In short, as Prime Minister Netanyahu himself has acknowledged, Israel has an image problem.

THE UNISRAELI-LIKE ISRAELI POSTURE

Israel may not have deserved the reception it got as a result of the Turkish flotilla incident, but, in my opinion, it does deserve criticism for the poor job it is doing in the field of public relations.  Having just read “Start-up Nation” and gained some appreciation of Israel’s bold, innovative culture, I am dismayed that your efforts in this crucial area have been so weak and unimaginative.  On the whole, my impression of your reaction to events is that it is defensive, often sluggish, and sometimes disorganized.  This in contrast with your adversaries’ propaganda that is typically timely, vivid, craftily worded, and consistent (not to say, predictable.)  In one-on-one contests, Israel, it seems, often comes out second-best even without the help of hostile reportage.

To an outsider like myself, it would appear that, by and large, you have judged your differences with the Arab (I use the word “Arab” loosely as a catch phrase to encompass all of Israel’s Muslim enemies in the Near East regardless of their ethnicity) world to be irreconcilable and the rest of the world hopelessly prejudiced in their favor.  In a word, your posture strikes me as defeatist.

From what I gather, these are not the characteristics that have won your past military battles nor, in my opinion, are they likely to win a just peace in the future.  In view of the above, I believe a radical shakeup in your information policies is in order.  More specifically, I suggest Israel take the initiative and launch an aggressive peace offensive.  In this connection, I humbly submit the following suggestions in the hope that a few may be worthy of your consideration.

 PROPOSAL 1: ADDING A PEACE PORTFOLIO

To emphasize the importance Israel places on peaceful coexistence with its neighbors, thought might be given to the creation of a new cabinet position devoted to that objective.  As an initial step, the new Peace Minister could issue a number of lists containing in all some fifty to a hundred country-specific (or countries specific) projects -each independent of the other and each approved in advance by Israel for automatic enactment if the other side were to accept.  One such project might be, for example, a swimming pool for Arab kids on the West Bank.  Any Arab country could pick and choose any (or all) of its designated items it considered to be in the best interest of its people.  The cooperating Arab state would, of course, have to guarantee the safety of any Israeli contractors on its territory, clearly identify the project as Israeli built (or funded), and safeguard the project when completed.  Hopefully most items would be at no cost to the recipient.  To prevent later bickering over those projects carrying a recipient price tag, payment would be required in advance deposited with a third-country acting as escrow agent.

The lists might include projects related to:

• Steps to improve the living standards of the general population
• Medical services, disease prevention, vaccination, dentistry
• Infrastructure improvements such as water supply, electrification
• Cultural exchanges
• Student exchanges
• Technical assistance
• Sport competitions
• Joint commercial ventures, etc.

Should some of the items be accepted, then the peace offensive would, I believe, begin to ameliorate the now embittered relationship between Israel and its neighbors.  Even if all the Arab countries rejected the entire set of lists out of hand, Israel would gain an important moral victory and the Arab states shown to be recalcitrant and obstructionist not only to the non-Muslim world but to at least a few in the Arab “street” as well.

 PROPOSAL 2: SPONSOR A VIDEO SERIES

The following three video productions could, I believe, be an effective means of counteracting the all-to-prevalent prejudice against Israel held particularly by Europeans:

VIDEO 1: ISRAEL’S CAUSE

I picture a program that begins by asking viewers to participate in a brief thought experiment in which they imagine themselves living in Switzerland.  Let them further imagine that the countries surrounding them-France, Italy, Germany, and Austria-have declared their implacable hatred of Switzerland expressed in a continuous stream of anti-Swiss vitriol issuing from their political leaders, their press, their Internet sites, their media, and, most intensely of all, from their pulpits.  The French premier is quoted as “(provide a quotation from, let’s say, a Hamas source),” the German minister as having wished Switzerland wiped off the face of the earth “(provide a quote from Iran),” Italy wishing everyone of their countrymen dead and Austria…etc.  Now add to their dilemma the fact that Italy, let’s say, is developing nuclear weapons, Germany does nothing to prevent bands within the country from launching continuous rocket attacks on their cities, France encourages terrorist strikes against their fellow civilians, and Austria is busily strengthening its offensive forces.  To make matters worse, these countries have formed a European Union to unite militarily. Thus, from whichever direction the Swiss look across their borders, they see nothing but a sea of faces distorted by hatred and waves of raised arms thrashing about and brandishing weapons.

In a better world they might hope to find safety or, at least an easing of tensions, by appealing to the United Nations.  Unfortunately, in the real world, the overwhelming political and commercial influence of their enemies overrules any chance for impartiality from that source.  Instead the UN insists that the Swiss people deserve at least some of the calumny heaped upon them on account of their past aggressiveness-never mind that the said aggressiveness was, in fact, a defense against the belligerence of the four European powers.  In any case, the only impact that the United Nations exerts on their dilemma is to worsen it by providing a legalistic rationale for the enmity arraigned against them.

What then is left for the Swiss citizens to do other than to depend on their own resources and pluck to defend themselves as best they can in the hope that, some day, sanity will return to their part of the world.

