Over the past several months, my co-authors (Alan Gitelson and Robert Dudley) and I have been working on a major revision of our American Government textbook. This will be the 11th edition, and our first with Oxford University Press. Among the major changes is the way we are approaching the treatment of public policy in a book that focuses on the institutions and political dynamics of American government. In the previous 10 editions we included two chapters at the end of the book focused on domestic and foreign policies respectively. The problem is that in the normal semester most instructors (including yours truly) end up cutting those two chapters due to time constraints.
In this new edition we are integrating short policy discussions (mini chapters?) after each major chapter, with the idea of leaving it up to the instructor to decide how to make use of those “Policy Connections” (PCs) Since I had primary responsibility for the two dropped policy chapters, I assumed primary responsibility for these 3000 to 4000 word Connections.
The new configuration is a bit of a risk in a market filled with books that vary very little in form. But one of the benefits of working with OUP is their willingness to allow us to try something different. We initially started with Houghton Mifflin — a class act among publishers, with one of the best political science editors at the time (Jean Woy) in overall charge. In a sense, Jean’s goal was to rebuild the political science offerings from scratch, and she had a three book approach regarding American government that (for the most part) succeeded. Led by Alan Gitelson (the order of authorship for Dudley and me was decided by a coin toss), our task was to put together a basic textbook that would work in the lower end of the college market –a paperback text that could be used in community colleges lieu of the more elaborate and sophisticated productions that brought in the big bucks at the larger state institutions. As it turned out, our first editions did well in the broader market, and even gained somewhat of a foothold in the expanding AP offerings.
Originally the plan was for our text to go through a new edition every three years, but we have actually ended up on pretty close to a two-year cycle (in addition to the 10 formal editions, there were a couple of “revised” in the mix). The big adoptions of the early editions were not repeated, primarily because of the continuous shake up of publishers. HMCO, for instance, purchased D C Heath as a “defensive move” when it looked like it was about to be taken over, and in the process several additional American government books were added to the “list” (including a best seller by James Q Wilson) and we soon became just one among many that the company marketed. Eventually we ended up as part of Cengage, and after a couple of editions under that imprint (actually Wadsworth) it became evident that our book was hardly an afterthought — one among so many that it was clear that the 10th was likely to be the last.
Facing that reality, the three of us decided to ask Cengage to release the rights to future editions to us so we might pursue an alternative publisher — one that was small enough to give our book the attention it was not receiving from Cengage, and yet willing to invest in the effort at future revisions. Much to our surprise and delight, the political science folks at Cengage were willing to do so, and while the process took a long time as it processed through their legal offices, we eventually obtained those rights. While we waited out the formalities (which took months), we received permission from the Cengage folks to market the book to alternative publishers. A number were interested, and each of them would have been fine.
It turned out our timing was perfect in two respects. First, in a scenario very similar to the HMCO effort headed by Jean Woy, OUP was launching its American government textbook line and (following the suggestion of its sales people who happened to stop by Alan’s office) we submitted a proposal to Jennifer Carpenter, the executive editor at OUP overseeing the development of the American government textbook line. For us, the advantages of OUP were obvious, for while the other publishers we spoke with were focused on publishing merely a revised update of the 10th, OUP was willing to consider the kind of reshaping and reconfiguring we thought ought to be done. Moreover, there is the advantage of a first rate imprint — the OUP reputation for publishing quality books is obvious. And yet despite that reputation, they are actually operating (editorially) at a scale closer to what we encountered in the early days at HMCO.
The second “timing” factor emerged a few months after we had finalized the rights transfer and started to work on the 11th edition. Cengage declared bankruptcy, and while in the long term this was a matter of financial strategy, the process would have frozen all assets — including all contracted rights. In short, we would not have been able to get those rights back for quite a few years, and thus would not have been able to sign with OUP or anyone else….
At this moment we are finalizing the drafted revisions, and OUP’s schedule has the book ready to go to the printer immediately after the 2014 midterm elections — and thus be ready for adoption for spring 2015 term classes. We are certain that OUP will do a terrific job marketing the book — and they will do so by highlighting the revisions as well as offering the book at a reasonable price.
That said, I have several other projects going (don’t ask) and the workload is likely to consume whatever plans I might have had for a summer break…. Still, very excited that the 11th edition will prove worthy of the efforts we (and OUP) are investing in it.
