Expanding the Pie

Financial reform relies heavily on the technical expertise of a bureaucratic elite that span the boundary between business and government (the bureaucratic model of power and poilitical economy). It is a combined corporate (a practical, operational model) that defines the problem and, therefore, the solution.

Identifying the decisional model in operation provides a high degree of predictive utility. The bureaucratic model combines the expertise of elite authority with public process. While the results validate, rather than legitimately confirm, Hamiltonian hypotheses, like the wealth will trickle down to provide the general welfare, the validation occurs by means of legitimate due process.
The empirical legitimacy of pluralism is absorbed into the false utility of an authoritarian regime that is exclusively capable of resolving an organized complexity.

Non-elits are not only incapable of determining a proper resolution, they are incapable of criticizing the competence of the managerial elite.

Accountability under an authoritarian regime is less a function of empirical measure than a game of confidence. It is not a facile accounting that can be directly acted on in a facile manner, like in a free-market economy in which disconfirmed hypotheses fail without bringing down the whole system.

Accountability that relies on an elitist, Hamiltonian, decisional model validates hypotheses by an appeal to authority rather than confirming them by an empirically ontological process of legitimacy. The model accumulates errors and risk, and will not bring down the entire system on confidence of the very best authority (empowered by what is too big, and too important, to fail by default of system).

As it is now, for example, we have low inflation with high unemployment because the pie, rather than expanding, is consolidating. Now that there are signs of growth, the Fed is hinting at raising the interest rate which will dampen inflation, and growth. Without growth there are no jobs to "demand" the economy out of the recessionary trend. The trend will, instead, be reversed on "command."

If the economy is financed for expansion rather than consolidation, markets tend to be saturated and experience a disinflationary, rather than a deflationary, declining rate of profit. The distinction is absolutely essential.

A deflationary decline presents as inflation and unemployment with the deflation aspect being more a consolidation of assets--wealth--than reduction of prices. Disinflation, on the other hand, allows for the demand-support--the price control--necessary to keep the economy out of recession, preventing the consolidation of wealth that feeds a deflationary trend marked more by unemployment than a reduction in prices.

In a disinflationary free-market environment, rather than a deflationary consolidation of the marketplace, the market share is won with the fittest to survive left standing by popular consent (demand) of consumers (an ontological legitimacy of democratic process). Winning the market share, rather than consolidating it, then determines the profit margin, and the consumer, rather than paying whatever a big corporate commands, has the "discretionary" income available to bid prices in a disinflationary manner. Power is shifted from the corporate to the consumer, exactly what the corporate wants to avoid by consolidating the marketplace. (That is why the proposed health care plan is not likely to reduce costs, because it does not empower the consumer.)

If the regulatory authority is not empowering the consumer, contrary to the conventional wisdom of expanding economies of scale, the pie will not expand and the risk will not be dissipated but will accumulate with market share.

Public and Private

The model of a bifurcated power structure allows for a comparable pluralism that has evolved into managing both the positive and negative externalities of capitalism with a combined, practical organization of the two elements.

The convergence of public and private into a bureaucratic model of power evolves the power structure to produce results with a mixed legitimacy that is not clearly public or private. It allows for an analytical complexity, a plurality of opinions, that cultivates a technocratic power elite to "resolve" the complexity into the practical administration of power.

Bernanke refers to an improved "resolution process" as we look for the systematic means to ensure equitably legitimate measures to stabilize the financial market and organize to predict and avoid systemic risk originating from the private sector with what he calls the "resolution authority." He is a technician engaged in engineering and executing an organizational technology that renders, resolves, all the ideas for what is the greatest good into the fundament of monetary policy, merging the elements of the power structure into a manageable, predictable operational model that distributes value into what is considered to be the primacy of the private sector with the force and legitimacy of public authority (Hamiltonianism).

The means tends to innovate and evolve, the ends of power does not. The means has evolved with the changing perception of equitable distribution of power and wealth in post-industrial society. The conservative element of power must maintain its legitimacy with a practical administrative model that is no longer the sole command of the private sector and the captains of industry.

Where accumulated wealth in the private sector continues to largely determine the results of market mechanics by sheer size and momentum, and financial means innovate to circumvent each regulatory reform in response to accumulations allowed into a crisis proportion, we progressively defer the privacy of power to the technocrats who "resolve" in the public forum of legitimate, constitutional power.

The quest for what is manageable and predictable organized from the top down is a command economy that requires a critical measure of accountability that is best accomplished from the bottom up by ensuring a free-market mechanics, the evaluative wisdom of a collective legitimacy, in priority. Without the means to evaluate with the legitimacy of ensuring the priority, bureaucratic power becomes a tyranny of technocrats--a technocracy.