It must be said, of course, that analogies are never perfect representations of the circumstances they are meant to portray and the one I’ve described is no exception.  On the other hand, in one respect at least, the modeling is nearly perfect.  The combined population of Switzerland’s imagined enemies (France, Germany, Italy, and Austria) is about twenty-eight times that of Switzerland itself.  And that same twenty-eight-to-one multiple holds true for the population of Israel’s real enemies (Egypt, Iran, Syria, Jordan, Lebanon, Iraq, and the Palestinian territories) over that of Israel’s vulnerable population.  In a comparison of areas, the preponderance against Israel is even more pronounced.  The countries arrayed against Switzerland in the analogy are 31 times larger; those arrayed against Israel are 161 times her size.

The program could then go on to enumerate the contrast between Arab and Israeli positions on a number of issues.  Examples might include:

• The toleration shown to the Arabs living inside Israel versus the unwillingness of the Palestinians to countenance the presence of a single Jewish community within the borders of their future country.
• The existence of Arab cultural artifacts such as books, music, dance within Israel and the absolute prohibition of anything remotely connected with Judaism in the Arab world
• The willingness of Israel to contemplate a Palestinian state contrasted with the Arab’s refusal to recognize the legitimacy of a Jewish state
• The commitment to democracy in Israel as opposed to the totalitarian nature of the political systems of its adversaries.
• The freedom of expression and religious practice in Israel and their often violent suppression by the Arabs.
• The liberal education of Jewish children versus the hate-filled indoctrination of children in Arab schools
• Israel’s good-faith evacuation of Gaza compared to the Arab’s virulent reaction to this gesture
• Israel’s record of trustworthy official announcements contrasted with the Arab’s habitual disregard for the truth
• Israel’s policy of keeping religious sites open to all faiths compared to Jordan’s refusal to allow Jews access to their holy sites under its administration

Given how horridly Israel is portrayed by the supposedly liberal-minded press in many countries, it may come as something of a shock to their readers upon learning that people are risking their lives not to flee Israel but to enter it.  Therefore, an effective end to the program might be an interview similar to one I heard over the radio with an African who had escaped from Egypt into Israel to enjoy the latter’s greater freedoms and opportunities.  His testimony included his relief that he was fortunate enough to slip across the border safely unlike many less fortunate compatriots he knew who were caught by the Egyptian police, beaten, and imprisoned.

VIDEO 2: ISRAELI ACCOMPLISHMENTS

This program would highlight Israel’s living standards, its educational system, economy, technological achievements, environmental projects, and international trade.

VIDEO 3: A HISTORY LESSON

Since a good part of the Arab’s hatred of Israel is based on a vilification of the country’s historical record, it seems to me that any hoped-for improvement in relations must start with a concerted effort to replace their distorted version with an unbiased one.

To be credible to the Arabs (and, for that matter, the rest of the world) an account of the region’s troubled past would have to be as accurate, impartial, unsentimental, balanced, and non-judgmental as humanely possible.  Ideally, the narration and commentary should originate from both Jewish and Muslim sources.  Rather than attempting to prove the Jews “right,” the video would aim to leave the viewer aware that neither side of the Israeli-Arab conflicts was by any means faultless.  Yes, the Jews fired the first shot in the six-day war, but, yes, the Egyptians initiated the first warlike provocations.  Yes, many Arabs were forced to flee their homes, but, yes, Jews were evicted from Muslim centers all over the Mideast.  Yes, the Jewish settlers moved into areas hitherto occupied by Palestinian Arabs, but, politically, it was not under their control either.  Yes, the Jews fared better in their armed conflicts with the Arabs, but that has been the ordained outcome of practically every confrontation between more technically advanced societies and less advanced ones.   

A summation of the conflicts would begin with an admission that atrocities were committed on both sides and an unvarnished recitation of some of them such as the massacre of the Jews in Hebron and the Israeli use of napalm in the Six-Day War.  It would then go on to document the numbers of war dead in terms of the actual numbers and as expressed in terms of the percentage of each population.  Similarly the financial cost of the wars would be tallied both in the aggregate and as prorated for every Palestinian and every Israeli thus bringing home the extent to which the participants’ standard of living had been sacrificed.

Zooming out from the Middle East, the video, as I imagine it, would conclude by noting that the twentieth century had been a troubled one in many parts of the world.  Millions victimized, millions butchered in wars, millions starved, millions made homeless.  Not surprisingly, this grisly record has left several nations traumatized by their past.  Constant religious, ethnic, and/or social disorder keeps their governments unstable, their economies undercapitalized, and their inhabitants poverty stricken.  Other nations have consciously shaken off the past and focused on the future instead.  By and large,  this fundamental decision has enabled them to do a much better job in attracting investment, creating jobs, and improving the lives of their people.  The question the Arab countries must ask themselves, then, is which of these paths to take as they enter the twenty-first century.  Is their first priority the maintenance of past hatreds or the betterment of the lives of their people?  It’s a choice only they can decide. 

It would be Pollyannaish to assume that a single documentary, no matter how well made or how logical, could alter the thinking of the Arab masses, but it would be equally mistaken to assume that every Arab is closed-minded and totally acceptant of what he hears from his leaders.  Change, if it is to come about at all, can only come from within the Arab community and encouragement of dissenters would be a start in the right direction.