As mentioned in the previous post, Larry Lessig gave one of his master presentations (does anyone else make such effective use of powerpoints as he does?) at the University of New Hampshire on March 31. The idea for the talk emerged from the fact that I am teaching courses on Congress and Corruption (yes, those are two courses, not one), and found myself requiring his Republic Lost book in both. Since he teaches just down the road a bit at Harvard, a colleague suggested that I might extend an invitation to talk to my classes (both meet on Mondays), and in short order he accepted and the class visits turned into a well attended campus event.
The talk was an extended version of one Lessig had prepared for his most recent TED presentation, and once you see that latest TED it will become clear why he was so quick and willing to accept my invite. Lessig is a man on a mission, and New Hampshire plays a central role in his efforts to mobilize a movement aimed directly at campaign finance reform and fixing what he terms a critical “flaw” in the US political system.
His devotion to that mission is single-minded, and he just might succeed given the intellectual and rhetorical powers he brings to the effort. He draws inspiration from his friend Aaron Schwartz and the memorable work of Granny D that is associated with the now emasculated McCain-Feingold reforms. His NHRebellion group is small but energized, and the Rootstrikers effort grows with each view of his latest TED. Moreover, he seems in it for the long haul (through 2016) and he might succeed if he can reactivate the now latent energy of the Occupy movement to his more focused cause.
Lessig’s efforts have me thinking more about reform movements and their role in American history. I suspect there was no more important force in the development of modern US government and politics than the Progressive Movement — a movement that essentially engulfed and altered our political system. While today one thinks of political movements in terms of rallies and “occupy”-like tactics, the roots of the American Progressive Movement is found in the work of Lessig-like lectures in the 1880s pursuing specific but critical changes in the way we conduct governance and politics. Consider the work of Woodrow Wilson, fresh from his PhD, giving lectures on the need to reform the business side of government; or the efforts of many others during what Richard Hofstadter has termed the “The Age of Reform”. That “age” lasted for several decades, and along the way it ran into opposition and morphed into several variants. One can imagine that happening again if folks like Lessig are persistent and able to push the message through the current channels that can reach an increasingly cynical public.
In my seminar on Corruption and Integrity last evening, I highlighted the distinction between two forms of organizational corruption: an organization of corrupt individuals (OCI) and a corrupt organization (CO). Based on a 2008 article in the Academy of Management Review,* the distinction is really a simple but fascinating one that stresses whether collusive corruption within an organization is designed to benefit individuals or the collective body.
Immediately, the discussion turned to Congress and the current regime of campaign financing that has drawn so much attention in recent months. We have been focused on Congress for several weeks, and especially Lawrence Lessig’s argument about systemic corruption in the Republic Lost and his TED presentations on that topic. (Lessig was kind enough to offer an extended version of his argument at a lecture on the University of New Hampshire campus on March 31.) Putting aside for the moment Chief Justice John Roberts’ somewhat narrow version of corruption (i.e. as quid pro quo bribery), the question raised by the distinction is whether Congress is an organization of corrupt individuals or a corrupt organization. To say the least, an interesting question…
The distinction might also help us understand another interesting case making headlines. As more information emerges about the case of General Motors and decisions surrounding the faulty ignition switches in Chevrolet Cobalts, one has to wonder whether we are looking at an OCI or CO.
This morning I’ve been reading Michael Lewis’ Flash Boys, and it seems that the distinction can also be applied to entire markets. Accepting the premise that high-frequency trading (HFT) is a form of systemic corruption, one has to ask whether Wall Street operating under the HFT regime is a market of corrupt individuals or simply a corrupt marketplace.
Like I said, interesting.
*Pinto, Jonathan, Carrie R. Leana and Frits K. Pil. “Corrupt Organizations or Organizations of Corrupt Individuals? Two Types of Organization-Level Corruption.” Academy of Management Review 33, no. 3 (2008): 685-709.
In recent weeks I found myself posting longer and longer comments of Facebook? Perhaps it is time to get back to blogging mode….
The US debate over health care — and specifically about the Affordable Care Act of 2010 (ACA) — is truly a “local” issue. For those of us who believe US policy machinations ought to be a global concern, it would be shocking to learn that many folks in the rest of the world find the tumult over ACA a reminder of just how quaint and strange the American political system really is.
