The Public-Private Partnership

Now that the treasury secretary, Geitner has revealed details of rendering good the bad financial assets clogging the lines of credit, how will the revaluation of these bad assets lead to economic recovery when the fundament, their underlying value, is still losing value?

That will be by government subsidy.

The difference between what the return on one dollar of the public sector purchase will bring and what a private sector purchase will bring gives value to the bad assets by the public sector subsidizing the private sector. This defines the "partnership."

Given the distribution of the benefit and the possible detriment, the relationship of this public-private mix is better described as a hierarchical subordination of value.

The private sector's dollar is considered more valuable because the public sector has the power (the value) to change the rules ex-post-facto and apply bills of attainder that will require legal action to prevent or reverse. Keep in mind, however, that these possible public acts would likely be reaction to public detection of the private sector's usurpation of value and to replevin the value.

Since government is considered to be THE absoute power that needs to be contained and checked, the object of distrust, despite the constitutional limitations, its dollar is discounted to reflect the possible detriment to the value of the private sector's dollar. Thus, the subsidy is considered by the treasury to be a necessary condition for economic recovery, and it is the model of political economy that made the assets to be cured bad to begin with.

If the public sector cannot be considered trustworthy, and with the private sector proving untrustworthy without close government regulatory accountability, this partnership is doomed to a marriage of primal, fundamental discontent. It is the formula for volaility, not stability. For the trageur, it is an arranged marriage made in heaven. For the taxpayer, it is a marriage made in hell.

The positive valuation for financial equities will be short lived. The previous resistance of 7500 on the DOW is likely to hold, being overbought beyond that, because the treasury plan to subsidize the bad assets does not support the fundamental value of the assets directly, but is likely to be the stimulus for short term trage on the assets as the value trickles down. The dollar will lose value and the price of commodities will rise to support the deflationary trend.

Gaming With Too Big to Fail

We will see the oversized financial firms being compensated by the public sector for wrecking the economy bargain to have it all their way with the threat of not participating in the government programs, or threatening to wreck it even more. That is what organizing to be too big to fail is for--to have it all your way. To be a tyrant.

Considering that "too big to fail" means they are indispensable, it is nothing but extortion. The fraud and abuse we have come to expect from these unexpendable economic entities is apparently not enough to demonstrate the extent of corporate hegemony.

Fascism is not the acceptable alternative to the threat of socialism.

What is too big to fail is easily cured with the public sector operating to ensure a free and unconsolidated marketplace in priority, the antithesis of "too big to fail." Fascism or socialism (another false binomial choice in which to toggle) is not the only alternative. The government action will not be ex-post-facto, it will not be a bill of attainder to punish corporates that have organized to get away with fraud, abuse and extortion. The progressive tax code needed to finance the third alternative will be to pluralize and destroy the tyranny that plagues The People.

The lack of action to progress the tax code renders the Obama administration's Keynesian stimulus plan equally unstimulating because it depreciates the value of the dollar. Energy and food prices will rise with a depreciating dollar, deflating the economy, what the stimulus spending is supposed to cure.

Understand that being able to dictate the cause-effect relationship of the dollar's value coupled with consumer prices is accomplished by organizing to be too big to fail, mainly by being able to restrict supply and thereby determine demand (deflation).

Being too big to fail does not suffer from deflation. It is a winner on the up cycle and the down cycle. It is being too small to survive that incurs all the detriment, and that detriment is consolidated into the benefit of being able to dictate the relationship, the ability to assess the value, control the bid, of commodities and currencies.

Ensuring the competitive multiplicity of the marketplace, financed with a progressive tax code across all jurisdictions, in priority cures this organizational problem of being too big to fail. The economy is then dominated by small firms with highly adaptable and innovative efficiencies that are as much concerned with low prices, full employment and adding supply (a strong dollar) by default of the system than just making a profit and deflating the economy by default.

Large, too-big-to-fail corporates benefit from deflation. It is profitable. It strengthens the ability to tyrannize the marketplace. The favorable terms for the corporate to be offered by treasury secretary, Geitner to recapitalize the financial market is a demonstration of "success" of the business model that Federal Reserve chairman, Bernanke describes as inimical but inevitable. Tyranny is the efficiency that a consolidated and collusive corporate achieves (and that can be a socialist legitimacy as well) at the expense of all other efficiencies.

Arguing that the large size, and big profits, of the large corporate allows for risk taking that would not otherwise occur, providing productive and innovative efficiency that only organizing to be too big to fail can provide, is an empirically nulled hypothesis. Maintaining the argument at this point is just a lie intended to conserve the means of tyranny (the elitist model of power and political economy).

The treasury secretary's plan to recapitalize "too big to fail" (remember, huge profits were made and converted into private equity before big financial firms "failed" with the probability of global economic collapse, which means that they--what is inimical--really should be allowed to fail) will be a demonstration of the power of the corporate that will confirm by false induction the Hamiltonian model as the only possible alternative: the private sector's too-big-to-fail corporate structure trumps the value of government (the sovereignty of The People). The empirical measure of superior value will be the assessed value of return on investment for one private enterprise dollar over a government (The People's) dollar. According to Geitner's plan, "The Public-Private Investment Program," The People's dollar only has a fraction of the value a hedge-fund, private-equity dollar of the private sector. The value of the private sector's dollar is considered, and validated, as supra-sovereign, and in the same way, as Nietzsche describes it, the inexorable "will to power" that is "beyond good and evil."

The difference between the public and private sector's return on the investment is the reward, the vigorish, of the will to power (to organize to be too big to fail). The struggle for political-economic dominance, hegemony of power, is the reason for being and existence again being played out and verified by the gaming we see now in progress. If we want to be verified existential moral deficients, we buy into this philosophical construct and practical modeling of power.

If we want to ensure the good life (a moral existence), we should try the third alternative: ensuring the competitive multiplicity of the marketplace, financed with a progressive tax code across all jurisdictions, in priority to cure the organizational problem of being too big to fail.

Federal Reserve and Treasury Action to Recapitalize Financials is Old School

What we need for economic recovery, reinvestment and stabilization is not what is now old school, status quo Keynesian economics that ensures the Hamiltonian model of political economy in priority.

Fed Chairman, Bernanke says it is not possible to have large financial institutions that are not too big to fail. While the chairman identifies the problem as an organizational one (and the chair of the nation's primary quasi-public/private financial institution admitting that is quite the coup), he nevertheless will not admit he is resorting to a passe' organizational model that needs to be thrown out.

The Hamiltonian model of political economy is an empirical failure. It always results in the volatile cyclical events that Bernanke decries as inimical to general economic health and social stability with the private sector causing economic crisis with support of the public sector, the tax authority, a quasi-public central banking system, and with the function to manage the effects (the negative externalitites: the retributive value) being neo-classically added. The model has evolved into a systematic complexity that is critical to its survival despite being an obvious empirical failure over and over again.