 PROPOSAL 3: STEP-BY-STEP DIPLOMACY

I suggest that should Israel undertake a peace offensive along the lines suggested above, it not attempt to concurrently arrive at a comprehensive peace treaty.  To begin with, there is no point in trying to negotiate with leaders who have no room to negotiate on account of the pressure they face from both terrorist organizations and the rabidly-anti-Semitic street.  Thus attempts to arrive at an agreement under the present circumstances would, I believe, do more harm than good by further aggravating existing disagreements and undermining Israel’s good-faith, incremental peace efforts.

If these suggestions appear too radical to be implemented, then they have served their purpose.  I believe some sort of radical shift in policy is in order.

Widening his gaze, the visitor could not help but be impressed by the building itself. Rising some seven stories from the street and extending well down the block, it would give every indication of fulfilling what must have been the architect’s intention to express solidity, trustworthiness, and power within a context of pleasing proportions and tasteful design.

Were he possessed of x-ray vision, our visitor would gain further confidence that the dignity and sense of purpose conveyed by the building’s exterior extended into its interior.  There he would observe a 3,800-strong, veritable army of people working in  well-lighted, safety-conscious offices and, presumably, all properly compensated ($200,000+ average salary) thanks to their proven competency and union affiliation.  More importantly, from the investor’s standpoint, was that each of these people was working to advance the agency’s objective as promulgated in its mission statement’s opening paragraph:

“The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.”

Presented with this formidable assemblage of flesh and stone standing ready to defend him in time of need, our visitor would have every reason to feel reassured as to his financial future well being.  Were I present on the occasion of the investor’s visit, I would feel obligated to caution him that appearances could be deceiving, and when it came to governmental matters, often are.  To d rive the point home, I would add this historical footnote.  To wit:

During the financial crisis of 2007-2009, the SEC did absolutely nothing to protect you and your fellow investors from Wall Street’s unforgiving machinations.  You would have fared no worse had the imposing edifice before you mysteriously sunk below ground and its site rededicated as a public park.  Indeed, you, as a taxpayer, would have benefited from a reduction in federal expenditures of $913 million per year-the agency’s budget.

This outright contradiction to what his own eyes had clearly observed would no doubt elicit demands from the investor  that I defend my seemingly outrageous defamatory statement.  So there would be nothing for me to do but invite him to join me for a glass of beer at the nearest bar and take up SEC’s violation of its noble mission statements one by one.

FIRST MISSION: PROTECTING INVESTORS

The very first words out of the SEC’s mouth, as it were, declare its inviolable duty to protect investors.  So much for good intentions.  The fact is the self-declared “investor’s advocate” was, for all practical purposes, asleep at the switch during the period in question.

Take the case of Brion Randall.  According to the Wall Street Journal, “Prosecutors alleged he bilked 30 investors out of an estimated $6 million from 2004 through 2009.  They alleged Mr. Randall told investors he was putting their money in an Alliance Bernstein fund that didn’t exist and showed them fake account statements.”  Thus Randall was able to keep on defrauding people despite the fact that in 2002 the Journal ran a front-page article pointing to an earlier set of claims against him in the dot-com era.  Aside from pinning a “crook wanted” poster on SEC’s bulletin board, it is hard to see what more could have been done to stir the agency into action.

In defense of the SEC regarding the$6 million Randall affair, perhaps it is unfair to expect it to detect every trifling sum lifted from investor pocket books.  However, that defense is harder to maintain regarding the $380 million that went missing after passing into the hands of the crooked Marc Dreier.   Yale and Harvard educated, Mr. Dreier was the founder and principal of Dreier L.L.P., a Park Avenue law firm that grew to a 600 employee outfit with offices in five cities.  Taking advantage of his prestigious position, the smooth-talking, elegantly-tailored lawyer was able to bilk a number of Manhattan hedge funds and fashion houses into buying fake promissory notes, presumably issued by a reputable real estate firm, the proceeds of which he simply pocketed.  If nothing else, Dreier’s rapidly expanding law practice and ostentatious life style-three luxurious residences, a 121 foot yacht, and a 30 million dollar art collection-should have come to the attention of someone among SEC’s financial vigilantes.  But these did no more to awaken the agency’s suspicions than did the several rumors of Dreier’s shenanigans filtering into their offices.

But even in the Dreier case, the SEC has an excuse of sorts.  The injured parties were deep-pocketed firms that presumably could withstand their losses and were not, in any case, the inexperienced investors who were supposedly the primary beneficiaries of SEC’s protective shield.  When we come to the Allen Stanford imbroglio, however, SEC has no such excuses.  In this case we are talking real money-give or take, 8 billion-and real people-estimated at fifty thousand-victimized not only by Stanford but, in a very real sense, by SEC itself.  My authority for this rather startling accusation? A 151 page report by none other than the agency’s own inspector general.  It seems that Stanford’s operation was investigated by the SEC in 1997, 1998, 2002, and 2004 at the behest of worried investors, a number of SEC’s own examiners, the Texas State Securities Board, and US Customs.  But in each case suspicions pointing to a Ponzi scheme were squashed by the agency’s own enforcement group, in particular, its head, Spencer Barasch (who, after leaving the agency, performed legal work for, yes indeed, Allen Stanford.)  The tragic aspect of this affair is that SEC had much of the information it needed to indict Standford back in 1997 and, had it acted then, the damage done to the investing public would have been but a fraction of what it actually suffered.  As an ironical twist to the episode, some investors interpreted SEC’s aborted investigations as proof of Stanford’s legitimacy and invested more heavily than before.