Obviously the same cannot be said for policy decisions (or non-decisions) related to economic matters that have clear global implications, e.g. financial regulation, transnational environmental policies, etc. Thus, the ACA-focused litigation that came to a head in Thursday’s Supreme Court decision might seem like an interesting sideshow. And the fact is, were it just about US health care policy, the case might just be of passing interest to international observers. But there is more to what occurred than non-Americans might think — both politically and (more important) constitutionally.
Politically, there is the possibility that the health care issue might become the THE focal point of the upcoming election — not only the contest for the White House, but also the races involving all of the US House and 1/3rd of the US Senate. The most obvious theme has already been struck when Mitt Romney took the podium and declared “repeal and replace” as his mantra (at least for now). Clearly, for those in the global community concerned about who will sit in the White House as the US’s “chief diplomat”. But there is also the matter of that tricky part of the ACA that was not given full backing by the Court: mandatory state participation in the Medicaid mechanism that was as important to implementation as the “individual mandate.” The foundation of this part of the ruling goes back to the principle that states (as sovereign entities in a federal system) cannot be forced to become agents of the federal government. They can be given incentives (through grants, etc.) to adopt and adapt to national laws, but they cannot be coerced — or for that matter “taxed” — into cooperation. In the decision, Roberts is very explicit about how to resolve this — convert the state mandate provision into a grant-giving provision. Simple enough, except for the fact that such a change would require a change in the ACA — a change that is likely to become a very heated political issue over the coming months.
And then there are the constitutional implications of the decision. By explicitly rejecting the rationale that the ACA individual mandate was justified under the Commerce Clause, the Roberts decision may have opened the floodgates to all sorts of challenges to US economic policies, especially in the regulatory arena. If such challenges emerge and are successful, the result may be a slow de-nationalization of American economic policy, which in turn can lead to a diminished role for the US in some sensitive sectors of the global economy. Deregulation has been bad enough, but imagine what can happen when the central government’s authority over banks and other financial services are challenged and turned over to the states.
The ruling also sent a message to federal policymakers that taxing and “extraction” policies are more likely to pass constitutional muster than the assertion of national jurisdiction through regulatory policies and means. It boggles the imagination to consider all the different ways taxation can be used to pursue national policy objectives. Under due process standards, current law offers firms subject to regulation the ability to shape and challenge specific rules and rulings. But as long as it applied fairly and equitably, taxes do not allow for for the exercise of influence via bargaining, cajoling, etc.
The closest analogy is the “luxury tax” mechanisms used in major sports leagues to control the spending of teams. You can spend lots of money to buy the best players for your team, but at a certain point the tax kicks in at such progressively higher rates that only the foolhardy would invest more. Now, consider how this might be used in lieu of regulatory oversight for banks and other financial services companies. Want to make sure banks are not too big to fail? Impose a “luxury tax” mechanism. Want to stop excessive executive compensation? Use taxes. Of course, these tax-based mechanisms are already on the books in many jurisdictions, but at present it is one of several policy options. The Roberts decision in the ACA case may have cast doubt on the constitutional alternatives to taxation approaches.
For those of us in the States who are quite pleased with today’s decision as it related to health care (I happen to live in Massachusetts, the only jurisdiction with and ACA-like system already in place), the implications of the decision is quite positive. But those who view it from the outside as another bit of odd political Americana should not take the ruling too lightly. It just might have global impacts in the long run.
Jacqueline Stevens most certainly stirred up things a bit in the political science community with her OpEd in the New York Times today (Sunday, 6/24/12), and it was refreshing to see someone make explicit what many in the field already knew — as a discipline we are poor at predictions and even worse at prescriptions. In those two respects we are no better or worse (well, perhaps a bit better) than the pundits who engage in political predictions and prescriptions on a 24/7 basis.
Personally, I find the calls from journalists seeking my “expert opinion” on some matter related to my teaching or research extremely annoying, primarily because they are often doing little more than fishing for a quote that will support the pre-formed thesis of their article. In response I typically launch into an explanation of how complicated the political world is, and how they ought to step back and reexamine the situation. You can imagine such insight is unwelcome, particularly if they are under deadline….
But in fact, that is what we political scientists do best — we step back and try to understand the political world and develop the theories and models and methodologies that can help all of us “make sense” of that complicated universe. Stevens’ simplistic view of the discipline is just that — simplistic; stating that “accurate political predictions” are “the field’s benchmark for what counts as science” perhaps says more about her own circumstances than about the field. It amounts to a myopic caricature that reflects reaction rather than thought. Had she given some thought to her critique, she might have noted how diverse and rich the field is — and how it really can AND HAS contributed to the sciences of the social.
