June 2011 Archives

Does The U.S. Need A New Constitution?

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         This Fourth of July, as in so many years past, politicians, public figures, and the citizens at large will celebrate the independence of the United States from Great Britain, invoke the inspirational words of the Declaration of Independence, and laud the American experiment as the noblest yet conceived of by man. Yet underneath the platitudes, there is a growing sense of unease. Shrill partisanship and institutional gridlock, as well as intractable economic and social problems, suggest that the 18th century governmental machinery that has guided this country since the ratification of the constitution in 1787 is becoming increasingly sclerotic and unresponsive.

           The Founders of the American Republic, who were inspired by the politics of John Locke, shared his fear of concentrated power. Hence, they devised a constitutional system for the United States in which political power was distributed between the federal government and the individual states. The object, as James Madison commented, was to disperse political power:"The federal Constitution forms a happy combination in this respect; the great and aggregate interests being referred to the national, the local and particular to the State legislatures."

           At the federal level, as a consequence, the government has been divided into three very unwieldy branches. Although each branch has been declared by the text of the constitution to be co-equal, the three branches have very different mandates and in actual practice - as evidenced by number of employees, the resources allocated, and the points of access - they are quite unequal. For those reasons, the exercise of political power, because it is so diffused, is often also unaccountable. In addition, because the process of amending the constitution was intentionally made so cumbersome by the founders, meaningful structural change at the federal level is virtually impossible to effect.  

           To cite only one extreme example of the kind of institutional gridlock that now exists in the Congress, each of the fifty states is entitled to two United States senators, irrespective of population.The result of this constitutional arrangement means that today voters in rural America and in less urbanized areas of the country exercise disproportionate political influence over this country's policies and priorities. Hence, for example, the rural and monochromatically white state of Wyoming, with some 530,000 citizens, has the same number of United Senators as the ethnically and economically diverse state of California, which, as of 2007, had a population of about 37,000,000 citizens.  

           The growing influence of lobbyists provides additional evidence that the diffusion of power at the federal level, instead of protecting or promoting the interests of ordinary American citizens, has often had the opposite effect from that which Jefferson, Madison and Hamilton imagined: it has permitted the ascendancy of an influence-peddling elite who enjoy virtually unimpeded access to the legislative as well as the executive branches of the government. As of 2007, $2.81 billion dollars was spent by 15,665 registered lobbyists to shape policies and legislation favorable to the interests of their individual clients.

           Between January of 2009 and July, 2009, four powerful financial institutions - each of which had received billions of dollars of taxpayer assistance as TARP (Troubled Assets Relief Program) recipients - spent millions of dollars to lobby Congress to thwart legislative efforts to increase oversight and regulation of the financial sector in the public interest. CitiGroup is reported to have spent $3.1 million dollars in those first six months, J. P. Morgan Chase, $3.1 million, and Met Life, $2.0 million. Morgan Stanley - which received $10 billion in TARP money - spent $1.7 million; and Wells Fargo - which received $25 billion dollars from TARP - incurred $1.4 million for lobbying at the federal level. By contrast, the Consumer Federation Of America, a pro-regulation advocate, spent only $50,000.00 lobbying Congress.

           The second branch of the government - the Executive - is equally hobbled by the constraints imposed upon it by the Lockean consensus. Other than the powers expressly granted to the President under Article 2, § 2, as commander-in-chief, and, under § 3 of that same article, to appoint ambassadors and to implicitly conduct foreign policy "with the advice and consent of the Senate," the President's powers over domestic issues are exceedingly limited. Beyond the enumerated powers, and those which some presidents may have arrogated to themselves because of the acquiescence of a timid and craven Congress, "Presidential power is the power to persuade," as presidential scholar Richard Neustadt argued.

           The primary domestic duty of the executive is to enforce the laws of the United States. However, this mandate has often been meaningless in those cases where individuals who were chosen to serve as the executive were opposed to the enforcement of laws which were enacted to promote civil rights, or which are designed to reign in the worst excesses of business through administrative regulations.  

          New York Times Correspondent Eric Lipton reported  ("Safety Agency Faces Scrutiny Amid Charges," September 2, 2007) one appalling examples from the second Bush administration which illustrates the harm to American citizens that is caused when a political agenda based upon the concerns of corporations and other private, wealthy interests - as opposed to the public good - are acted upon without consideration of their public consequences. The Consumer Product and Safety Commission was established by the United States Congress in the 1970s in response to complaints concerning consumer safety first revealed by Ralph Nader.  