The uncontested title of king of the Ponzi schemers belongs, of course, to Bernard Madoff whose $65 billion fraud over a sixteen-year period fleeced thousands of investors including universities, charities, hospitals, foundations, and, of course, wealthy individuals.  But that was by no means Madoff’s only accomplishment.  Equally impressive to my mind was his knack of goading SEC’s incompetence to hitherto unsurpassed levels.  Short of painting the word “guilty” in red letters across his imposing forehead I don’t know what more he could have done to advertise his nefarious undertakings.  Beginning in 1992 the agency received six substantive complaints against Madoff that triggered three investigations and two examinations none of which did anything whatsoever to impede the man’s operations.  Harry Markopolos, an independent financial fraud investigator, practically made it his career to nail Madoff.  According to CNN Money, Markopolos “sent detailed memos, listing dozens of red flags, laying out a road map of instructions for SEC investigators to follow, even listing contacts and phone numbers of Wall Street experts whom he said would confirm his findings. But Markopolos’ whistle-blowing got nowhere.”  It is said that at certain junctures even Madoff himself was amazed that his scheme had not been uncovered.  As a wry footnote to the affair, there was one tangible result of all this investigative activity: the SEC awarded a performance citation to an enforcement staff attorney for her “ability to understand and analyze the complex issues of the Madoff investigation.”

I cannot leave this discussion without acknowledging that in each of these cases the SEC did finally take action.  To the best of my knowledge, every one of the bad guys mentioned is, at the time of this writing, in jail.  But aside from providing impoverished victims a degree of satisfaction, such after-the-fact justice did nothing to compensate them for their financial losses.  The fact remains that the SEC sat on its well-padded behind for year after year while people were being swindled out of their money before it deigned to take action.  SEC’s bold declaration of purpose rightfully deserves to be heralded as “mission unaccomplished.”

SECOND MISSION: FACILITATE MARKETS

Protecting investors is not the SEC’s only declared responsibility.  Recall that the agency’s second mission is to “maintain fair, orderly, and efficient markets”-certainly an important objective on a par with its first.  Unhappily, during the period being discussed, the agency’s failure to accomplish this mission was likewise on a par with its first.  The market action alone tells much of the story.  On October 1, 2007 the Dow Jones Industrial Average stood at 14,067.  Some seventeen months later, by March 2, 2009, the DJIA had declined to 6,627, a drop of over fifty per cent.  A ruthlessly efficient market, perhaps, but hardly the fair and orderly one contemplated by the SEC.

The Great Recession, as it came to be called, cannot reasonably be ascribed to a single cause or a single entity.  But one guiding hand, so to speak, can be identified.  It was none other than our own government.  Consider the following, briefly summarized, succession of interdependent steps:

Step one: The government assiduously crafted an environment conducive to individual home ownership that was believed to be socially beneficial and politically advantageous.  Contributing to this environment were unnaturally low interest rates, an easy money policy, and an outrageously liberal legal system that allowed scofflaws to walk away from their mortgage obligations scot free. 

Step two: Taking advantage of the situation, overzealous, often dishonest, mortgage brokers, in collusion with naïve and/or likewise dishonest home buyers, originated a flood of unsound mortgages.

Step three: With no reason to be overly concerned as to the mortgages’ true worth, the banks bundled them into securities that were then passed on, like hot potatoes, into the welcoming, largely unquestioning, arms of Fannie Mae and Freddie Mac.  These two government-sponsored enterprises (GSE’s) had been set up to facilitate mortgage financing at the lowest possible interest charges and with the fewest barriers to home ownership.  And, sure enough, they undertook these assignments with single-minded enthusiasm undeterred by such considerations as the attendant risks or costs.  As fast as the securitized mortgages came in their front door, the GSE’s shoveled them out the back onto the open market.

Step four: Once in the inventive hands of investment-bank and hedge-fund quants, the bundled mortgages were repackaged into still-larger multi-million dollar collateralized debt obligations (CDO’s) portions of which were awarded triple-A status by the three obliging, government accredited, rating agencies.  Again, at each step up the ladder, risk assessment was made secondary to the profit-making opportunities afforded by these huge financial instruments.

Step five: As discussed below, the SEC either stood by or actually contributed to the loosening of the money supply that enabled the players in the financial institutions to juggle more and more trades, collect more and more fees, and enjoy ever greater bonuses for their not-over-strenuous paper shuffling.

Step six: Given the massive sums involved, the purchasers of the CDO’s­­-insurance companies, local governments, pension funds, and the like-understandably sought to insure their value by entering into credit default swaps with presumably strong counter parties.

Step seven:  As more and more layers of such derivatives piled onto the already shaky financial structure, many trillions of dollars now rode on nothing more tangible than the presumed viability of the participants, none of whom, as it turned out, had anything like the capital required to engage in such a high stakes game.

Step eight: Unbeknownst to but a few, the Wall Street giants had put themselves at the mercy of overextended salaried home owners hanging on to their household budgets by their fingernails.  Then, somewhere in the United States, the unthinkable happened.  John Doe lost his job at the local supermarket, and, finding that he could no longer make his house payments, loaded his belongings into his pickup, gathered his family, turned his house keys over to his bank, and drove away unaware that he had just begun The Great Recession.