Case in point is the little acknowledged fact that there have been two Nobel prizes in economics awarded to political scientists who were in fact often funded by the NSF and other sources who do not take the concept of “science” lightly. What these two individuals (Herbert Simon in 1976 and Elinor Ostrom in 2009) had in common was a commitment to challenging conventional wisdom used by the “predictors” in economics and related fields — and in the process they developed alternative approaches to human behavior that have altered our thinking about social life in general.
For Simon, his views on the limits of human rationality not only reoriented economics, but led to significant changes in how we think about organized life in general. (And while he was at it, along the way he and Allan Newell founded the field of artificial intelligence). As for Elinor Ostrom, by insisting that theoretical assumptions underpinning policy options be put to the test empirically, she was able to break through the government-or-market debate and foster a greater appreciation of the human capacity to develop alternative governing arrangements.
The major point is that neither Simon nor Ostrom were predictors or prescribers; rather, they were political scientists who took the “science” part of their job seriously. The support they received from NSF and related funders was justifiable as investments in the science of human behavior. It is too bad that so many — Professor Stevens obviously among them — fail to appreciate the difference between pop culture punditry and what really takes place in those parts of our discipline where science trumps “expertise”.
The Oxford Project and False Trichotomies
Those of us engaged in thinking about the (ongoing) global financial crisis (GFC) are an “enlightened” bunch — daughters and sons of an Enlightenment who won’t rest until the cause of every problem is uncovered and workable solutions that deal with those causes are found. But we are also an impatient people, often too willing to accept simple explanations that will allow us to “get on with it” by developing equally simple solutions.
Of course, any academic analyst worthy of the designation will acknowledge the complexities involved in determining why something like the GFC occurred and would (when talking among themselves) raise questions about the simplistic policy responses being seriously considered. Our problem is that we are prone to be too responsive to the public clamor for answers, and thus fall into the trap set by those who want all discussions of policy problems and solutions reduced to easy explanations and quick policy solutions.
If you step back and examine the general policy debate that has entrapped us, you can see at least two false dichotomies. On the one hand is the choice between regulation and markets — as if there was nothing in between. The cause is either too much regulation or not enough, with too much (or too little) reliance on markets as the mirror view of cause and solution. On the other hand has been the choice between blaming the GFC on systemic factors or pointing the finger at individual misfeasance or malfeasance. As the pressure to don our “expert” punditry hats increases, we begin to talk as if these two simplistic and fallacious dichotomies ring true — and worse yet, we begin to believe them to be true and abandon our objectivity for advocacy. “Speaking truth to power” is part of our job — but we ought to make certain it is the truth we find credible rather than the truth policymakers want to hear.
Which brings me to the focus of the Oxford Project — a well meaning effort to refocus attention on the “micro-foundations” of the financial markets with the explicit theme that issues underlying the GFC are matters related to “trust.” The brilliance of this agenda is that it bridges and combines the regulation/markets and systemic/individual discourses by highlighting a pivotal aspect of both. Enhancing the trustworthiness of financial market decisions and decision makers clearly reduces (but does not eliminate) the need for regulation, and creating professional (moral) communities promotes ethicality and thus offsets some systemic pressures the can prove dysfunctional.
What has drawn the attention of those who have responded to the initial post on the Project by David Vines has been its call for the reintroduction of professional and ethical standards. However, the central question of the Project as expressed by Professor Vines seems to preempt further exploration of those micro-foundation by asking “what framework of moral obligations could and should be imposed on employees within financial institutions. What should the resulting ‘integrity system’ of professional obligation look like?” Without knowing the data generated in support of the implied contention that the problem is reducible to a question of trustworthiness, I can only assume there is more than anecdotal evidence to back it. If not, we have a logically begged question, and we have moved from false dichotomies to a false trichotomy (regulation, market and trust) that might draw us even further into the distraction of policy debates shaped as much by partisanship and ideologies as by the credible understanding of the problems policies should be addressing.
