Mozilo made each other rich. Which explains why Mr. Johnson could feel so comfortable asking Sen. Kent Conrad (D., N.D.) to discuss a sweetheart mortgage with Mr. Mozilo, and also explains the Mozilo-Raines tag team in 2003.
I recount all this now because it illustrates the perverse nature of Fannie and Freddie that has made them such a relentless and untouchable political force. Their unique clout derives from a combination of liberal ideology and private profit. Fannie has been able to purchase political immunity for decades by disguising its vast profit-making machine in the cloak of "affordable housing." To be more precise, Fan and Fred have been protected by an alliance of Capitol Hill and Wall Street, of Barney Frank and Angelo Mozilo.
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patrissimo- Patri Friedman
- Patri's World
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It might be larger, but concentrated? You've got to be kidding. Government is incredibly diffuse, that's part of the genius of it. Everyone is in it for themselves to some degree. The Bush administration & thier unitary executive fetish is probably the most focused government that there's been in our lives and it's been a shambolic mess.
Modern life is complicated and it takes complicated systems to mediate it.
Controlled per person?
Most large corporations have a small select board of directors who can make decisions -- while local and state governments can have initiative processes of thousands of people dictating what can happen.
If you look at the number of people *really* in control then corporations are far more concentrated.
I've helped build several corporations. Most of the money in each...nobody makes those "decisions" at all -- it's payroll, taxes, and ordinary capital expenditures.
But yes, there are some large corporations in which small boards make decisions over billions of dollars. Name one and I'll tell you about a government program that dwarfs the size of that company -- even when we divide the money up according to the number of congresspeople and executives involved in the decision. We could play that game forever and I'd win every time.
Well, it looks like there are 22,000 lobbyists out there.
Even so. I am, also, wary of Patri's assumption that governments are bigger and more powerful than corporations. It's an emotional response, though, I can't quite pin it down.
It might have something to do with common interests of discreet corporations making them act like a super-organism.
Could that be it?
If I wanted to argue the wrong metrics of "control" then yes you'd win... but the problems would be:
(1) Comparing by $ value may not show a proper correspondence
(2) Control of dollars != "control" of decisions
A state government may control millions of dollars for programs - but Initiative processes can mean THOUSANDS of people have say on what happens.
On the other hand, show me a corporation where the the board aren't also the major shareholders and can be "overridden" by the employees.
Then show me it happens as much as compared to government.
In that instance I would wager corporation control is stronger AND the number of executives is still smaller in the ultimate decision.
As for overriding by employees, you don't have that, in any practical sense, in the public administration sector. For private employers, you have a much more liquid option to leave to a more well run competitor.
Corporations may have a high density of control in a very local part of the world, but when you integrate the diffuse power of the government over everything it touches, it's power dwarfs any particular corporation. How many SINGLE acquisitions [warships for example] by the government would be amazing values for the sum of the commerce in an entire industry?
The council members probably want to be re-elected, which means their decisions are tied into what the voters will want.
Corporate board members and VPs aren't elected by the employees - which would infer more autonomy in the decision making process.
As for overriding by employees, you don't have that, in any practical sense, in the public administration sector
In Washington State, they have initiatives where they can collect X number of signatures to call a vote on an issue, and if the vote passes then a bill/tax change can be put into effect by the public. This is what I mean where thousands of people can be part of, or override, public officials.
Corporations may have a high density of control in a very local part of the world,
Most *government* is local and State in the U.S. - which is very local in scope.
integrate the diffuse power of the government over everything it touches, it's power dwarfs any particular corporation
But the power dynamics are different. Government has a greater range of power but it's leaders are elected, have fixed term durations they can serve, it's decisions are easier to challenge due to it's public nature, and how it raises money makes it more open to scrutiny.
How many SINGLE acquisitions [warships for example] by the government would be amazing values for the sum of the commerce in an entire industry?
Again - the discussion is not just $, but how many people influence or control the decision for those $.
Warships are purchased by the Federal Government - which means it's part of not only the Defense budget but also the Federal budget... which means it has to be approved by Congress.
Depending on which House does what - we've just added a few hundred people to the decision-making process.
Again -- how does that compare to a corporation?
Depends on your metric. I like $ as a metric, and most of my tax $ goes to the federal government. So the federal government controls a lot more resources.
Worse, the interplay between the appropriators [legislators] and the spenders [executive] is game theoretically broken [in the sense that the rules of the system give rise to an equilibrium that is the worst best-case].
The task is also technically overwhelming. In a corporation, you have a hierarchical control system, where the poobahs make decisions at a certain normalization scale for dollars, and then delegate the refinement of the spending of those dollars to lower level deciders, who exercise an increasingly technical judgement over the spend. In the government, the right to sign for dollars is reserved and prestigious, so the enhanced technical judgement is an ancillary service, and exists at the behest of and the extent that it is supported by the spender.
Decision cycles for governors are relatively short compared to the election cycles. Memories of misgovernance fade. A short run of recent productivity is a stronger memory than a long run of mediocre performance. That's a simple fact of biology. Moreover, there is tons of research [ahem, Daniel Kahneman] that suggests that people would rather endure a bad situation than risk change.
If you calculate the cost of a referendum effort, versus the cost of lobbying individual deciders, I would guess that you would realize a tremendous economy of scale for the latter. That is a pragmatic fact that has to be addressed.
For the rest of this - I need to give some thought to your argument before I give a response. Thanks for a discussion that doesn't turn into name calling and insults.
My bro-in-law runs a small cafe. He's a pretty liberal guy in the sense that he thinks that a proper government can provide appropriate safeguards for The People, and is willing to allow more intrusion into his life to meet that end. That said, he was RAILING, about how he's getting killed by taxes, and getting very little for it. He can't grow his business [well that, and he has no grasp of his numbers] in large part.
I am actually a moderately liberal guy myself, and the tax situation drives me batty for a litany of reasons that I won't clutter this up with; mostly it's just stupid people doing stupid things that enables them to be completely unaccountable. [I actually don't see it as a democrat-republican battle. I see it as a battle between the bureaucrats and the workers].
I like the Chinese model, no corporate income taxes. If you are going to tax corporations, charge them use fees. Probably messes with the macro-inflation picture in the short term, but long term, it improves our economic lot.
But to characterize corporations by the BOD/Execs rather than shareholders, while characterizing governments by voters rather than bureaucrats/executives is utterly hypocritical. I mean, it's not just a little bit bad, it's total bullshit. Compare shareholders to voters if you like, or compare corporate executives to government ones, but be more even-handed.
And that is a major difference in my mind -- a small group of people can own major or majority stock, but how would we find a comparison to government?
Am I still being unfair in my judgement here?
If the board members control the company, then I agree that the whole company is controlled by a small number of people.
And that is a major difference in my mind -- a small group of people can own major or majority stock, but how would we find a comparison to government?
I would say that the amount of power over me wielded by many small groups of government employees - like the DEA or local police departments, is much greater than any single corporation. What single corporation can fuck up my life to the degree that those groups can? None, not even close.
Look, cops kill unarmed victims and then get off scot-free all the time (if you read the right news feeds - which I try to avoid because they depress me). What corporation has anywhere near that level of threat to me welfare?
Upon which, we would still end up with corporations have more 'concentrated' power since the number of people they answer to would be smaller.
Equity is still going down more eventually for FNM/FRE, but the mortgage bonds will be fine. Note that Bill Gross / PIMCO is loaded up with FNM/FRE bonds and shorting treasuries. That's because the spread will shrink between them as the government guarantees them.