We’ll start today with an article from Cranmer by Brother Ivo and note that we are jumping back and forth between the UK and US here, so pay attention, the problems and solutions will be much the same.
Cranmer: It is time to confront crony capitalism
From Brother Ivo:
The growth of massive ‘logistics’ firms like Capita, Serco and G4S has occurred under both Labour and Conservative/Liberal Democrat administrations. They are employed in a variety of circumstances across a wide range of Government departments from Education, Justice, Defence and Immigration to Transport, Health and Leisure.
They are specialists in outsourcing and, as such, have built massive contacts with central government in this country and abroad. Serco, for example, is contracted inter alia to assist the implementation of Obamacare in the USA; G4S is the world’s third largest private employer; and Capita ‘s turnover for 2012 was £3,352,000,000.
These are big companies by any standard and measure, which makes it all the more difficult for any government when their honesty and integrity comes legitimately into question. They have become unassailable in the public space, and so fall foul of Brother Ivo’s dictum – ‘When people/companies become indispensable, you have to let them go.’ ["An excellent rule, I think," Neo]
[...]
It was bad enough when we realised that we could not allow certain banks to fail, but MPs from all parties were able then to puff themselves up with outrage as nobody could easily associate them with complicity. But this scandal is worse. Our entire political class has allowed the outsourcing/data/logistics industry to become the elephant in the room. We cannot discuss it because the consequences of their disgrace or failure would paralyse government of any description.
This is what crony capitalism looks like.
Government needs the out-sourcers; the out-sourcers need government. They have close, necessary and easy access to each other. There are consultants and consultancies to complicate the story.
It will surprise no one if I say that I consider it a positive good for government to out source many of the (especially the many, many, illegitimate) functions that our governments perform now. But, and this is a huge but, it must always be done by an open competitive bid, awarded without fear or favor. Otherwise it may well be worse than the government doing it force-account simply because a noncompetitive bid is by definition fraudulent, one has no way to know if the job could be done for a fraction of the cost, or can not be done at all. All we know is that we are paying some person or organization X dollars to do something.
Our experience with semi-legitimate government projects, say road building, is that it could be done to the same standard for far less by the private sector not least because of political clauses inserted into the contract. Davis-Bacon comes to mind, where in my neighborhood a laborer worth perhaps $13/hour will be paid something on the order of $50/hour because the contract is written by the government.
And here is where the principle of subsidiarity (or its political twin, federalism) enters into the equation. The government in Washington is far away and remote (and slow moving) while my county can move quite quickly indeed when necessary, as well as knowing things like what a laborer in our community is worth. And it is entirely in it’s competence to realize that it would be a good thing for the towns of A and Z to be connected with an all weather highway, if (and only if) it could be done at a price that would lead to benefits outweighing the cost. Note that writing these down in a coherent manner might be difficult, and in the local arena might in truth be a waste of time and resources in and of itself. The problem is that we have skewed the tax system to make Washington our local fairy godmother where all golden eggs come from.
That same argument holds in all spheres, except national defense, and constitutional guarantees, and true interstate commerce. And even there it can be overdone.
We have come a long way from the days of EF Shumacher and his ‘small is beautiful’ philosophy – a way of thinking that influenced those on the Left and Right alike, and, indeed, the then emergent Green Party before they, too, fell in love with big government.
Schumacher drew his inspiration from an earlier thinker whose approach was slightly more nuanced. The right approach, thought Leopold Kohr, was appropriate scale: ‘Whenever something is wrong something is too big.’ {Hear, Hear}
Brother Ivo does not know if Douglas Carswell has read Kohr or Schumacher, but his thinking on I-Democracy is plainly along the same line of thought.
I don’t know if you have heard much about iDemocracy yet, here’s a bit
Throughout history, we have been impeded in doing this by physical barriers, such as distance, and by artificial ones, such as priesthoods of bureaucrats and experts. Today, i-this and e-that are cutting out these middlemen. He quotes the internet sage, Clay Shirky: “Here comes everybody”. Mr Carswell directs magnificent scorn at the aides to David Cameron who briefed the media that the Prime Minister now has an iPad app which will allow him, at a stroke of his finger, “to judge the success or failure of ministers with reference to performance-related data”.
The effect of the digital revolution is exactly the opposite of what the aides imagine. Far from now being able to survey everything, always, like God, the Prime Minister – any prime minister – is now in an unprecedentedly weak position in relation to the average citizen: “Digital technology is starting to allow us to choose for ourselves things that until recently Digital Dave and Co decided for us.”
A non-physical business, for instance, can often decide pretty freely where, for the purposes of taxation, it wants to live. Naturally, it will choose benign jurisdictions. Governments can try to ban it from doing so, but they will either fail, or find that they are cutting off their nose to spite their face. The very idea of a “tax base”, on which treasuries depend, wobbles when so much value lies in intellectual property and intellectual property is mobile. So taxes need to be flatter to keep their revenues up. If they are flatter, they will be paid by more people.
Therefore it becomes much harder for government to grow, since most people do not want to pay more.¹
Which is true enough, although it doesn’t go far enough. What we are really seeing, I think is a return to the old familial organization that held sway before the industrial revolution, because while I obviously have to be on site to do my physical work, for me that is less than half of my time, and is somewhat predictable as well as delegatable, and the rest of my work I can do from anywhere in the world where I can obtain a reasonable internet connection, which if we include satellite is nearly anywhere in the world. For the most part, if I don’t want to interact with the people around me, I no longer have to. That is a fundamental change in society. The obvious example is this blog, which is a small one, was read yesterday in five countries all the way around the world, in this case they found my take on Political Correctness but we could just as easily been renewing plans for a large or small project, even collaborating on the detailed plans for it. See how say the taxes in the UK don’t really matter anymore, I can sit here in Nebraska, or the beach in Belize, for that matter, and do everything but the physical installation, and I can supervise that as well, if desired.
[...]
Un-evictable bedfellows make Brother Ivo very suspicious. {Neo, too}
Read all of Cranmer: It is time to confront crony capitalism. Emphasis is mine and my comments are in green.
¹ Douglas Carswell: How technology will create true democracy
As a sort of coda to this, the dichotomy of the title is the Obama regime. Here we have an American presidency with unheard of sophistication in the use of the internet and social media, which is pushing with all it strength for industrial solutions which aggrandize power to them without regard to the desires of the electorate. It won’t work in today’s society and is most likely going to be very expensive to deconstruct. Why? It is the old Model T model, you can get it in any color you want, as long as that color is black, but maybe I want blue, so I’ll spend the bit extra for a Chevrolet. The worst mistake one can ever make is to underestimate the power of the marketplace, because it is the paramount power in our society.
Always has been; Always will be, at least in a reasonably free society.
Related articles
- Don’t Confuse Free Market Capitalism with Crony Capitalism (yevala.com)
- Crony Capitalism (billmoyers.com)
- David Stockman on Crony Capitalism (ritholtz.com)
- Looking at Life through Koch-Colored Glasses: You May Be One of the Richest People in the World…without Knowing It (jonathanturley.org)
- Crony capitalism and uncompetitiveness (trinidadexpress.com)
- The Plundering of Delphi by Crony Capitalism (drudge.com)
- Greens accuse Govt of ‘crony capitalism’ (stuff.co.nz)
Image may be NSFW.
Clik here to view.
Image may be NSFW.Clik here to view.