The purpose in enumerating these steps is to point out that had the SEC exercised its influence to thwart any one of them, the ascent into riskier and riskier realms would have been interrupted and the final plunge averted.  The commission would, no doubt,  argue that such criticism is based on twenty-twenty hindsight.  Who could have been prescient enough t0 detect the danger before the actual blowup?  Well, the fact is, a number of people actually did.  Unfortunately, none were employed by the SEC.  A small group of short sellers and hedge fund managers clearly perceived what would happen, placed their bets accordingly, and made billions of dollars in the process.  The inability of anyone on SEC’s staff to grasp the situation is all the more embarrassing given the fact that the short sellers were novices in the mortgage industry and had only a fraction of SEC’s resources available to them.  What they did have, and apparently what the SEC lacked, was common sense and the initiative to leave their desks long enough to find out what was happening in the field.

THIRD MISSION: FACILITATE CAPITAL FORMATION

The painful fact is that the SEC failed in its third mission even more spectacularly than it failed its first two.  Far from facilitating the formation of capital during the Great Recession, it significantly contributed to its destruction.  How could this be?  In a word, “leverage.”  In a series of fateful rulings the government provided the means for the banks to dangerously extend themselves in search for ever higher profitability.  First, in 2004, eager to increase their participation in the lucrative flow of mortgages, major investment banks successfully persuaded the SEC to reduce their percentage of reserve capital.  Second, the government ruled that the banks’ holdings of the GSE’s AA and AAA mortgage bonds could be considered equivalent to cash in the calculation of their capital requirements.  It was to the banks’ benefit, therefore, to stuff their vaults with these interest-bearing notes backed by the good faith of the US, use them to borrow at near zero percent interest, and put the borrowed capital to work earning more money.  Third, the banks were allowed to carry financials on their books at face value as opposed to their more deserved market value.  Fourth, the SECs supervision was lax.  It did not look into off-balance sheet transactions, allowed encumbered collateral to be treated as liquid, and turned a blind eye toward the bank’s “repos”-the practice of concealing substantial chunks of indebtedness at the end of each quarter in order to dress up their financial statements.  And, fifth, perhaps most egregious of all, government’s regulators allowed the banks to police their own risk management, for all practical purposes,           ‘ even when it was abundantly clear the firms were beginning to get into trouble-a relationship notoriously known as “regulatory capture.”

As a result of these accommodative policies, banks and other financial institutions extended themselves further and further.  At the end, Bear Stearns, for example, was in hock for $33 for every one dollar of net capital it had on hand as equity.  The motivation of bank executives to engage in such risky behavior is not hard to discern.  As lending increased, fees multiplied, profits soared, and bonuses liberalized.  From 2002 to 2010, one of these top dogs, Lloyd Blankfein, Chairman and CEO of Goldman Sachs, received $111.6 million in salary and cash bonuses.

When the entire fragile financial structure collapsed, one overleveraged firm after another ran into trouble meeting its obligations and, understandably, grew wary of the ability of its fellow institutions to meet theirs.  Losses escalated, major financial institutions either went bankrupt or were taken over at fire sale prices, interbank transactions commanded much higher costs, the derivative market was thrown in disarray, and credit froze.  Six trillion dollars of housing wealth and even more in stock wealth disappeared.  Eventually, the federal government was forced to massively intervene to hold things together.  Emergency measures included the Troubled Asset Relief Program designed to throw banks a life saver; an $862 billion stimulus package; and requiring the Federal Reserve to adopt the role of guarantor for vast amounts of commercial paper of dubious worth.

As noted above, throughout this sorry episode SEC either acted unhelpfully or simply retreated to the sidelines.  What is certain is that it certainly did not facilitate the formation of capital.  And, true to form, it did not spring into action until a full year after the crash when it launched fifty different investigations into the financial industry to figure out what happened and to look for some bad guys to blame.

AFTERTHOUGHTS:

The question naturally arises, what were the agency’s stalwart defenders of the fair market doing during the lead up to the crash?  Where were the Divisions of Investment  Management; Trading and Markets; Risk, Strategy, and Financial Innovation; and, most critical of all, Enforcement?

We can account for the inaction of 33 members of its staff.  By the agency’s own admission, they were too fixated on their computer screens alternative viewing to be distracted by financial matters.  But what of the 3,770 or so other members not so engaged?  It would seem that an administration lax enough to tolerate the voyeurism  of 33 people would positively welcome the countless more normal ways employees invent to avoid working: the two-hour lunch breaks, multiple sick days, shopping on company time, socializing around the water cooler, and so on.  And when they did spend time at their desks, how much of it was spent on internal housekeeping, preparing self-congratulatory performance reports, plumping for an increase in the next appropriation from Congress, feuding with other federal agencies, internal politicking, and other bureaucratic enterprises?  For that matter, were managers focused on the public interest or landing a job with the financial firms they were supposedly regulating?  One can’t help but wonder about a governmental culture that enabled three heads of SEC in recent years to enjoy a threefold boost in income when they left the agency, skipped through the revolving door,  and hunkered down with the opposition.  More recently, Ms. Elizabeth King, formerly SEC’s associate director for market supervision, was hired by Getco LLC, a Chicago-based high-frequency trading firm, at, one would assume, an increase in salary commensurate with her new responsibilities.