Bernanke alludes to the complexity of the system as both the problem and the solution, which is the first indication that change we need is not forthcoming. The complexity will be the medium in which to "manage" the system to fit the existing practical model that, while the means can be changed, determines conservation of the ends.

The system of banking, being critical to assessing value, for example, by who gets a loan and for what, is critical for the development of economic entities too big to fail and can, thus, control the value to be assessed and the assessment of the value. It is an absolute power that corrupts absolutely that decides, dictates, beyond having collateral or not, the success or failure of the non-elite with assessing the value of loyalty in service to the overlords, the owners, of the capital. It is an evolved form of feudalism that Thomas Jefferson argued was an unneccesary vestige of an evolving structure of power that the American Revolution and the new democratic-republican form of government was intended to prevent.

The American Revolution represented the expansion of sovereignty to prevent, according to Jefferson, what Hamilton wanted to ensure.

For Alexander Hamilton, the nation's first treasury secretary, the revolution represented an expansion of elite rule with a democratic legitimacy of power that would make the right to rule immune to revolution and beyond the claims of a sovereign, including The People. He set to bifurcating the power structure into public and private domains in which the private sector rules and the public sector supports and legitimizes, always having the support of the king (now The People), the sovereign, by default. It allows the legitimacy of power, the means justifying the ends, and the virtue of what is public or private, to be whatever the power elite say it is with their status or "class" being supra-sovereign.

The elite claim the vulgar status of sovereignty only when the means of power, the consolidation of the wealth, is threatened by action from the public sector, invoking constitutional prohibitions like ex-post-facto laws and bills of attainder that are argued as "punitive" measures designed to unjustly punish success in the private sector.

Hamilton's scheme of bifurcating the power structure, neither purely public or private, is intended to satisfy the element of democracy that verifies its existence, pluralism, with "two" elements of power that, operationalized with elitist control of the banking system and public finance (controlling the assessment of value), ensures the power structure always operates to conserve the collateral and the ability to distribute rewards and deprivations from the private sector based on loyalty to the values of the power elite. Those values extend specifically from the prime value of providing for the welfare of the rich in priority, like we have now. The two elements of power operate to provide a false pluralism acting as one system of power that defeats the distributive benefit of a democratic-republic while maintaining the democratic means (the pluralism) that justifies (verifies) the ends (the distribution) of power.

Hamilton's scheme of a verifiable pluralism in which the public sector (government) ensures the sovereignty of the individual private citizen ensures that some people are more equal than others. It provides the dynamic for crisis that Bernanke refers to as inimical to the general welfare, meaning that Hamiltonianism, despite his corrective measures being consistent with it, is unconstitutional since the general welfare is what the government is in business to provide; but, of course, Bernanke's technical status is "quasi" neither public or private. He is a tool of the private sector masquerading as a civil servant with the legitimacy of public service ensuring Constitutional outcomes with distributive value verified by the means justifying the ends.

While Alexander Hamilton provided us with an ingenious system for democratic means legitimizing the distributive benefit of unequal power so it may be defined as indivisible "with liberty and justice for all," two hundred years of boom and bust is quite enough evidence that the trickle-down model of public finance does not work if the goal is the general welfare. The Hamiltonian model is intended to ensure in priority the economic welfare of a small elite ruling from the private sector with the support and legitimacy of public (constitutional) authority through the cyclical process of boom and bust. The benefit, by definition, cannot be indivisible, and the application of Keynesian measures fits the model perfectly with a much needed element of adaptability to allow the status quo ante to appear as the means of change despite the divisibly distributive benefit.

Arguing that ensuring the welfare of the rich--ensuring the survival of an organizational technique that cannot be allowed to fail--is the general welfare is nonsense. It always has been. It is now! It dooms everyone but the elite to a tyranny of avarice, greed and all manner of stupidity, ignorance and amoral, if not deliberately immoral, behavior all for the "utility" of achieving the greatest good always to be announced with forever innovative means.

The next "ism" of a failed socio-political hypothesis is always lurking just below the horizon, reinvented to extract the economic value that supports the superior right to rule that is otherwise The Constitutional Right of The People.

Thomas Jefferson was right. The revolution is always "occurring." According to Jefferson, Alexander Hamilton's organizational technique of public/private finance that keeps a "reoccurring" debt obligation, with a regressive tax burden, will ensure it, and here we are.

The Fed's latest plan of action keeps the debt in a state of "reoccurrence." Keynesian economics is just an innovative means of recycling the debt, turning the economy into a perpetual-motion debt machine, politically and economically providing the highest return at the lowest possible risk.

Bernanke is not implying that technically organizing to be too big to fail needs to be deconsolidated into firms that are small enough to fail with investment from private equity. It is absurd to think private equity will invest without the no-risk/high return model of too big to fail fully in operation, and so treasury secretary Geitner's plan to "detox" the bad debt with a large leveraged return for private funds and a small simple return for public funds is purely representative of the Hamiltonian model.

It is in the best (divisible) interest of private capital to allow the Fed to inflate the economy with fresh capital (monetize the debt) to liquidate the leverage that became toxic and recycle that bad debt indirectly into the indebted economic rent that keeps the rich rich and the poor poor--Hamiltonianism.

No! It is clear. The Hamiltonian model needs to be junked!

The vast majority of Americans have a clear sense of ethical (indivisible) economic equity that has nothing to do with bills of attainder or ex-post-facto laws. These legal arguments, while appropriate for preventing the abusive power of kings, are being used as a ruse intended to discredit the call for equity and justice as mob rule (the political legitimacy of the Hamiltonian model to prevent the chaos of the ignorant masses). The People do not intend to persecute individuals, but to simply prosecute the systematically unjust, divisible distribution of wealth and power being falsely argued as an indivisible social benefit that prevents, rather than provides, a more perfect union.

The reinvestment to restructure the financial system must come from the existing capital that is consolidated. A progressive tax code is necessary to finance a safe, secure and easily accountable marketplace that is not dependant on the success or failure of any one firm, and is to be ensured by means of public finance in priority.

An Organizational Problem

President Obama advised citizens not be seduced into becoming bankers because of the level of compensation, but to be productive in sectors that add real GDP and will be disinflationary (adding supply and adequate income) rather than deflationary (reducing income, or demand, to conserve supply).

The rhetoric incorrectly suggests a non-structural, non-organizational problem.

Citizens, of course, seek employment to maximize income in most cases independent of the structural dimension of the economy, largely out of their hands. The high compensation is available through organizational means that accumulates the capital to pay the high compensation, limiting the incentive to entrepreneurially compete for the profit and innovate quickly to market so that the means to disinflate the economy becomes the means to deflate the economy and reconsolidate the compensation paid, or the crisis we are in now.

The structural, organizational variable largely determines the decision to be a banker, i.e., organizing to accumulate and consolidate the capital causes the inefficiency that the president refers to.