           In March of 2005, the Commission called together the nation's top safety experts to confront the data which showed that 44,000 children who drove all terrain vehicles were injured the previous year, including 150 fatalities. Based upon her analysis, the agency's hazard statistician, Robin L. Ingle, recommended that sales of these vehicles be banned to children under 16 years of age. However, her recommendation was overridden by the agency's director of compliance, a former lawyer for the ATV industry, John Gibson Mullen, who had been a member of the law firm of the Whitewater and Clinton Special Prosecutor, Kenneth Star. Mr. Mullen is quoted as having said,: "My own view is the situation is not necessarily deteriorating.We would need to be very careful about making any changes."

           The federal judiciary, as the third, unelected branch of the federal government, is also a significant part of the problem.In contrast to the unique eras of the Marshall and the Warren Courts, since the onset of the Reagan administration, the federal courts have done little except to mirror and to ratify the increasing distance between ordinary citizens and their government. Since the 1970s, led by an increasingly reactionary Supreme Court, the federal judiciary has expressed pronounced hostility toward government regulation, civil rights, and legislation in the public interest.The net effect of this jurisprudence has been to empower corporations and the disproportionately influential while ratifying the status quo.

           The doctrine of "original intent," as conceived by some of these jurists, is especially destructive since that it has been invented solely to thwart the continued evolution of American politics and jurisprudence - by imposing a requirement that all laws must be analyzed within the framework of an eighteenth century worldview. In the guise of a purported respect for the understanding and interpretation of the U.S. Constitution which the Founding Fathers evinced, this doctrine is, in actuality, a most radical form of judicial activism, It ignores the explicit language of  the "necessary and proper clause " of  Article 1,§ 9, c.18 of the U.S. Constitution and it imposes the dead hand of the past, in the form of a fossilized litmus test, upon an instrument which, since the time of John Marshall, had been viewed as a living, evolving document.

           Consistent with that bizarre mode of judicial analysis, the Supreme Court chose to breathe new life into the Tenth Amendment, the effect of which is to further drive American jurisprudence back into the early decades of the 19th century when even the idea of minimal government regulation ostensibly in the public interest was unimaginable. See, for example, Justice Rehnquist's decision in U. S. v. Lopez, 115 S.Ct. 1624 (1995)  In that decision, by a 5-4 struck vote, the U.S. Supreme Court struck down a San Antonio gun conviction which occurred within a 100 yards of a school on the grounds that the interstate commerce clause did not apply. See also U.S. Term Limits, Inc. v. Thornton, et al, 514 U.S.  779 (1995), a case in which Justice Thomas came within a "whisker" of returning American constitutional jurisprudence to the Articles of Confederation.

           Since the beginning of  the 1970s, a majority of the Supreme Court judges have not hesitated to impose their personal political preferences for free-market, anti-regulation policies through the judicial feat of federal preemption of state laws and regulations to the contrary. Most of the laws and regulations pre-empted were designed by state legislatures to protect the rights of workers and consumers. Hence, for example, in 1978, in the case of Marquette National Bank of Minneapolis v. First of Omaha Service Corp.,439 U.S. 299 (1975) the U.S. Supreme Court declared state usury laws to be unavailing against credit card companies engaged in interstate commerce. The effect of that decision, therefore, was to permit credit-card companies to exact whatever interest rates they wanted, to the detriment of ordinary Americans.

           Equally unsettling, the U.S. Supreme Court's decision in the matter of Buckley v. Valeo,  424 U.S. 1 (1976), as one of its effects, severely undermined public confidence in the political system. In that decision, the court upheld some modest limits imposed by the U.S. Congress upon individual campaign contributions. More importantly, however, the court held that the campaign contributions by corporations and other large entities were protected by the U.S. Constitution. Congressional attempts to impose restrictions on the financial contributions by corporations and other organizations, because they conflicted with First Amendment guarantees of free speech, would, henceforth, invite strict scrutiny by the court and would require that a compelling state interest had to be shown to pass judicial muster.