One would think that having utterly failed to live up to its own mission statement at a time when its involvement was sorely needed, the “three strikes you’re out” rule would have been called on the SEC.  But we are talking government, not baseball.  The financial reform bill moving through Congress is expected to pass and to be signed by the President who has expressed satisfaction in its provisions.  As a major player in the government’s plans, the SEC has not been ignored in the measure.  No, indeed.  Its authority is being expanded along with its appropriation-an indication, obviously, of Congress’s confidence in its competence.  A snide insinuation in this connection has circulated claiming that the SEC’s increase in funding will be partially devoted to replacing its present monitors with larger units outfitted with 3-D projection.  Having seen no facts to back up this allegation, I can only conclude that it is entirely apocryphal-an invention of some embittered detractor.

Personally, I would prefer that the funding for the SEC e used to transform its building at 100 F Street into one that would serve a more useful public service.  More specifically, I suggest that its present occupants be asked to leave, manikins installed in their place, and the building then reopened in its new incarnation: The Museum of Legislative Failure.  As I imagine it, a faint blue haze would permeate its spaces to remind visitors, upon entering, of the prevailing ennui.  Through the haze, the visitors would see row upon row of desks occupied by bored, bureaucratic hacks alternating with row upon row of stuffed file cabinets in which the fruits of their industry were stored, for the most part never to be seen again.  Another crowd-pleasing attraction would be colorful, informative panels illustrating the tangle of ill-advised, often conflicting, politically-motivated, accumulation of congressional measures under which these workers labored.  Thousands of empty cubicles and offices would emphasize the vast wastage of time and money committed on these premises.  And tactfully edited computer terminal displays would at least hint that not all of the workers’ time was consumed by financial matters.

Just before leaving the museum, visitors would be led into a large hall dominated by a floor-to-ceiling wall map of Washington DC on which the government’s other major horror stories would be located and numbered.  (The Wall Street Journal article posted in this issue of the quarterly tells of 115 separate regulatory agencies involved in financial services) A display screen and, below it, a panel of buttons corresponding to each of the sites, would make it possible for visitors to inform themselves of the offending agency’s identity, its own regulatory foibles and its cost to the taxpayer.

REGULATION ON POSTCAPIA

Faithful readers of this blog may wonder how regulatory matters are handled on Postcapia, a utopian planet I am known to visit from time to time.  My guess is, however, they already know enough of this planet’s ethos to have deduced the answer for themselves.  In any case, for old and new readers alike, let me set the matter straight.  On Postcapia the government has turned the job over to nonpartisan system engineers-impartial people who know how to analyze problems holistically and institute workable solutions.  Other professionals-even lawyers on rare occasions­-are called in for their expertise when needed.

Actually, the word “regulation” is seldom heard among these engineers; when addressing situations in need of control, they talk exclusively of feedback mechanisms.  The word “feedback” is often used rather loosely on earth, but on Postcapia it is always defined as a mathematically-rigorous circulatory system that constantly monitors the flow of a particular dataset, compares those data with present standards, and, when deviations are observed, automatically initiates action to bring the data back into compliance.

The virtues of Postcapia’s feedback mechanisms compared to our regulations are many : they operate in real time (not after the fact); they apply their remedies incrementally (not disruptively); they focus on outcomes (as opposed to intrusive, often outdated, diktats); and, since their solutions are applied automatically, their action is timely and effective (not delayed while the problem worsens and perhaps gets out of hand)  This is not to say that every feedback installation on Postcapia succeeds.  On the other hand, they are all equipped with a self-destruct capability that is triggered were they to run out of bounds. 

During my short visit, I couldn’t possibly learn about all of the applications of feedback mechanisms that the Postcapians relied upon, but, to give the reader some idea of their prevalence, I did jot down a few that were pointed out to me.

• Controling inflation
• Providing shock absorbers to cushion stock market fluctuations
• Limiting the buildup of derivatives
• Determining interest rates
• Stabilizing currency exchange rates
• Smoothing out residential and commercial construction activity
• Management of the money supply
• Ensure proper credit flows to both large and small organizations
• Allocating resources for research and development
• Monitoring bank liquidity

Even this abbreviated list gives some inkling of the possibilities that could arise were we to emulate Postcapia’s enlightened approach.  This may seem a farfetched notion, but sooner or later, the government will have to come to grips with the twenty-first century and, keeping in mind SEC’s history, our regulatory policies might be a good place to start.

The Gulf Spill, the Financial Crisis and Government Failure

Both Republicans and Democrats fail to see the limits of centralized regulation in a modern market economy.

By GERALD P. O’DRISCOLL JR.

The Gulf oil spill and the global financial crisis both demonstrate the failings of big government. Partisan politics obscures the linkage, with the consequence that each political party repeats the mistakes of the other as its turn to govern arrives.

First, consider the oil spill. BP and its contractors are surely responsible for the accident. They may also be responsible for a poor response. The nature and scope of legal culpability is yet to be determined. What is the government’s role? Offshore drilling is a dangerous activity with potential undesirable consequences now actualized. For this reason, as we have learned, it is heavily regulated. The agency directly responsible for regulating the activity is the Minerals Management Service (MMS) of the Department of the Interior.