Deconsolidate the capital and pluralize the marketplace. Both the efficiency and the freedom to pursue it will naturally appear as the fundament of a healthy economy with minimal volatility, less speculative risk and non-market distortions.

Deconsolidating the capital begins with a more progressive tax code, which not only satifies the sense of equity, but provides the means (the capital) to maximally innovate to add supply with an adequacy of income that renders catastrophic cyclical crisis an obsolete relic of the past.

Punitive Taxation

The tax policy discussion surrounding the use of tax money and assessing the value of executive compensation schedules of TARP recipients is a micro case study in the theory of retributive value described in several articles at griffithlighton.blogspot.com.

The value assessed by the public sector to be retributed to the taxpayer for the use of public financing, at this point, is 90 to 100 percent of the value assessed by the private sector with the "punitive" tax rate assessed proportionate to total income (a progressive tax rate).

Progression of this punitive rate is sensitive to the measure of fairness to retribute the value as discussed in the previous article, "Your Tax Money at Work," but it took a punctuated micro event for a progressive tax rate to gain serious credibility beyond mere rhetoric for a practical macro application. It indicates that the will to employ the best measure for recovery is to be a populist gaming event to be utilized at the micro level. It is political gaming that will continue to slow implementation of policy that will quickly and most effectively achieve economic recovery and reinvestment.

Notice that neither the executive or the legislature is expressing the efficacy of quickly progressing the tax code to most efficiently achieve the fairness the taxpayer is demanding, or to most efficiently retribute the value. While the president expresses the need to progress the tax code, the commitment appears to fade into the tactical designs and maneuvers of the legislative leadership to win a game. The needed measure and its full effect will be likely compromised.

A rapid recovery will most effectively occur from the bottom up facilitated by a progressive tax code, giving value to the currency now suffering depreciation (inflation) from the Fed's newly announced trillion dollar, Keynesian measure to finance the recovery from the top down by buying treasury bonds and expanding the debt obligation.

The latest Federal Reserve measure to give liquidity to the credit market expands the money supply. The expansion is not only anti-deflationary by making credit easier to increase purchasing power, but to give liquidity to the previously overleveraged assets to be trickled down, or what does not verifiably work.

It has been critical to quickly move forward with a progressive tax policy to avoid the Keynesian measures that will take us right from a deflationary to an inflationary trend. That will, in turn, sustain the recession as prices increase with no growth, regressing back into the stagflationary phase of the cycle. Not exactly progress.

It is not that economic policy is being poorly managed. It is being managed to fit the Hamiltonian model with economic recovery (expansion) being dependant on borrowing the capital from a small class of economic elits--the upper class (the accumulation phase of the macro cycle), to be paid largely by the non-elite (the distribution phase of the macro cycle).

The Fed's trillion dollar expansion of the money supply in the form of buying treasury bonds renders economic expansion dependant on a debt to be paid to the creditor from the wealth trickled down. Economic expansion is, then, a way to pay the debt, and not an economic recovery per se. Nor can the recovery be considered economic expansion since what is gained has to be repaid. It is the means to service the debt without the debtors suffering enough detriment to demand immediate and full retribution of the value (what is classically called the subsistence wage; neo-classically, Keynesian economics allows the retributive threshold to be mainatined at a much higher level without sacrificing the accumulation of value, expressed as the public debt instead of people starving in the streets).

The bonds the Fed is buying represent borrowed money, a debt, that has to be repaid to the people that have the money to lend--the upper class. The cycle is completed into recovery and is ready to be repeated. The cyclical change will not be the change We The People need, just the status-quo, cyclical trend in progress that will be argued as change.

Yes, we are smarter than that.

The first step to change the operational model in which technocrats are to confirmably operate to execute "the change We need" is to legislate a progressive tax code post haste!

Conservatives want a progressive tax code to be considered "punitive" like the taxation being levied on the executive compensation of TARP recipients to suggest it is a temporary change. Otherwise, it is the means for switching to a more pluralistic operational model of power, or the change we need. Both parties are part and parcel to preventing this change with a false pluralism of competing ideologies and practices. At this pint in our political-economic history, partisan politics is not fooling very many people very much of the time.

Your Tax Money at Work

When it was decided that tax money would be used to bail out financial firms too big to fail, I asked the question: what is the probability the money will be used to continue the practices that caused the financial crisis considering that causing the crisis is profitable?

The probability turns out to be, of course, 100 percent.

Your tax money has been, and will be, used to finance credit default swaps in a deflationary trend. The taxpayer directly pays, by default of the system, the profit to be had from a failing economy through bonded insurance derivatives that the interlocked firms receiving TARP funds--the network of integrated financials too big to fail--buy and sell. The direct payment of the profit is in addition to the indirect benefit that the deflationary trend produces in the form of consolidating capital and markets.

AIG (your tax money), for example, will be paying hedge fund operations within the integrated system that bet the economy will falter and credit (bonds) will default. Considering that allowing wealth to accumulate into the upper class (consolidation of the capital) always results in recession, there is virtually no risk to the CDS buyers who can be, and are, also CDS sellers (remember, it is an "integrated" system). The profit is systematically ensured with no risk and paid by the taxpayer, which is not the hedge funds since they are exempt (a regressive tax code). The systematic model is state capitalism, not socialism though both can be argued as the same thing with being "too big to fail" the determining (controlling) variable.

So, we see that the effect (the profit) is systematically caused by a circular and recycled accumulation of the effect organizationally integrated and paid largely by The "little" People (regressive taxation) so that the reward is always disproportionate to the risk to conserve the status quo of disproportionate (elitist) power, or Hamiltonianism.

This system of finance, this business model based on being too big to fail in order to dictate the marketplace and control the bid, literally has the victim taxpayers (the non-elite that suffer a regressive tax burden) paying the wrongdoer to do the wrong and finance the means to do it all at the same time. It is a system of finance that can hardly be anymore unjust and inequitable. It is the model of finance that Thomas Jefferson so strongly opposed (the Hamiltonian model), with the inequity having become evermore visible, disfunctionally passe' and a model of absurdity.

For the small class of people accepting public funds to stabilize the economy, using it to cause a profitable instability with a circular system of effects while telling the taxpayer we should fear socialism all at the same time, fascism is not the acceptable alternative!

Progress the tax code so that your tax money is working FOR YOU, and not against you!

Now is the time to do it!

The Economy is Job One

Warren Buffet, billionaire investor, says tending to the economic crisis is job one.

That it is, and for the most part, that is where taking advice from billionaires should end.

If we are to prioritize the action to be taken by the new administration and congress, with the economy being job one, progressing the tax code is the very first step to take in priority. Instead, however, action was immediately taken to finance healthcare with a regressive tax burden. The leadership was so concerned with winning a political game that the very measure to nourish economic health was abandoned to win it.

