I am only going to have one thought today. This is it:

There has been a lot of discussion here about the nature of power – why do people with money affect government policy, while people who vote don’t?

The answer is organization. Corporations and wealthy people, with the exception of “Hollywood,” do not simply throw money at candidates and hope for the best. They assemble it in large quantities, and use it as a lever. They have many other tools at their disposal, but I’ll stick to that.

Organization is effective. That’s why the notion of labor unions is so distasteful to powerful people. They don’t want working people to have real power. They want workers to vote for either party, as their whims dictate, and otherwise not meddle.

George M. Dennison served on the Board of Plum Creek Timber while also serving as the president of the University of Montana. When asked how he could justify this apparent conflict of interest, he claimed not to have any such conflict, as he did his work for Plum Creek in his off hours.

He knew better, surely, as he is no fool. “Conflict of interest” has less to do with how a person spends his time than service to two masters. If the objectives of one do not line up with those of the other, then Dennison was obligated to resign one position or the other. If UofM and Plum Creek share common objectives, then UofM is obligated to watch out for Plum Creek’s bottom line. That’s the only reason the company exists.

Dennison did not resign either during his tenure. It’s emblematic of our new Gilded Age.

Avoidance of conflict of interest is why elected politicians set up blind trusts, why judges recuse themselves from certain cases, and why law firms diligently search their records for potential conflicts before taking on a new client.

This came to mind this morning as I read the following passage from the book All the Devils are Here, by Bethany McLean and Joe Nocera. They are financial reporters who wrote about the recent financial meltdown, and the passage I cite (p 289) is about attempts by some people to stave off future losses by helping people who were under water with their mortgages:

In fact, around this time [March, 2007] there had been efforts by some of the big Wall Street firms to salvage their triple-A tranches by buying actual mortgages and preventing enough foreclosures to keep those trances from eroding. Bear [Stearns]…announced “Mod Squad”…, which was supposed to help delinquent borrowers avoid foreclosure. Other firms, including Merrill Lynch and Morgan Stanley, were meeting to see if they could do something collectively to keep homeowners from defaulting.

Continue reading ““Hell is empty, and all the devils are here”*” →

It’s a wonderful system, this free market capitalism. So I take this opportunity to celebrate and offer examples of how it works and makes life better for all of us. Since we recently traveled from Denver to the east coast, I’ll start with the airlines in the wake of Jimmy Carter’s deregulation:

Baggage: Once airlines charged to carry customer luggage in addition to the ticket price. But one airline saw a market opportunity, and offered to carry bags as part of the ticket price. Soon all the other airlines were forced to go along. Bags now fly free. Markets work.

Legroom: Airlines once squeezed as many people on to an airliner as possible. This allowed them to run fewer flights. Then one of them saw an opportunity to increase its market share, and increased passenger comfort by increasing legroom. All the other airliners, for fear of losing market share, went along. Markets work.
Continue reading “Why free markets work – examples abound” →