The case for the Oxford Project does have strong philosophical roots, and specifically in the work of no less a figure than Adam Smith — not the Smith of economic legend, but the ethicist author of The Theory of Moral Sentiments (TMS) who made the case for the foundational role of trust in 1759 with the declaration that a “Moral Being is an Accountable Being.” And as anyone who has read TMS knows, Smith made a concerted effort to analyze both the nature and limitations of trusting relationships. He knew, for example, that trust built on accountability was critical to social life, but he also knew that extending that trust beyond the local community was possible but ultimately tenuous. Trust, like all other factors of human behavior and interaction, is as complicated as it is critical, and attempting to use it as a foundation for public policy is a risky business. Designing policies that seek to “impose” trust through so-called “integrity systems” would likely have the Smith of TMS extremely anxious, if not frustrated — an error that ignores our natural empathy and inclinations.
In lieu of designing and imposing integrity systems, perhaps we should devote more attention to broadening our understanding the nature and dynamics those “micro-foundations” and delve even deeper into the social milieu of financial markets. Focusing on professionalism and ethical solutions is worthwhile but might prove too narrow as a solution. What we are likely to need is a mixed approach to designing policies for dealing with (and most importantly, preventing) future GFCs — some regulatory, some managerial, some ethical, etc.. Markets and moral communities don’t just emerge — they are constituted by the trusting and accountable relationships which underlie current practices. Thus, while we often speak of reform, what we are really advocating is “reconstituting” ongoing relationships. We need to know more about those relationships before we take a stand on solutions.
[My colleague Justin O’Brien recently launched a new portal for his Centre for Law and Regulation at the University of New South Wales. He invited me to post some thoughts about corporate accountability and regulatory reform — and I delivered a two part analysis. Here is the second part — the original is found at http://bit.ly/zbqmEE]
I have argued thus far that much of the global policymaking rhetoric emerging in response to the 2008 financial market collapse has been based on the two simple narratives that stress the role of corporate accountability as both cause and cure. Together these comprise the “policy theory” that underlies current government responses to the crisis.
Students of public policy are taught that the policymaking process is a messy business involving a clash of interests engaged in bargaining and compromises. But in many cases — especially those related to particular events or crises — policymaking also involves explicit or implied theories of cause and possible cures. The implied policy theory reflected in responses to the financial crisis triggered by the 2008 bankruptcy of Lehman Brothers has been relatively clear: the economic turmoil resulted from deregulation and the subsequent lack of responsible behavior on the part of the banking community and especially major investment houses. It followed that what was needed was a reconstruction and reinvigoration of a stronger regulatory regime with the intent of strengthening corporate accountability in the financial industry and throughout the corporate world.
In an ideal world, theories are grounded in facts and constantly put to the test; in the world of policymaking they are often based on pure speculation and supported primarily by an unwarranted but strong belief in the theory and its veracity. The problem is that in policymaking such strong beliefs often trump efforts to weigh the evidence against a dominant theory or in support of alternative policy approaches.
At this juncture I have no intent to argue against the causal (explanatory) part of this policy theory, other than to note that most analyses indicate that the issues underlying the events of 2008 and the Great Recession that followed were more systemic than the theory implies. Deregulation and the lack of corporate accountability certainly factor into any explanation, but there is little evidence to back the argument that a future recurrence of the crisis will be prevented if we rebuild the regulatory regimes that began to dissipate from the late 1970s onwards. If that is the only major response, then we have certainly learned little of value from the economic collapse.
At the same time, I do not intend to argue against the cure part of the theory, for certainly any coherent policy response must take into account the need for greater corporate accountability in the future. The issue is whether regulatory regimes — new or reconstructed — are the only or appropriate policy responses to the need for a greater sense of corporate responsibility for the actions they take. There are alternative approaches that can be seriously considered.
Before outlining the alternatives, however, let’s revisit the issue of corporate accountability to place it in historical perspective. The issue itself is a creature of the “managerial revolution” that took root in the early 20th century. It became a major cause for concern as corporate decisions and control passed from ownership to the emerging technocracy within the more successful enterprises. Throughout the 1920s and 1930s, the problems of accountability were primarily within corporations. They were typically resolved through policies based on such concepts as fiduciary responsibilities and other legalistic instruments that made mangers accountable to shareholders. In the public sector, similar concerns were being raised as governments turned increasingly to quangos and other forms of autonomous public enterprises. It was in this context that corporate accountability first emerged as a public policy issue in the form of how to make those public authorities and crown corporations more responsive to the public interest.