This kind of political gaming, to win at any cost, is not the model of pragmatism, but a self-satisfaction that is characteristic of a detached elite. The cost is that we do not have the benefit of a more progressive tax code any time soon to, for example, regain the multi-million dollar AIG executive compensation with at least some good measure of being both legal and properly equitable. Instead, it appears everything we are doing is frought with a good measure of inequity.

If the Obama administration is looking for advice, here it is: progress the tax code and do it now! Utilize the gamers and the gaming in the administration and congress to achieve the priority. Doing this will be Strong Pareto Optimal as opposed to what we have now being all of a sub-optimal benefit.

We need to recapitalize the economy from the accumulated benefit. That is accomplished through progressive taxation. The cyclical squeeze of illiquidity (deflation) is putting small businesses out of business and it is more difficult for start ups. The data is there to support the hypothesis that the classical effect of the cyclical trend is consolidating the capital and markets.

The capital needs to be deconsolidated and made available through the small business administration to provide a competitive multiplicity of the marketplace, and all of the Strong Pareto Optimality that comes with it. It can't be anymore expensive, certainly no more an onus, than bailing out what is "too big to fail." Quit alluding to it, gaming with those that are too big to fail, and just do it!

Pluralizing the marketplace with a progressive tax code, with no exemptions, renders the business model of "too big to fail" the model of inefficiency that it really is by providing an empirical comparison--an empirical measure of efficiency, continuous improvement and accountability, both micro and macro, that being too big to fail cannot, by definition, provide.

Everybody benefits (Strong Pareto Optimality), even a billionaire looking for accurate valuations and strong economic fundamentals, like Warren Buffet.

There it is, all the advice you need but are not likely to fully get.

Assessing Value

AIG Retention Bonuses

The MBA executives that devised and administered the hedge fund division of AIG without fear of government regulation did their job with superior expertise. They executed what they were hired to do with superior performance.

They are being compensated for a job well done. So, what's wrong with that?

If we think that the AIG, MBA hedge fund executives were not hired to wreck the economy, we would be wrong. They produced huge value put away into the private property--the personal wealth--of the upper class, creating the largest accumulation of income in the upper class since before The Great Depression; deflated and consolidated the economic expansion--the more pluralistic expansion and equitable distribution of the wealth--that occured in the 90's when we had a more progressive tax code; created a huge budget deficit to be paid with a regressive tax burden while increasing the demand (the need) for government (including the TARP); and a convergence of what is public and what is private into a practical, organizational technology that ensures private ownership of the benefit, and public ownership of the detriment. This is a macro-economic model of economic entities too large to fail, antithetical to a free-market economics, that operationalizes neo-classical, Keynesian, capitalism into a low-risk, high-return business model, designed and executed by the best and brightest our educational institutions can produce and that money can buy.

The model is an elitist model called, state capitalism in which financing the cost is a function of the public sector, and financing compensation (the reward of success) is a function of the private sector. It is a bifurcation of the power structure retained by evolution of the model in order for it to survive and maintain an obviously inequitable outcome with a democratic legitimacy (see the article "Public Finance and Community Power Structure" and "Evolution of the Political Economy" at griffithlighton.blogspot.com).

Notice how the controversial AIG compensation cannot be changed. It is compensation for value received, which includes the value lost--like small businesses that will be allowed to fail (less competition) with the value of unemployment (lower compensation costs) and the loss of asset values (net worth) consolidated due to illiquidity (a lack of available credit and income) that will be resold with the lost value re-"gained," or realized in the recovery (distribution) phase of the business cycle. The value is not lost, it is consolidated, which is the goal, the intended consequence, the effect, the outcome of the classical model of capitalism in which the measure of success is defined by class distinction (unequal compensation and net worth). According to the power elite, it is the moral imperative, the "natural" outcome, that should not be, and as we see, cannot be, changed.

So we see, the economic value (the compensation, or what "We" are "willing" to pay) is a "moral" value to be conserved. Changing the inequity (the assessment of value) would rip the very moral fabric of civilized society and would condemn us to a conflicted process of chaos to be forged into order by a power elite. Nature is inescapable. It is inexorable. It is futile--immoral--to resist what is natural and, therefore, righteous in both the means and ends of power.

With a necessary talent for masterfully arguing the fallacy of composition, the inequity of what "We" are "willing" to pay, conservatives argue, is the equilibrium, the stability, of a civil society. The will to power is, therefore, the will to a peaceful prosperity and, therefore, the natural will of The People and the function of "the republic." Denying the ministers of the power elite full value is, therefore, neither legal or proper. The inequitable compensation is really the will of The People, the public good that, if you recall, Palin described during the last presidential campaign as the secret knowlege, the inscrutably difficult wisdom, conservatives have about what is really moral and righteous.

Controlling The Bid

It is, therefore, by the conservative argument, righteous to ensure the means of the power elite to control the bid (economic inequity), or what is "willing" to be paid and cannot be changed with the force and legitimacy of law (public authority, or the Hamiltonian model of government, "...the Republic for which it stands, under God, with liberty and justice for all").

Organizing to ensure the consolidation of wealth and power--organizing to be too big to fail--is the means to control the bid and, thus, the obviously inequitable compensation that, according to the force and legitimacy of public authority, is an assessment of value that is freely contracted and to be justly paid as compensation we are all entitled to (political equity) for services rendered of comparable quality (the effect, or the value rendered and received--the inequity). It is our natural right to be fully compensated for value freely contracted, performed and received. The value assessed and the compensation to be received is, then, legal and proper?

No!

The ability to control the bid is illegal! It is the effect of organizing to defeat the mechanism of free-market economics. That is entirely illegal and improper.

The conservative argument presented above is 18th Century utilitarianism in which the bourgeosie needed a legitimacy of power that was beyond the inherited and divine right of royalty. While the legal philosophy of the want-to-be kings expanded the right to rule (collect taxes and generally decide the fate of others) to the "natural rights of man," the divine right to rule is retained as a vestige of an evolving structure of power (see the article "Evolution of the Political Economy" at griffithlighton.blogspot.com).

For the government (what was previously the king, or the sovereign) to abrogate the contractual obligation for AIG's retention bonuses would be an illegal usurpation of public power; a dictatorial act strictly forbidden by the Constitution.

For the new power elite, power has to be gained, or won, by a pluralistic economic process freely pursued without government (the king's) interference (laissez-faire capitalism). God, or nature, acts to determine, or providentially endows, the legitimacy of power by class distinction of economic measure, and the "natural right" to that economic value (the private sector) is enforced with the constitutional legitimacy of public authority (the public sector). Where we see the right to private property becoming evermore a function of public policy and finance, assessing the value is no longer the exclusive domain of private want-to-be kings. Evolution of the power structure has been reduced to a choice between the fundamental elements of power. Should we choose an elitist or pluralist model of power and political economy?

Where the reward of gaining wealth, and power, is the ability to dictate the marketplace without government interference, the legitimacy of power is lost; and where government has evolved with a convergence of what is public and private to operate for administering private profit through public process (the political economy), what has evolved is the means and not the ends of power (see the article "Restructuring the Elements of Power" at griffithlighton.blogspot.com).