Government regulation is intended to protect the public interest against bad or irresponsible behavior by private parties. In the case of offshore drilling, the federal government has assumed the role of solving a collective action problem. Potentially all Americans benefit from the drilling, but those living in coastal areas suffer disproportionate harm from mishaps. The government theoretically negotiates on their behalf and establishes rules to protect them.

Obviously, regulation failed. By all accounts, MMS operated as a rubber stamp for BP. It is a striking example of regulatory capture: Agencies tasked with protecting the public interest come to identify with the regulated industry and protect its interests against that of the public. The result: Government fails to protect the public. That conclusion is precisely the same for the financial services industry.

Financial services have long been subject to detailed regulation by multiple agencies. In his book on the financial crisis, “Jimmy Stewart is Dead,” Boston University Professor Laurence Kotlikoff counts over 115 regulatory agencies for financial services. If more hands in the pot helped, financial services would be in fine shape. Few believe such is the case.

Advocates of heavy regulation promise that risky behavior by banks can be controlled and limited by regulators. There are two major reasons such efforts fail. I have already discussed the first: regulatory capture.

The second source of regulatory failure is the knowledge problem identified by Nobel Laureate Friedrich Hayek. The knowledge required by regulators is dispersed throughout the industry and broader economy. For regulation to work, that dispersed knowledge must be centralized in the regulatory agency. To successfully accomplish this requires central planning of the industry, if not the economy. But the local knowledge of specific circumstances of time and place cannot be aggregated in one mind or agency. We know that is impossible, and that impossibility was the reason for the collapse of the Soviet Empire and the transformation of the Chinese economy.

Regulatory practice represents islands of central planning in otherwise decentralized market economies. If we add back in the problem of regulatory capture, then we get industries coddled and protected by government. When business and politics become intertwined we move from market economies to crony capitalism.

What is the missed lesson from all this? When President George W. Bush had his Katrina moment, the federal government’s bumbling response was blamed on him, on the Republicans, and on conservatives. Now it is President Obama’s turn. His administration’s faltering response to the disaster in the Gulf is attributed to his personal failings, staff ineptitude, communication failures, etc. And, of course, the two administrations have shared responsibility for the poor handling of the financial crisis.

A big-government conservative administration failed in crisis, as has a big-government liberal administration. The regulatory state did not prevent excessive risk taking whether in financial services, nor perhaps in offshore oil drilling. Government response to crises once they occur is slow and inept. All this is not because either Republicans or Democrats are in power, but because big government doesn’t work. It can’t deliver on its promises. Big government overpromises and underdelivers. In reaching to do more, big government accomplishes less. That is not an ideological statement, but an empirical observation.

In the case of financial services, virtually all the proposed regulatory reform offers more of the same. Additional regulations will be added to existing ones without addressing why existing ones failed to prevent the crisis. The same process will likely happen with respect to offshore drilling.

Einstein famously defined insanity as the belief that, if we repeatedly do the same thing, we will eventually get a different result. The response to the financial crisis, as to others, is policy insanity.

University of Chicago law professor Richard Epstein has observed that we need simple rules for a complex world. The complexity of rules is self-defeating, because that complexity requires more knowledge than can be acquired. Brazil has a simple rule for directors of failed banks: They are personally liable. That concentrates the mind of directors on reining in risk-taking by management more effectively than would creating a systemic-risk regulator.

The Obama administration and Congress propose more of the same failed approach to regulation. Instead they should heed Hayek, who observed that “the curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

Mr. O’Driscoll is a senior fellow at the Cato Institute. He was formerly vice president at the Federal Reserve Bank of Dallas and later a vice president at Citigroup.

HONG KONG: The 3 km-long, pedestrian nature walk around the rim of “The Peak,” the city’s high point, was posted, understandably enough, with signs admonishing dog owners to pick up their pet’s leavings.  Similar postings in the US, I recalled, were but carelessly observed and so my steps ahead were guarded.  Surprisingly, my traverse of the scenic path found not a single violation despite the presence of a goodly number of four-legged potential felons.  With time to puzzle over this extraordinary display of diligence, it occurred to me that if Chinese dogs were as proportionally literate compared to American dogs as Chinese schoolchildren were to American, they deciphered the signs for themselves and accordingly exercised the necessary self control.

HONG KONG: I know it’s another trivial matter, but I could not help noticing that the street markings here were bright and spanking white-a far cry from the faded, often indiscernible, markings on my home town’s thoroughfares.  It was as though every night street crews rushed out to repaint afresh every last lane-divider, directional arrow, crossing hash marks, etc. in the city.  Visible evidence, it seemed to me, of a determination to do things well.

HONG KONG CENTRAL:  I would challenge anyone to erect an outhouse here without first having to make room by tearing down a skyscraper.  What with the columns of workers rushing in, out, and around of all these buildings, the city left me with the image of one, huge, smoothly-functioning, concrete manhill.