Political-economic technocrats claim the legitimacy of acting with the "public" trust. The implication is that the results of public-private organizational technique are public and the distribution of rewards and deprivations (the measure of exercised power) is the legitimate public good. Democratic (pluralistic) results are thereby ensured through autocratic (elitist) means. The means, despite being undemocratic, is argued to justify the ends in an organizational tautology that validates the elitist model as the best practice of the republic.

As we hear a lot of acrimonious rhetoric from the right wing that we are engaged in the move to socialism, analytically, they do not understand the political-economic dynamic in operation or are so blinded by ideological socialization they cannot accept divergence from the passe' pre-industrial model of bifurcated power that has built great wealth, but with an increasingly conflicted public-or-private legitimacy over the distribution of costs and benefits that has come to a point of reconciliation, or "resolution."

The right wing is losing, clinging to an absolute and obsolete theoretical legitimacy that does not square with the need for technocracy, leaving them with a diminishing credibility that is evermore reduced to the lunatic fringe of conservative talk show hosts and clownish intellectualism.

If treasury (a public bank) and the federal reserve (a private bank) do not separately or together act to produce the general welfare, then what does? The complex debate is not about a welfare--a distribution of costs and benefits--that is general, or fair and equitable, it is about producing an inequity with the legitimacy of the general welfare.

A legitimacy based on inequity requires the force of a public authority, and this is where the conservative argument resorts to all manner of fallacy and intellectual feats of funambulism because what is public authority (government, the sovereign) is historically corrupt if not incompetent, and according to The Constitution, The People are sovereign. Hence, the Hamiltonian argument that power must be exercised from the private sector by a power elite that have the ambition, the will, to power.

The ambition to power can only be by the accumulation of wealth. It is the real measure of power and is produced by the private sector with a legitimate self-determination to acquire it. Sharing the wealth is to share power. If a person wants to share in the power, a person must produce wealth, and that share is equivalent to the share produced determined by the market price in the marketplace (a private enterprise performed in public).

Since accumulating wealth can control the price, a person can accumulate shares disproportionate to the wealth produced by that person. The shares are attributed to the powerful (the elite) who must then engage a political process of preventing the value being retributed, or shared. If the value is not shared, a crisis ensues and forces political distribution of the value. It is the plight of the conservative element to minimize, or conserve, the retributive value as private property protected by constitutional right, or public authority.

We see, then, the contradiction of the conservative argument that must be "resolved." There is the accumulation of private power with the supremacy of public authority.

Co-opting the legitimacy of public power is absolutely essential for maintaining the primacy of the private sector. Hence, we have the conservative argument that if government is not limited to enforcing the right to private property and self-determination in priority, it is otherwise corrupt and incompetent. The problem here, again, is to prevent this legitimacy of public authority from becoming "public" beyond the mere force of the argument when the inequity becomes so disproportionate that retribution of the value is the only possible resolution. It then becomes the function of government to resolve BOTH public and private.

The arguments for the inefficiencies of government are nevertheless vestigial and iterates the ambition to power.

Even with a public-private resolve it is still possible to maintain, in true Hamiltonian fashion, the function of constitutional government is to provide The People with the illusion of a self-determination (sovereignty) that is self-enforced by operation of public authority--the sovereign. The elite do not claim to be the sovereign, like the technocrat, only the representative of the sovereign (the republican form of government), providing the competence and moral strength the sovereign lacks to rule in the interest of the general welfare.

Despite an ambitious technocracy programed for elitist ends, it is clear to the conservative element that the mission of a bureaucracy can be changed without an act of congress or amending a constitution. The actual administration of power, and the actual outcome, is essentially the practical discretion of the bureaucratic elite in any case. It is a sharing of power, an evolution, the ruling class of consolidated capitalism has absolutely no intention of occurring.

If technocrats take on the vestigial mantle of the ruling class, the current power elite are supplanted by means of their own device, and nothing is more humiliating for a power elite than being victim of one's own stupidity (which was what the philosophes were for--to enlighten the despots). In this case, it is nothing but the stupidity of greed and avarice to be tempered with the practical, pragmatic wisdom of a technocratic elite to resolve the nagging contradictions of legitimate power either public or private.

Evolution does not appear to be linear in any respect. Nature cycles up and down, back and forth. As elements merge, and ideas converge, change emerges indifferent to the determination of our self always decided by choices we make now with virtue (the strength of what is righteous) being the vision of destiny.