In order for the ends to converge with the legitimate means of power, we must choose the practical model to accomplish it. The elitist model is a confirmed failure--a nulled hypothesis (see the article "Science and Life" at griffithlighton.blogspot.com).

If we choose a pluralist model, the public and private dimensions of power will be fused by government ensuring a free and unconsolidated marketplace in priority. Choosing an elitist model will evolve the legitimacy of power from state capitalism (private gains with public losses) to state socialism. The probability of democracy diminishes significantly when it will be possible to operate as a fascist or a socialist state depending on the ability of the power elite to argue the value, if not the reality, of one or the other by means of public process, much like what we have now.

Does not Chavez argue his concept of the good life is what The People really want just like the conservative argument above, with what The People want always to be announced? Will exploitation of value assessed be an evolutionary vestige from state capitalism to state socialism? Accepting the pluralist model renders the question moot. Rather than uncertainty, we will have the practical application of continuous improvement through empirical process of close accountability--Democracy with a big "D." What is good and practically righteous--the value assessed--becomes the full value of choice, the full measure of what We The People decide in the full realization of what it means to be free.

Instead of ensuring the means to control the bid (the value assessed), ensure the means to prevent it with the clear and up close verifiable legitimacy that a free-market economics (pluralism) provides.

Fear or Loathing: Do Economists and Business Leaders Lack Expertise to Manage the Economy?

There has been criticism that our technocratic elite have shown considerable incompetence to predict, prevent, and now control and abate the economic crisis.

The criticism, getting a loud voice from a wealthy class of new rich who are now being branded in the media as "less rich," is incorrect. The economy has and continues to be managed with competence to define class distinction, or the measure of "success" that occurs with the deflationary phase of the macro-economic business cycle.

The "class" dimension is absolutely critical to understanding the measure of success or failure. What appears as a political failure--a maldistribution of wealth to the upper class--is an economic success. That is what the Hamiltonian (elitist) model of power and political economy is supposed to do: operate to clearly confirm class distinction, defining just exactly who the elite are. At this point within this elitist model, there is, of course, the impetus for a political solution to catalyze a recovery phase of the cycle that is the antithesis of deflation, or inflation (an economic metric).

As long as the recovery phase is managed within the Hamiltonian model, the political measures taken will be inflationary: monetizing the debt with a regressive tax code that produces a budget deficit. The alternative to the budget deficit (inflation) is an equally massive economic detriment, like people starving in the streets, that no one can tolerate, not even the elite because it accumulates too much retributive value to be managed at one time.

At this phase of the political-economic cycle we can choose to finance the recovery with a regressive tax burden that confirms operation of the practical elitist model, or we can choose to progress the tax code and modify the working model to a more pluralistic effect.

Progressing the tax code will not destroy our nation or the free market as all the conservative rhetoricians, that have all the access to media form the margin because the elite can afford to own it, say it will. The fearmongering is an expression of this marginal disproportion of power that the elitist model produces and is designed to maintain with a level of competence that is the best money can buy.

The experts are busy telling us that the prospect of progressing the tax code is keeping the economy in a deflationary trend. We should be afraid of that prospect. It will spoil recovery by discouraging the reinvestment needed to trickle down to the masses and overcome their fear of having no income to spend. Nevermind, of course, that expert implementation of this theory led to their having less income to spend, record depreciation of household net worth, and the fear (the prospect) that it will get worse. What is bad about the economy, what is to be loathed, is being expertly attributed to the fear the elite have of probable change that occurs with the depth and breadth of the cyclical trend and the unequal distribution of wealth and power it is intended to conserve. What the elite fear is, by the absurd reduction of the 18th Century collective utilitarian argument, what we all really fear in our collective self-interest.

What is the elite's fear is the non-elite's triumph of a constitutionally endowed pluralism. The fear that our technocrats are telling us is driving our economy into the ground is a misattribution. The fear factor is the political will to switch to a more pluralistic model that threatens the status quo of power a la Thomas Jefferson.

Our economy is not continuing to trend deflationary out of fear of the largely non-elite consumer who is not spending. The spending is inadequate because the income is not there to support it. It has been consolidated as per the elitist model in operation, and being very competently applied. The trick is now to fool us into believing that choosing the means for a more pluralistic model of power--a more progressive tax burden that will enhance non-elite spending--is antithetical to the basis of our constitutional form of government that protects our freedom. The argument is, of course, absurd.

Operating with the elitist, Hamiltonian model causes the lack of income because it has been accumulated in the upper class to now be consolidated through political process of a regressive tax burden so that the recovery will be financed by borrowing from the consolidated wealth with interest (a budget deficit) instead of taxing it.

The elite of power are afraid, they fear The People will realize that the practical model can be easily changed so that instead of financing the means of consolidating power, We finance the means of real freedom we are all endowed.

Instead of financing the means to defeat free-market economics, We finance the means to allow for it in the fullest measure. We may then confirm what it is we have to fear: a free market or the lack of it?

The expertise being used is being mistaken for the lack of it because the complexity of the problem is being used to convince us all that the cure for our loathing is to be feared: that the problem is the solution; to identify the fear of the elite--the solution--as the object of the loathing, or a fundamental error of attribution. It is a deliberate error, a fallacy, being detected but erroneously interpreted as, attributed to, incompetence of the technocrats instead of the successful operation of the organizational technology--the elitist model of power and political economy.

The bad economics we all loathe is not the result of free-market economics, merely the lack of it. Realizing that is what the elite fear and will do whatever it takes to turn what We loathe into what they fear with the highest level of expertise.

Public Policy and the Art of Arbitrage

The announcement of Federal Reserve chairman, Bernanke to adjust mark-to-market accounting rules employs a financial tool that determines asset valuations at a particular time. When he suggested that the rule would be eased to facilitate selling the bad assets with a quick and favorable valuation, the stock market rallied on what made the assets bad to begin with.

Bernanke is acting to make good the organizational model that makes the assets bad by making the assets good, manipulating an abstract accounting trick that gives the assets arbitrage value. The fundamental value of the assets--the lack of value due to a lack of income to pay the underlying mortgage debt obligation--is still bad because that value was leveraged into a securitized debt obligation and sold, marked to market, when it was overvalued. The investment made was an arbitrage that did not give value to the fundament. When the leverage unwound, the debt renderred worthless was being hidden off balance sheet to avoid being marked to the market valuation. By easing the rule, the Federal Reserve Bank is attemting to reveal the hidden valuation, give it value and liquidity.

The measure is Hamiltonian. It operates to save the organized dimension of "too big to fail" argued as the result of a free market mechanics, rewarding success in the marketplace with the large size that defeats the function of the free market in which firms inimical to the public welfare will fail. It is a measure that causes the demand for government, not prevent the need for government that the premise of his action advances in support of the free-market mechanism.