But it was not until the 1950s and 1960s that the public impact of private sector corporate decisions became increasingly evident and calls for greater corporate accountability found a place on the political agenda of most advanced economic systems. Because many of the issues being raised involved specific areas of corporate behavior (e.g., auto safety, the environment), regulatory solutions seemed most relevant. But there were those, like John Kenneth Galbraith, who were warning that the rise of corporate power and influence in the “new industrial state” called for more than just regulatory solutions. On this reading corporate accountability was a more systemic challenge. It required policies that went beyond merely making and enforcing rules. (Ironically, in the aftermath of the 2008 financial market collapse, those who turned to Galbraith’s writings ignored his warnings about the new industrial state and focused instead on his classic analysis of the 1929 stock market crash.)
What emerges from this brief overview is the idea that we need a multifaceted approach to the issue of corporate accountability, one that reflects the scope and range of the problems we are attempting to resolve. There is no doubt a place for (re)regulation where we are dealing with specific arenas of corporate behavior where malfeasance (criminal acts) or market indifference (externalities of corporate decisions on the environment and public health and safety) are possible or likely without government intervention. But such regulatory approaches are not designed to handle the broader, macroeconomic threats posed by irresponsible corporate decisions and behavior.
One such approach is the option of creating more responsible behavior through a “managed” economy in which corporations become part of an overall governance scheme that attempts to hold them accountable for their role in the general economy. Such a managed approach is often associated with now discredited (but at one time widely advocated) national economic planning policies. Nevertheless, in more subtle forms (e.g., industrial policies, economic development policies) the approach remains a viable and active means for inducing corporations to take the public impact of their decisions into consideration.
Another approach — one more often implied than explicitly advocated — is to alter the parameters and rules of the environment in with corporations operate. It involves reconstituting (or fiddling around with the design of) what organization theorists call the “task environment” of corporate enterprises. Underlying this approach is the assumption that accountability does not have to be created, but rather changed. “Moral beings are accountable beings,” wrote Adam Smith in 1759; it is in our social nature to be accountable, both as individuals and as organizations. Under this “constitutive” strategy, it is a matter of reshaping and redirecting the accountableness that already exists — to develop policies that foster and nurture a more desirable (i.e., moral?) sense of corporate accountability. We see this approach implied in the work of public choice theorists as well as in the work of the growing cadre of behavioral economists who seek to “nudge” rather than regulate or manage. On a practical level, we see it in the US with the development of B-corporation charters in a growing number of states that alters the fiduciary relationships required under traditional corporate law. Done mostly under the radar of mass media news coverage, this new charter allows B-charter firms the freedom to modify their operating norms away from the bottom line in order to explicitly serve more than shareholder interests.
Sadly, simple narratives and simplistic policy theories often carry the day when it comes to reform. Perhaps with a bit more public reflection and debate that can be changed. In the case of corporate accountability it is not too late.
[My colleague Justin O’Brien recently launched a new portal for his Centre for Law and Regulation at the University of New South Wales. He invited me to post some thoughts about corporate accountability and regulatory reform — and I delivered a two part analysis. Here is the first part — the original is found at http://bit.ly/xp0WOS]
In the rhetoric that has accompanied the economic troubles of recent years, “corporate accountability” has emerged as an all-purpose phrase, serving to explain how we got into the current global financial mess as well as offering the means for getting us back on track. Thus, corporate accountability became central to two narratives, one focused on the lack of sufficient accountability as a primary cause of the problems we face and the other on enhanced accountability as the solution or cure.
As first look, the cause-cure narratives make a good deal of sense. For one thing, history seems to fit the explanation of why we found ourselves on the precipice of a global financial meltdown in 2008. Fostered by major retreats from the regulatory state and its capacity to set and enforce limits on corporate behavior, corporate accountability became re-centered in the expanding global marketplace where the lack of authority and competitive norms bordering on the glorification of “greed” meant deterioration in corporate self-restraint – especially in the financial services market. Released from the responsibilities and requirements of national government regulations and rules, corporations creatively and enthusiastically took advantage of the opportunities presented by the deregulated environment at home and abroad, and in the process overextended themselves and the global economy.
