What the NFL referee lockout tells us about libertarian thought

On a couple of levels it's been fun watching the NFL replacement referee disaster unfold. The league is trying to stick it to the unionized professionals while sending in what appear as rank amateurs to officiate regular season games.

It also works as an illustration of why letting the market do its thing (a.k.a. laissez-faire) is a terrible way to run an economy. Business and commerce need compentent referees to achieve a fair, accountable outcome from trade. Letting the players go at it without oversight falls far short of assuring orderly transactions. Weak, ineffective regulation is an invitation to mishap or mayhem--preventing a just and fair resolution. Go ask the Greenbay Packers' fans.

James Madison said it far more eloquently in Federalist #51: "If men were angels, no government would be necessary." Let's fit that statement for a capitalist context: "If market players participated fairly, no regulation would be required." The 2008 financial crisis proved this wasn't the case. Why can't libertarians grasp this?

Too big to know what's best for the nation, economy

Former Wall Street Executive: Complexity Of Today’s Banks ‘Makes You Weep Blood Out Of Your Eyes’ via Think Progress

Another former Wall Street executive has emerged to advocate reform of banks in the "too big to fail" category.

Sallie Krawcheck, once the head of Bank of America's wealth management division, was a guest panelist at the Bloomberg Markets 50 Summit on Thurs., Sept. 13 when she made the stunning observation about the complexity of big bank operations.

She joins Sandford Weill, former Citigroup head, who advocated the break up of big banks back in July.

The chorus opposing such measures has been adamant. Two voices in particular merit consideration--Jamie Dimon, CEO of JP Morgan and his predecessor, William B. Harrison Jr.

Touting the benefits of the too-big-to-fail scale, Jamie Dimon actually used the "port in the storm" metaphor to bolster his argument--this from the head of a bank that lost $5.8 billion in credit derivatives trades.

Writing in the New York Times, William B. Harrison Jr. wields a straw man, the first of several, to launch his defense of big banks. Serously, who is arguing that breaking up big banks will eliminate the risk of future crises? He'd have no trouble naming the source of the phony argument if someone were actually making it.

Wouldn't he also name the source of the fallacy that the emergence of the big bank was an artificial, unnatural market development? Worse is the bale of grass he stuffs into the notion that anyone with a shred of credibility blames big banks for the 2008 financial meltdown.

There is a very compelling reason why the likes of Messrs. Harrison and Dimon would defend the size and scope of big banks--a reason they'd probably never admit in polite company. What is at stake for them is the generous compensations earned by CEOs at said financial behemoths.

How is this so?

Harvard-trained economist Xavier Gabaix and his research partner, Augustin Landier, have taken a look at CEO compensation and its link to a company's market capitalization (the value of its share price multiplied by number of shares issued by the company).

What they found happening between the years of 1980 and 2003 is that CEO compensation increased by a multiple of six--along with the market capitalization growth for large U.S. corporations. As The American put it more bluntly: "The trend lines of market capitalization and executive payouts rose and dipped in near-perfect tandem."

One might acknowledge the same motivating impulse with participants in a betting pool--the larger pool, the greater the payout.

So, what difference does this make for the economy and the nation as a whole?

The public should be asking, what's the worth of systemic risk that massive financial institutions pose? For an example, consider the scenario when certain big banks knowingly sold toxic assets to institutional investors who managed 401k's, pension- and mutual funds.

What resulted from buying the imploding mortgage-backed assets? Millions of mid-income, hard working citizens were hooked for the losses set in motion by defaulting borrowers.

So, is the American public ready to confront goliath financial institutions for what they are? That synaptic network of transactions--enabling those massive capitalizations that money-starved CEOs dream of--which have very little to offer for the greater good of a nation seeking stability and sustainable economic growth.

Are you citizen enough?

The word is in from rank and file opinion makers evaluating President Barack Obama`s speech Thursday night, accepting the Democratic Party's nomination for president.

In spite of the consensus that the president gave a defensive, lukewarm speech, he offered one very crucial idea. Consider it a planted seed whose growth will depend mostly upon the efforts of voters--a notion reinforced throughout his speech.

Taking the word citizenship, President Obama redefined its scope as a criticism of the extremist wing of the Republican Party. Calling it "a word at the very heart of our [nation's] founding, at the very essence of our democracy", the president went on to expand its meaning. Its significance bounds beyond the relationship an American has with his or her country.

Citizenship means that "this country only works when we accept certain obligations to one another, and to future generations." Yes, the statement could benefit from specifics, but it can be wielded in two ways.

First, it is a rebuke of the libertarian idea that privileges individual freedom above all else--even over accountability to community and government. This arrangement may please a few of the anarchy-minded, but it has never represented the United States at its best. (A well-known political leader with a libertarian bent has questioned the morality of desegregated lunch counters if the restaurant owner opposes them.)

Second, it works as a pointed jab at the fanatical "birther" movement--those motley masters of suspicion who cannot countenance the documented reality that Barack Obama was born in Hawaii after it joined the United States as the fiftieth. Redefining citizenship calls attention to the shameful way the "birthers" have squandered their own citizenship for a cause that veils their own deeply held prejudice.