While it is politically elegant to lend survivability to a failed model of organizational power, within the Ivy-League list of possible alternatives, economically it is pure junk!

Public policy that confirms the practices of private power that has led to the current crisis will not save it. It will make it worse and the effect will be to discredit what will both prevent crises and the need for government--free-market economics.

When the Federal Reserve announces it will only act to promote ensuring a competitive multiplicity (pluralism) of the marketplace, organizing the economy to prevent economic entities that are too big to fail and threaten the stability of the entire economic structure, is when we will have a technical support for solving our problems rather than saving them.

The Federal Reserve's announcement to increase oversight of banking and lending will combine with Treasury's announcement next week on what will be done to dispose of the bad assets.

Treasury secretary, Geitner looks to attract private capital to buy the bad debt, rather than a public debt to be paid with a more progressive tax code, which will need to be more than worthless at the time of sale and resale. That will be by manipulation of the accounting rules at any particular time or point of the arbitrage transaction that determines the taxable gain on the capital invested in the banks by buying their bad debt, giving liquidity to the leverage that caused the bad debt, and giving us the political-economic phenomenology of successfully failing (see the article, "Restructuring the Elements of Power" at griffithlighton.blogspot.com).

At the same time, congressman, Barney Franks has proposed reactivating the "uptick rule." If arbitrageurs must wait for an uptick to sell short, there is an indication that values are being manipulated on the bid and shorting the bad assets is less likely to occur. That would help give value to the bad debt the taxpayer bought that is essentially worthless because the fundament of its value--the income necessary to pay the debt--has not been supported. Its secondary, derivative value--its leveraged, arbitrage value--is getting the technical support.

Citigroup's report of a quarterly profit provided technical support for equities that, combined with the possibility of favorable accounting rules for valuing the remaining bad debt and diminished capacity for the false technical indicators of short selling practices, comes at a time when equity ownership (the capital) has been largely consolidated.

Both measures, and the timing, to change the technical rules to support asset valuation are Hamiltonian, avoiding support at the fundament of the value--the income to pay the mortgage so that all the parties (the class elements of the power structure) benefit. Rather, the system is maintained in zero-sum in keeping with the Hamiltonian model and recovery will occur to recycle the consolidation of fundamental value with the art of the trage leading the way.

The political economy, rather than lending regulatory stability to the market, operates to add volatility, providing the medium for the art of arbitrage that gains the capital and gives liquidity to the leverage (see the article, "Rebuilding the Economy" at griffithlighton.blogspot.com).

Managing the Risk

If you have been following the articles in political economy at griffithlighton.blogspot.com, analytical modeling is critical for understanding political-economic policies, programs and evaluation. The different models of power yield highly probable results. Predictive utility--managing the risk--is the practical utility of organizational modeling.

Devising and implementing policies and programs that fit the pluralistic model in which power is maximally diffused to check fraud and abuse with the most direct, and confirmable, accountability is the antithesis of the model we are using now across all jurisdictional boundaries, from the structure of community power to "globalization." Trying to achieve pluralistic results with an elitist model of power condemns us to a painfull progression of historical evolution, needlessly suffering the illusion of pluralism to realize it by means of dialectic determinism.

In order to achieve a more pluralistic society, abandoning the elitist model for the pluralist model is a requirement.

The first thing the Obama administration did was finance expansion of healthcare with a regressive tax burden. Regressive tax policy is a characteristic of the elitist model. It shifts economic value from low incomes to high incomes in the name of the general welfare. A regressive tax burden does not fit the pluralistic model because it consolidates economic value and, therefore, power to organize and manage the pluralistic elements of power to a predictable outcome that fits the elitist model. Providing the means to organize the plural elements of society into an operational consolidation of power that predictably yields a consolidation of value describes the elitist model of power.

In anticipation of SCHIP, and subsequently, the pharmaceutical sector set to consolidation. It fully intends to tap-out the pool of funding set up by the program's regressive tax burden in collusion with the medical profession. The result will be rising costs and lower incomes to finance it, fully consistent with (predicted by) the working practical model with the final practical result being deflationary--exactly what ails the people touted to benefit from the program.

The profit scheme of the elitist model of power and political economy is a web of seemingly disconnected policies, programs and sectors both public and private. It is seemingly pluralistic, but its elements are deliberately organized to defeat the direct and confirmable accountabilities--like controlling costs, fraud and abuse--that a true pluralistic model easily achieves. The result of SCHIP, for example, deflation, will pressure tax increases to keep the profit margin expanding as the pool of funds is depleted (more deflation). It perfectly fits the elitist model of power and political economy in which a "class" of people are targeted for a regressive burden, made a sub-class of citizens below the citizens that do not pay the tax directly but set themselves up for an indirect increase in the price of goods and services in the private sector. The majority buys into the elitist, class-model of power that seduces The People into operationalizing with the model for their deprivation thus considered "self-determination" and a legitimate outcome of the practical model.

The TARP funding, implemented by Treasury with the authority of our Democratically controlled congress, is another example of how the elitist model of power and political economy works to predictably manage risk.

While the American people were told the return on TARP funds would be 1-1, The People ended up with a realized loss of forty cents on the dollar. Investment from the private sector, however, yields a twenty cent return on every dollar. The difference in the quality of the investment and the expected return is that one is an elitist dollar and one is not. One is a public-sector dollar, and one is not. According to the Hamiltonian model--the bifurcated model of power, the public-sector dollar should not be allowed parity with the private sector of power, ensuring the superiority of the power elite, operating with public immunity and impunity. The sum result is that the leverage (the bad debt) was liquified into a merchantible money asset that fully supports the elitist model. Operating within the model is thereby confirmed to present minimal risk and the probability that the model will survive to reiterate the expected return is almost perfect. The same risk-return ratio exists for the SCHIP program and, combined with the approach for the financial sector, suggests that the change in organizational modeling we need to prevent crises is being managed to minimize the risk the change we need will not occur, despite all the rhetoric.

The problems we now overwhelming face are not a function of ideology and rhetoric, but of practical organizational means. The change we need is not ideological or rhetorical, it is organizational. Accepting a new ideology will not change anything but the rhetoric to support it. Accepting a new organizational model will achieve the practical change we need.

High level financiers will now call for the need to have a global, coordinated means of managing the risk (the retributive value) of overleveraged assets that causes highly punctuated crisis events like we have now that threatens the Hamiltonian model of power. The elite will call for a coordination of central banks--a monopoly of economic power that is otherwise considered illegal but is now being argued to be the only simple solution for preventing deep deflationary trends of the business cycle and abate harmful economic volatility. It is a call for an inimical consolidation of power that should not be allowed to occur. By their design, this crisis is a vehicle for finishing the consolidation of power at the global level so that power will not be shared any further by historical dialectic, like the American Revolution, but kept in current hands.