If it was the retreat from the regulatory state that generated the economic crisis, the solution seems as obvious – reestablish the ex ante corporate accountability that proved so successful in pre-deregulation days. For the financial markets in the United States, this called for re-regulation in banking through Dodd-Frank and the Volcker Rule. As if to signal that past misfeasance and malfeasance will not go unpunished, prosecutorial initiatives suddenly came to life, as have many previously dormant and new enforcement mechanisms at the federal and state levels.
There are a number of problems with this simplistic cause-cure scenario, but two stand out. First is the credibility of the causal narrative itself – that it was the emasculation of strong regulatory regimes from the mid-1970s onward that unleashed the forces of economic ruin. But while the regulatory and monetary policies that inflated the housing bubble were certainly proximate causes leading to the Great Recession, there were other factors already in play by 2007-2008 that created the conditions ripe for the coming crisis. For Joseph Stiglitz,* among others, the economy was already in a “fundamentally weak” condition, and in fact the bubble was providing “life support” for the unsustainable consumption that drove us toward the inevitable collapse.
Which brings me to the second problem of the cause-cure narrative: the widespread belief in policy responses that involved little more than a nostalgic return to the pre-deregulation era when government provided a much needed set of constraints on corporate behavior by holding them (again, especially banks) accountable. Again, Stiglitz on this approach: “It was absurd to think that fixing the banking system could by itself restore the economy to health. Bringing the economy back to ‘where it w’s” does nothing to address the underlying problems.“
Thus we have in the dominant cause-cure narrative a beautifully simple yet highly suspect policy logic requiring not only a critical rethinking of what brought about the current malaise, but also a de-coupling of the powerful cause-cure link that is leading nowhere. Whether and to what extent the lack of corporate accountability played a central role in the economic crisis is an empirical question, and at this point the evidence indicates that it was certainly a factor in fostering and triggering the financial collapse. But even if we had definitive proof that corporate accountability did play a significant role in the crisis, the solution might not lie in a return to what we now imagine to be the glory days of the regulatory state when the only thing standing between responsible behavior and corporate malfeasance was the strong threat of government action. Upon closer examination, the history of corporate regulation does not necessarily support that view; rather, the historical record highlights many instances of regulatory “capture” and the manipulation of oversight and enforcement on behalf of corporate interests.
If enhanced corporate accountability of the sort that serves the general good is our objective, we need to think outside the regulatory box and explore alternative means to achieve that ends.
*Jospeh E. Stiglitz, “The Book of Jobs,” Vanity Fair, January 2012,http://www.vanityfair.com/politics/2012/01/stiglitz-depression-201201
In the past I have been rather coy about my partisan leanings among students, and perhaps there are some outside family and friends who wonder about my politics. But with the exception of a year or two flirtation as a young Barry Goldwater supporter in college (hey, I was only a freshman), I have followed the family tradition of being a Democrat through and through. I probably would have been more open about all that were it not for a serious case of cynicism about politics that came from the assassinations of the 1960s (I was VERY active in the RFK campaign in 1968) and the norms of studying political science in graduate school (objectivity, and all that…). By the time I started teaching, my modus operandi was to take either side of an issue (usually the one opposite whomever I was speaking with) and to avoid any sense of being partisan.
Thirty plus years later, however, I found myself openly (although not outrageously) supporting and giving money to the Obama campaign in 2008, and grumble as I might about what I perceived to be the performance of the White House over the past three years, I remain an Obama supporter (although now I give my money locally, to Elizabeth Warren; more on that later).
I bring this up because I am getting increasingly frustrated at what I regard as the lack of concern in the Obama campaign for what can only be termed “political energy”, and the continued ineptitude of the White House as exemplified by the recent flare-up over the coverage of contraceptives in the health care plan. It isn’t so much the substantive issue that is bothering me (any reasoned analysis makes it clear that such a policy is needed and more than justifiable), but rather the inability of the campaign — Obama included — to take advantage of the situation. Right as they may be, the Obama folks are letting the GOP (as usual) set the rhetorical agenda. This approach proved a disaster in the 2010 election — by the time some of the Democratic Party leadership figured that out, it was much too late.
I get the sense that we are seeing a possible repeat of 2010, except now we are talking about the complacency of an organized presidential campaign as it sits back and waits for the inevitable outcome of the GOP to be assured. Yes, they are very proactive in raising funds and putting together the machinery required for a national campaign that must reach out to the grassroots. Heaven knows, hardly a day goes by that we don’t get some sort of email from the national campaign, the national Party, the state party, etc. But there is something missing — which brings me to the point of this post…. But there is something critical missing.
