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.