It will be a global system of governing that will manage the systemic risk by there being no means of exacting the retributive value with the force and legitimacy of public authority. It is the systematic consolidation of power that Thomas Jefferson warned us of.

Evolution of the Political Economy

The last transformative crisis of capitalism was a punctuated evolutionary event that called into question the system of a bifurcated power structure of public and private domains discussed in previous articles. After The Great Depression, the power elite admitted contemplating whether the power structure should be modeled as fascist or communist. The bifurcation of the power structure was a threat to elitist power because it was too unstable and was providing empirical confirmation of the Marxist critique of classical capitalism.

The elite could not very well adopt a model we had fought a world war to prevent, and communism, while it would allow the elite to sytematically keep its power by maintaining an elitist administrative model, is antithetical to the Hamiltonian model of a ruling "class" society of private power with the force and legitimacy of public authority (government). Since the Hamiltonian model was too unstable, it would have to be modified (evolved) to survive. The conservative "principle" of strict bifurcation of the power structure that produces "great" wealth, and the legal authority to accumulate that wealth, causing a "great" depression, mutated into a "mixed" Keynesian economy.

Marx predicted this evolution of capitalism and called it "anti-socialist socialism." While the "decision" (the economic determinism) to adopt a more public/private mix of power was to prevent confirming Marxist hypotheses, all it did was confirm the critique of classical economic theory that the accumulation and consolidation of wealth and power will result in crises that evolves the power structure into an evermore equitable distribution to save itself. The power elite hang on to the vestigial emblems and rhetoric of consolidated power as long as possible.

The conservative rhetoric we hear now, that society is "naturally" ruled from the center-right, is but a desperate vestige of an empirical failure in an evermore scientifically cognizant society. There is really very little the conservative element can do in the face of economic determinism. We can continue with regressive (deflationary) burdens to publicly finance Keynesian policies and programs to validate the Hamiltonian model of power as application of the general welfare, like the SCHIP legislation, for example, but as we have seen, kick the systemic risk out the front door, it just comes in the back; and with every punctuated event toward a more pluralistic power structure, each recession is accompanied with a higher level of social expectation so that, while the detriment is monetized, it still "feels" like The Great Depression.

Financial markets will continue to be volatile. Equities will dip to oversold levels till the professionals have shook out and consolidated as much equity share as possible...you know the old saw, "the market can wait longer than you have money." This is where the zero-sum plays in the macro-economic cycle, where the mainstream economists falsely assure small investors that the lost value is not being consolidated. The bear market will end, and the recovery phase of the macro cycle begins, when the professionals are largely buying and selling to themselves.

Small investors will panic-out if not sell out of necessity. The wealthiest among us (the power elite of the Hamiltonian model) will consolidate those shares and sell them back on the uptick of the business cycle to small investors that, among other things, have to pay a more significant tax burden by a function of the size of their income (this is the reserve--the surplused value--used to buy, or consolidate, the wealth in a state of distress and an indirect means of accomplishing a zero-sum accumulation). The value of a regressive tax burden, including the burden of a flat tax, is magnified by the element of crisis. The false argument that there is no zero-sum loss of asset value is easily made by economists by ignoring the full mechanics of the macro systematic cycle. That is what they are educated, if not paid, to do.

Falsely arguing a non-zero-sum accumulation of wealth, and power, is an easy con because the sum lost is gained on the uptick of the business cycle and not at the time of the distressed value, the crisis, where the victim (the zero-sum loser) is experiencing the deflation of asset value. Ingenius as this system of expropriating value may be, it is not sustainable because, over time, the distribution of value is so strikingly inequitable that not only does it cause crisis, but as the distribution tends to become incrementally more equitable, the members of cafe society appear increasingly clownish and the compensation for it to be intolerably absurd.

The army of MBA's that have been graduated over the past twenty years to administer the means that finance the incomes of cafe society become the scorn of non-elite society. They will have to look to more pluralistic means to satisfy their dreams of success, unless of course we retrench to accepting the false efficiency of "bigger is better" compensated by an organized means of "too big to fail," condemning ourselves to an unneccessary farce of cyclical crisis in which we reward failure with success.

Arguing the value of rewarding success is the last vestige of conservative rhetoric to persuade us that the natural progress of a more pluralistic society should be resisted because it leads to the evil, alternative "ism" to capitalism. It is an argument that masquerades ideology as intelligence, pressing for adherence to principles that are but the passe' rationalism of 18th Century utilitarianism evolved into the "isms" (the unempirical belief systems) of modern ideology.

While 18th Century utilitarianism motivated the production of great wealth, it is now an argumentative absurdity that lacks the empirical truth of daily modern life. We observe failure being lavishly rewarded with success; and when the non-elite lose their jobs and their savings as a consequence of the failure-rewarded-as-success, it is absurdly argued as a non-zero-sum economic expansion of the pie.

Calculating economic growth liquidated into negative growth, like we are experiencing now, as the general welfare, or a "collective" gain produced by an inequitable distribution of wealth and power, the conservative utilitarian argument has evolved into complete absurdity. The productive "utility" of the argument is that we emerge collectively stronger as non-elites must work harder to achieve the measure of success that, by definition, cannot be collectively had. The non-elite must sacrifice to achieve the reward of "success" in zero-sum so that the only way to share in success is for someone to be unsuccessful, or a system condemned to a struggle, a conflict, of a change of elites. While it may motivate a productively innovative capacity, it does not promote a peaceful means to prosperity. A moral existence becomes secondary to the struggle. The Nietzche-like "will to power" becomes the dominant existential value, or the moral imperative beyond what is good and what is evil. The moral imperative is, then, confirmed to be the interest of the self, and the powerful, then, have achieved power with a moral and, thus, legitimate collective security of what we all ultimately strive to achieve as individuals.

Where the adherence to passe' conservative principles lacks the intellectual capacity to recognize and allow for the natural evolution of a more pluralistic structure of power, it is full of self-interest, which forms the fallacious composition of the conservative argument: that the welfare of the elite (ensuring the success of the individual) is the general welfare (ensuring the success of the collective). The argument is defeated by the very definition of the elements that compose it: the elite by definition are successful by the non-success of others (a zero-sum). This is also where conservatives discredit the operation of a free-market mechanism that allows for a peaceful and prosperous evolution of pluralistic society.

Defeating the pluralistic, democratic, mechanism of free-market economics while maintaining its moral and collective legitimacy is an elegant success of the capitalist model to consolidate power and keep it. Success in the free market is defined by defeating its operation. The accumulation of wealth that causes liquidity crisis is the reward of that success and cyclically causing the crisis ensures its consolidation into a zero-sum over time. Pluralizing the accumulated power of this freely acquired success by an intervention of the public sector (government) to ensure the operation of the free-market mechanism is regarded as a threat to freely pursue the rewards of success by denying the full value--the full power--of it. Government, therefore, as it was in the 18th Century, can only be regarded as evil unless it operates to keep the power privately consolidated for the public (collective) good (the Hamiltonian model). The communist model of government operates with the same utility of consolidated power but without the distinction between a public and private sector which is becoming evermore mixed whether capitalist or communist. The contradiction, and the practical organizational convergence, is readily apparent.