           Thirty-four years after the Buckley decision, an even more reactionary court declared any restrictions upon campaign financing by corporations violate the free speech provision of the First Amendment. In the matter of Citizens United v. Federal Elections Commission, 30 S.Ct.  876 ( 2010), Justice Kennedy, writing for the majority in  5-4 decision, reversed two previous precedents which had upheld modest campaign finance regulations. Justice Kennedy opined that the  Court had previously recognized that First Amendment protection extended to corporations and that "Under the rationale of these precedents  cited, political speech does not lose First Amendment protection 'simply because its source is a corporation;" further "corporations and other associations, like individuals, contribute to the 'discussion, debate, and the dissemination of information and ideas' that the First Amendment seeks to foster."

           By its decisions in Buckley v. Valeo and Citizens United v. FEC, a majority of the justices of the Supreme Court reaffirmed their theological commitment to Locke's belief that the primary purpose of government is to protect property. Henceforth, putatively immortal, non-natural entities, because of their ability to influence political decisions through their wealth and property, will be accorded a constitutional protection to influence the course of government greater than that of mortal, ordinary citizens. As a result of these two decisions, the voices of ordinary citizens and their ability to be heard have been reduced to an almost inaudible whisper in the "marketplace of ideas."

           Finally, at the state and local level, political power in the United States is exercised through fifty state legislatures and executives, and thousands of administrative agencies, commissions and departments. In 2002, there were reported to be 87,525 units of local government. The existence of so many competing and overlapping spheres of political power creates a kind of modern-day feudalism which ensures that the  influence of a few, powerful and connected interests, usually monied, will be carefully considered and acknowledged while the ability of ordinary citizens to influence these political entities is negligible.  

           The diffusion and distribution of political power within the political  system of the United States has today resulted in something  profoundly different than what they anticipated: The liberal consensus, that gave birth to the American republic, emerged historically in England as a democratic force to challenge to feudal privilege and the tyranny of kings. But in the United States, where all who have been born are held to be equal before the law and where the Constitution expressly prohibits the granting of any titles of nobility, John Locke's politics has created its own antithesis: rule by oligarchs and corporate plutocrats in which the rights of the wealthy individuals and their corporations are accorded a greater protection than the rights of ordinary individuals. 

           Divided government, with its diffusion of power vertically and horizontally, has contributed to an appalling lack of accountability that enables the office-holders in each of the fifty states and in the three branches of the federal government to point accusing fingers at one another while refusing to accept responsibility for their own decision-making.

             Other vibrant democracies in the Western World have revisited and updated their constitutional schemes of government when the evidence showed that the governmental machinery no longer served the public interest. Why should we be any different?  

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Do You Drive A Foreign Car?

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Kaiser Manhattan 4-Door Sedan 1953

Kaiser Manhattan four door sedan 1953

       Henry Ford's adoption of mass-production techniques to produce the Model T was soon emulated by other U.S. automobile companies and helped to propel automobile manufacturing into a controlling position in the U.S. economy.

       From the end of World War Two through the 1970s, the U.S. automobile market was almost entirely dominated by domestic manufacturers. GM, Ford, Chrysler, and American Motors were the big four, but other domestic manufacturers included Kaiser Motors, which made automobiles at Willow Run, Michigan, United States, from 1945 to 1953, and the Hudson Motor Car Company, which made automobiles in Detroit, Michigan, from 1909 to 1954, and then merged with Nash-Kelvinator.
    
    The singular importance of General Motors to the American economy during that era was epitomized in the misstated quotation from former GM Chairman, Charles Wilson, "What's good for General Motors is good for America." And, to a very great extent, that misstated quote did reflect the American reality: Millions of Americans employed by the automobile manufacturing industry, by virtue of the wages and benefits they received, were able to become prosperous members of the American middle class, educate their children, and enjoy good retirements. 

         Equally important, during that era the American automobile industry performed a critical  function as a lever industry. As demand for domestic automobiles increased, that demand, in turn, stimulated the aggregate demand as secondary and tertiary sectors of the economy such as domestic manufacturers of glass, rubber, steel,  plastic and precision machine parts became profitable and increasingly employed more workers at better wages. Hence, when President John Kennedy proposed a middle class tax cut in his administration, which the Congress enacted, it had an immediate stimulative effect as middle income recipients went out and purchased American automobiles and, as a consequence, the multiplier effect of those purchases reverberated throughout the American economy.

         At the end of  the Vietnam era, from 1971-1973, U.S. automobile profits began to decline and that trend continued thereafter. By 1998, the market share of the three remaining U.S. automobile makers had declined to 70% and by 2008, the domestic share of the automobile market held by remaining three American automobile manufacturers was reduced to 53%. In fact, just a year before the current economic meltdown began in 2008, Japan exported $41.3 billion in automobiles to the U.S., and Japanese cars represented 77% of all automobiles that the U.S. imported from Pacific-Rim countries in 2009.