We speak of political campaigns as if the key to success is “organization” — and there can be little doubt that unless you have the capacity to literally organize at all levels of the campaign, from the precinct to the convention, from the raising of funs to getting out the vote, you are less likely to have a decent chance at winning. In that regard, I don’t think we have ever seen anything like the Obama effort in 2008; and even now they are constantly building that campaign infrastructure into a major and massive operation. It is as if they took the community action and machine politics ops from Chicago and put them into effect nationwide. (Some people see that as a negative — but in American politics that is definitely a positive if the goal is, as it should be, to win elective office.)
But there is another dimension to political campaigning that is being ignored at this time, and that is the energizing factor that is best captured by a phrase used decades ago by political scientist E. E. Schattschneider: the mobilization of bias. There are certain terms and phrases that capture a phenomenon that is otherwise difficult to explain, but the mobilization of bias has always struck me as the second key necessary to win over and generate commitment on the part of the electorate. Perhaps it doesn’t get used much because the word “bias” sends the wrong message — and perhaps it is best to think of it as the mobilization of political energy and commitment. Whatever word you use to describe it, the mobilization of bias is what Harry Truman did as he whistle stopped his way to reelection in 1948 — even without a strong organization behind him. It was, I believe, what Obama really achieved (intentionally or not) in 2008 — and it is what they seem to be missing right now, or at least seem to care little about at the moment.
The GOP gets it — and that was their secret in 2010 as the Tea Party stalwarts put most of their effort into mobilizing bias. Were it not for that effort (greatly aided by Fox, Beck, Hannity, Limbaugh and company), the Tea Party types would just be a bunch of angry John Birch types holding meetings and putting out newsletters. The fact is, whatever traditional election-focused work emerged from the Tea Partyites developed out of a sense of immediate (and short-lived) rage that was central to getting out the vote, and once the victory was theirs and as time passed it became evident that whatever organization they had developed would dissipate. Rage and indication have short lifespans. In the long term the benefit goes to the organized — but the cost of ignoring or delaying bias mobilization in an election can prove costly.
We first witnessed the GOP advantage in effectively mobilizing bias with the Scott Brown election here in Massachusetts. It was clear to all of us that there was really no grass roots campaign behind Brown, just a strong political energy that came together at just the right time. The Dems had the organization, but it was essentially passive and complacent for too long — counting on a sure bet, they failed to turn out the voters. In my town of Beverly, Democratic officials report that 1200 registered Democratic voters failed to vote that election, and it was noticeable at the polling places as well. As is the tradition in these parts, as you approach the polling place you are greeted with many of your friends and neighbors standing along the sidewalk with placards of support for their candidate waving hello. In that special election there were a dozen or so folks — but I do not recall any for Martha Coakley, Brown’s Democratic opponent. The sure bet turned into a disaster.
The bottom line is that if the Obama campaign waits too long to engage in bias mobilization and focuses strictly on organizing and funding, they might wake up next November as well organized and well funded losers. The need to be proactive in their advocacy of policies that seem controversial — they need to anticipate and preemptively deal with every vulnerability the GOP might seize on, not by withdrawing or compromising (unless there is a better option), but by providing a full throated defense that grabs the rhetorical agenda of the moment and runs with it. Without their ability to dominate the conversation — that is, to capture and mobilize the political bias of the moment — the GOP has little to stand on. This is, in a way, an extension of the very successful “war room” approach of the Clinton campaign in 1992, but in this case they should not just hang about waiting for the attacks….
If there is a current model to follow, by the way, it is the Warren for Senate campaign. There is a first class organizing and funding effort going on down to the precinct level, and but it is fascinating to watch is how Warren has taken to the task of energizing folks by directly through forceful presentations that anticipated — and in part helped spur on — the Occupy movement. She is spending lots of time now “introducing herself” to Massachusetts voters in an effort to undermine the “Harvard professor/elitist” attack, but the heart of the campaign remains that viral video where she takes stands in defense of the consumer protection policies she helped shape. She is setting a tone for the campaign, but more importantly she has mobilized that dormant energy required to beat Scott. And just as the Obama folks picked up on Deval Patrick’s 2006 campaign themes for the 2008 run, they seem to have latched on to Warren’s approach. That is all well and good, but it is time to do more of that now — sooner rather than later….