The irony in all this is that it took a man who has been wrongly, incessantly accused of not being a citizen, to reconstitute the meaning of citizenship.

Throughout his speech, President Obama reminded supporters about their participation as voters and activists, making possible the gains achieved by his administration. "You were the reason," he insisted repeatedly, "You did that."

This isn't just some pivot from the "Yes, we can!" chant that seasoned campaign events back in 2008. The refrain, "You did that!" is meant to remind voters how indispensable their input and participation are to the political process.

Though there's lots of hollering and tally making over the big game known as campaign fund raising, how can average income voters ever get a word in edge-wise?

This brings the conversation back to the word citizenship, the idea of citizens acknowledging their obligation to one another, their mutuality. To be very specific, a voter must think of  impact his or her vote has on their peers when casting the ballot.

In today's electoral politics, there is no greater urgency than voters working together to bridge the influence gap between wealthy elite interests, who can buy an election, and everyone else.

Because they can

By now it's been widely documented by fact checker, news report and blog--the amount of deception seasoning Gov. Mitt Romney and Rep. Paul Ryan's acceptance speeches at the GOP national gathering in Tampa. However, there has not been a lot of talk about why.

The answer as to "why" centers on that elusive swath of swing voters: the ones who may not pay much attention to election season, much less fact check convention speeches. A campaign in Romney-Ryan's position figures that monkey wrenching the truth is worth the risk of public excoriation; to influence those citizens described as "low-information voters", people who have things on their minds other than the names Romney or Obama.

Former Capitol Hill staffer Mike Lofgren described this class of citizens as "voters who hardly know which party controls which branch of government, let alone which party is pursuing a particular legislative tactic."

Given the close outcome of recent presidential elections, and that such voters number in the tens of millions (by Lofgren's estimation), probability dictates that the Romney-Ryan campaign can capture enough "low-information" votes to prevail over President Obama.

At this point it is far too late to do anything to improve the decision making quality of underinformed voters. Essayist Lewis Lapham has suggested that education holds a significant bearing over the choices voters make. Quoting Thomas Jefferson in a piece called "Playing with Fire," Lapham laments how far this country has drifted from the founding father's dream of a "citizen schooled to the tasks of self-government and encouraged 'to judge for himself what would secure or endanger his freedom.'"

In the current political environment there seems to be no end to the talk about what may secure or endanger a citizen's freedom--for which there is no prevailing consensus. Generally speaking, the "low-information" voter bloc represents a key obstacle to any kind of consensus taking shape--over jobs, taxes, etc.

As the country remains split down the middle, ideologically speaking, the tasks of self-government must include an ongoing conversation voters have with one another, especially with those less likely to pay attention or participate. This is the full meaning of being a citizen--a voter who is not so much an individual as he or she is a crucial refence point; one among a vast network of electors rendering what Abraham Lincoln called the "consent of the governed."

Electoral sabotage--by default

One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors. --quote attributed to Plato

The results of a USA Today/Suffolk University voter participation survey reveals no surprising details about the state of today's eligible voters; except that two thirds confirm they are currently registered.

Judging from a few of their primary reasons for not showing up at the polls on election day, apathetic voters illustrate how deeply uninformed they are about the inner workings of Washington, DC. They cannot fathom the degree by which lobbyists are organized, connected and relentless in the effort to influence elected representives.

For an example of the initiative that drives lobbyists, consider the 'day-in-the-life-of-a-lobbyist' guide offered by the California chapter of the National Active and Retired Federal Employees Association. It encourages the effort to persuade elected office holders, by stating, "You have to be persistent... [which] means continuing to press your issue and recognizing that 'no' is only for now. There is no last vote. There's always going to be a next vote."

Now have a look at three of the various excuses eligible voters give in the survey for not going to the polls on election day:

"They aren't excited about either candidate."

"Their vote doesn't really matter."

"[N]othing ever gets done, anyway."

Is it little wonder that the lobbyist industry--which numbers only in the tens of thousands--out-maneuvers tens of millions of voters day-in and day-out in matters of public policy?

Call it electoral sabotage, by default--on the part of vote-eligible citizens too apathetic to participate. 

To remedy this state of affairs would require an immense messaging effort by elected representatives and participating voters. The message to non-participating voters should spell out what the cost is for not being politically engaged, for refusing to pay attention. An incumbent running for re-election must remind voters how much time is spent on fundraising when it could be devoted to legislating and problem solving--all because a plurality of voters haven't tuned in.

Given that wide margin of unengaged citizens, it means a candidate running for public office must raise mounds of cash for the cost of media buys that reach voters who aren't paying attention.  Money doesn't grow on trees, but it certainly finds its way from the wallets of the  wealthy elite and into the coffers of a political campaign.

This defines the influence gap between voters and high dollar campaign contributors, who always come out on top over matters of public policy.

So, who can deny that we the people no longer call the shots? And who among us is ready to accept responsibility for that reality?