The practical evolution of mixing what is public and private to maintain a consolidated model of accumulated power is not necessarily an improvement. Progress is not always linear.

The businessperson has always tried to defeat the free market out of self-interest, and where the free market obtained, self-interest has always been verifiably checked in the collective interest, or for the general welfare.

We are not doomed to the determination of a natural existence. We are not merely the ineffective subjects of an economic determinism in which the convergent forces of evolving organizational technologies result in a dystopic hegemony of consolidated power and a continuous conflict to willfully ascend its structure. Whether the legitimacy of power is capitalist or communist, for the individual or the collective interest, we achieve existential satisfaction when freedom is the measure of our success.

Government that ensures a free and unconsolidated marketplace in priority operationalizes all the elements of power--what is public, what is private, the individual interest or the collective interest--into a peaceful process of pluralism. What is otherwise an eternal sea of differing opinions that forces a perpetual conflict of competing interests is rendered a peaceful progression of realizing our natural existence both individually and collectively. Rather than a fate of economic determinism, we are free both individually and collectively to determine our fate.

Just because the proponents and practitioners of consolidated capitalism falsely argue the legitimacy of free-market economics does not mean it cannot be rendered a true legitimacy with the force of public authority. The result will be a peaceful prosperity that allows for the freedom to pursue the good life rather than the dictates of the will to power beyond what is good and evil determining the fate of our natural existence.

by Griffith Lighton

March 1, 2009

griffithlighton.blogspot.com

Healthcare and Public Policy

Providing healthcare, along with many other sectors of our economy, is increasingly being considered a public good, like a public utility. If, for example, the financial system is so critical to the public welfare, why should it be subjected to a cycle of boom and bust that is inimical to that welfare generally as long as it remains in the private domain of the power structure where it has demonstrated the model of inefficiency and corruption, providing the lowest quality at the highest possible cost.

Bifurcation of the power strucutre into the domains of public and private is supposed to allow for a pluralistic efficacy. In some cases, goods and services are to be determined best provided in the private sector, some in the public. Failure in the private sector tends to force an enterprise into the public domain, if not in whole, in part by regulation of public enterprise--government. So we see that the conservative argument that "government does not produce anything...it is the model of inefficiency" is merely a "belief" proffered as an absolute truth (a guiding principle) that is nothing but sophistry that identifies their self-interest with the general welfare. It is the rhetorical stock-in-trade of the conservative element and is completely, empirically, disconfirmed by the evidence.

So it is with the healthcare system residing in the private sector. It is a model of inefficiency, and where it intersects with the public sector, it is a model of racketeering, fraud and corruption, just like the financial system. While medical doctors, for example, gain the public's confidence as the keepers of the public health, they at the same time bilk the public coffers (the tax base) with fraudulent and abusive pricing practices that only Enron could rival. This, of course, explains the byzantine regulatory scheme of Tom Daschle, for example. Complex schemes provide the opportunity for the abuse it is supposed to prevent, like the tax code, and that would explain how Daschle, and many others like him, can be both industry-friendly and keeper of the public trust (see the article, "Restructuring the Elements of Power" at griffithlighton.blogspot.com).

The remedy for the tendency to engineer complex schemes and organizational public/private technologies is a free market system, falsely discredited by the partisan, duopolistic, politics of the power structure that allows industries and markets to consolidate, defeating its operational utility.

A doctor should become wealthy because the public prefers that doctor over others, not because there are not enough doctors as per the entrance requirements of the AMA, its medical procedures, or its billing practices. The AMA is operating with the classic model of early 20th Century capitalism in which unscrupulous businessmen monopolized industries and markets in the name of free enterprise and free-market economics only to render its operation null and void. Only the most unscrupulous were the fittest to survive, or rewarded with a profitable measure of success.

The Standard Oil Trust Corporation became the model of uncivil behavior and economic inefficiency because it defeated the utility of free-market economics. Practitioners of organizing economic trusts became the criminal element of a civil society, and medical doctors should be no exception because they swear a hippocratic oath of doing no harm.

Anti-trust laws were enacted to control the tendency of organizing capital so that producers could tyrannize consumers by dictating the marketplace, consolidate the capital, and power. A significant part of that legal remedy was allowed to be dismissed by the Clinton Administration with the result of letting the financial sector both horizontally and vertically integrate. The result of this false two-party system of practical governance was catastrophic! Liberals and conservatives, by the evidence to date, work against each other in a bivariate--binary--system of false opposition and cooperation to produce the status quo of power. Allowing this realpolitique to continue--allowing bipartisanship to masquerade as nonpartisanship--should be at the very top of our list of things NOT to do!

The advocates of organizing to consolidate power either public or private should exist at the fringe of the power structure. Consolidation of power will be abusive! A government that acts to ensure a free and unconsolidated marketplace in priority is a government that governs least because the free market takes care of keeping everybody accountable by direct participation (Democracy with a BIG "D") and controls prices with a plurality of easily accessible capital and markets.

Doctors claim their incomes are high because they have the special knowlege to keep the public health. The free market dictates that a high income will draw enough practitioners into the profession to equilibriate the cost of healthcare so that everyone can afford it--so that it is in adequate supply. The only reason it will not be in adequate supply would be a barrier-to-entry into the profession and, consequently, a cost-barrier to "acquiring" healthcare (what is reasonably to be considered a "requirement"). The final result of "rigging the market" (defeating the economics of a free market) is the lowest quality at the highest possible cost. It is the model of inefficiency, and organizing it into the public sector, so-called "socializing" it, without trust-busting the AMA just jumps it from the frying pan to the fire. The organized utility of bifurcating the power structure to preserve the status quo, the class distinction of have and have not (Hamiltonianism), will be very elegantly applied and accomplished.

The formula for providing healthcare is the formula for economic health: adequate income and controlling costs. It is what a free-market economy provides through pluralistic means.

The way the healthcare sector is organized now, we have the high cost rendering incomes inadequate--it is deflationary. The SCHIP legislation is just a reinvention of the status quo, financing extension of coverage through a regressive tax burden, a deflationary tax policy. It does not fit the formula for economic health: it despoils income and, rather than controlling costs, it provides public funding for price increases. The public/private mix is a false pluralism of power. It provides less an efficiency for public welfare than for a consolidation of power for private profit (a consolidation of private property--Hamiltonianism).

Pluralism provides. Consolidation deprives. Despite all the rhetoric and promise, consolidation of power always proves corrupt and inefficient. Pluralism always proves an efficiency of costs and effectiveness with the highest degree of accountability, which is why the most unscrupulous among us will always try to organize to defeat it without prohibition. The healthcare sector is no exception.

In terms of economic health, the medical profession is overfed and its patients are undernourished.