    In an article by CNN Money senior writer in 2009 entitled "Support The U.S. Economy. Buy American," Peter Valdes-Dapena quoted Thomas Klier, an economist with the Federal Reserve Bank of Chicago who wrote extensively on the auto industry: When it comes to longer term benefits, a lot of activity happens in the country in which the company's world headquarters is domiciled." Klier further observed  that buying a Ford or General Motors car was still preferable for the American economy and for American workers, even if the particular vehicle was built in Mexico, Canada or Korea since American car companies made more cars and employed more workers in the United States than did automakers based in other countries.

     Klier explained that, for example, even though the purchase of a Toyota Camry may, in the short term, support an American worker on an assembly line in Kentucky or elsewhere in the U.S., the critical, highly-paid research and development functions were performed in Japan, while the profits were repatriated and re-invested in the home country to the detriment of the American economy.

    In that article, Valdes-Dapena also quoted Martin Zimmerman, a University of Michigan economist and a former executive with Ford Motor Co., who emphasized that  Ford and GM use more American-made parts in their cars. In the aggregate, U.S. manufacturers still use more U.S. content than Japanese importers." Unspoken in that interview was any acknowledgment that almost of the foreign automobile manufacturers who have opened plants in the U.S. have done so in "right-to-work " states where it is virtually impossible for employees to unionize and collectively-bargain; as a consequence, their wages and benefits are consistently lower than those received by UAW employees.

         The increased appetite of American consumers for foreign manufactured goods, especially "big-ticket" items exemplified by the purchase of foreign-made automobiles, contributes to the growing trade deficit in the U.S., but also to the continued high-rates of unemployment among American workers. Long before the effects of the great recession began to manifest themselves in 2008, the shedding of jobs in the American manufacturing sector, the increasing corporate downsizing and their de-industrialization of the economy contributed to the problem of growing structural unemployment.

    As a result, the number of men between the ages of twenty-five to sixty-four who were available for work, but were no longer employed, increased during the past generation. Research shows that, between 1975 and 2002, the real earnings of males with only a high school education decreased by 13 percent while the earnings of high school dropouts decreased by 23 percent. Further, in 2008, 28 percent of black men of working age reported that they were unable to find work. But the largest decline in labor force participation occurred among workers who possessed either a bachelor's degree or a graduate-level degree. Hence, the argument that better education is the key to economic advancement has been disproved by the data.

        The General Theory of John Maynard was a rigorous effort to explain the dynamics of a modern, industrialized capitalist economy from a macro-economic perspective. His economic theory emphasized the importance of achieving equilibrium in the markets and the necessity of an ever-expanding, consumer-driven population of employed workers to stimulate the aggregate demand in advanced industrial, capitalist economies. When the consumption function is depressed, as during the Great Depression or now, Keynes recommended pump-priming by the government--the expenditure of public monies through monetary policy--in order to create conditions approximating full-employment.

       However, from a macro-economic perspective, when an increasing share of purchased goods are manufactured abroad, pump-priming has a significantly reduced stimulative effect on the demand side. Thus, when President Obama's stimulus package was enacted although it provided, Republican myth-makers notwithstanding, an undeniable and measurable stimulus, that effect was reduced because consumers continued to purchase foreign-made automobiles and other consumer goods manufactured abroad. The effect of their purchases was to stimulate the economies of Japan, China, South Korea, and Germany.

    The lesson is very clear and is based upon solid principles of economics. If we care about the American economy, ourselves, our children and our grandchildren, we need to be at least as nationalistic as the Chinese, the Japanese, the South Koreans and the Germans: Buy an American car and help to restore the promise of  America. For each American-made car purchased, seven to ten well-paying jobs are created. 

         We are all in this together. The quality of American automobiles has now reached parity with - and in many cases exceeds - that of  the overseas competitors . The continued purchase of luxury cars such as Jaguars, BMWs and Lexuses by the few winners in this increasingly unequal economy is a sad testimony to their self-indulgence and indifference to the plight of their fellow citizens who are still suffering because of the excesses of the financial world and the pursuit of short-term profits, all else be damned, by American corporations and their shareholders who seem to be incapable of grasping the long-term implications of their anti-social behavior.
 
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