SHANGHAI:  Our handsome, late-twenties, likeable guide on the bus tour seemed generally contented with his lot.  He did admit, however, to a longing for an apartment of his own.  But thanks to skyrocketing real estate prices-they had increased three-fold in the last five years-and the thirty-percent down payment required, this was out of reach for the present and, thus, marriage to his girl friend would have to be postponed.  Although he would have had a legitimate reason for doing do, he tactfully avoided mentioning the disparity between his living standard and ours-my guess being that his living area was scarcely larger than our staterooms on board the ship.  The circumstances surrounding our relative affluence struck me as more than a little incongruous, for he was, in a real sense, our creditor and we, his debtors.  More precisely, every American man, woman, and child, on the average, owed his country $2,838 (based on China’s holdings of US Treasury Securities as of February, 2010)  Thus it would have been altogether fitting were each of us sightseers to have wiped out our individual imbalance by handing him that sum as we left the bus.  Such an openhearted gesture would have provided a practical example of our country’s unquestioned creditworthiness, but, alas, none of us volunteered to do so and, as a result, I’m afraid, his tips were considerably less.

Although, like most Shanghaiese, our guide had not officially joined the Communist Party, he had no quarrel with its administration of China’s affairs.  After all, he contended, there was no point in needlessly debating the validity of the leadership’s plans when no one could accurately foretell the future in any case.  The point was to continue to unite behind the party’s policies and maintain the progress already achieved.  Less there be any doubt in this regard, he proudly called our attention to the Pudong district across the river-an imposing cluster of skyscrapers that now served as the city’s financial center and home for some 1.5 million people.  Twenty years ago, the land Pudong now occupies was nothing but vacant farmland.  That so much could be planned and built in so short a time gave indisputable evidence that, when they put their minds to it, these people get things done.  One can only hope that what they put their minds to is salutary to the world’s health. 

BEIJING: The bus trip from the port of Xingang to the capital took two hours-more time to contemplate the landscape than I might have wished.  The flat terrain was uninteresting and the greyish, damp weather did nothing to enhance it.  Nor did the unbroken stream of slowly rumbling trucks that seemed to barely tolerate the passenger cars they outnumbered three to one.  Roadway lined almost continuously with industrial parks stretching into the distance on both sides.  Interspersed among these areas were apartment blocks of, say, twenty-four, domino-shaped, orderly buildings each some twenty-thirty stories high.  Billboards, planted along the entire length of the roadway, were evenly spaced about one-hundred yards apart.  Notable for their uniform size and construction, they were composed of a single, ten-inch diameter, steel pole twenty-five-foot high upon which two large, lighted billboards were sturdily affixed-one sign facing traffic the other, away.  Stations of the Cross, as it were, mutely testifying to the country’s commitment to the compromise between laissez-faire commerce and socialist control.  More decoratively, miles of newly-planted tree saplings, four to six rows deep, were destined, one assumed, to soften the scene with greenery.  Whereas it was by no means the most dismal stretch of industrial landscape I’ve been down elsewhere, it felt somehow as one of the more humorless.

BEIJING:  On a tour through the Forbidden City, our instructor’s elaboration on the history of the resident eunuchs seemed disproportionate given the magnificence of the surroundings and the wealth of more edifying information they should have inspired.  Most probably he found the subject a crowd-pleaser and, part showman that he was, stuck with it.  And, like everyone else, I attentively lapped up the details.  One particularly touching note stuck in my mind.  After fifty years of faithful-and undoubtedly scandal-free, service-a eunuch was honored with a retirement ceremony at which time a jar containing his own carefully-preserved organ was presented to him for proud display, one supposes, on his fireplace mantle.

BEIJING:  To cap off the ship’s visit to China, we passengers were to hear a chamber music concert performed by a group from New York’s Lincoln Center who were flying in expressly for the one-night occasion.  It was not to be.  Their travel agent had reasoned that the Chinese custom officials would surely not require the musicians to hold visas for a single-night’s performance and immediate return to the US thereafter.  He was wrong, of course.  A New Yorker, of all people, should have known never to underestimate the officiousness of petty authorities.  The musicians were abruptly turned around and sent home at the Beijing airport to endure yet another fourteen-hour plane ride.  To compensate for our deprivation, we passengers ordered a mixed drink and descended upon the ship’s accomplished pianist for our evening’s entertainment.            

KOBE:  Endeavoring to assure myself that I was on the right train platform, I asked a pair of middle-aged women if this was indeed the place to catch the train to Kyoto.  They understood me well enough to affirm my assumption and explain that they were headed there as well.  On board the train, their being seated ahead of me did not prevent them from looking back at each intermediate stop to ensure that I did not get off prematurely.  Then, as the train approached Kyoto, they alerted me to the need to disembark.  Once this clearly incompetent American was safely deposited where he presumably wanted to be, they released me from under their wing, and waved energetic goodbye smiles as they sauntered off chatting amiably.    

KYOTO:  Nothing to the left or right in the extensive railroad station gave me any hint as to which direction lay the taxi stand I sought.  However, ahead was an imposing flight of stairs-three long flights actually with two landings-upon which a number of people were scurrying up and down.  With no better evidence than this casual observation, I stupidly assumed that it represented the way to a street entrance at which I would find my needed transportation.  Manfully, I took hold of my two suitcases and trudged upward only to find that the stairs were, in fact, a way out-a way out, that is, for those who owned cars.  The reward for my trouble was the discovery of the entrance to the station’s parking garage.  Retreating down the stairs was a worrisome prospect for a man of my age used to holding onto a banister as I descended.  So, opting on the side of caution, I left one suitcase at the head of the stairs and went down to the next landing with the other, intending, of course, to then rescue the temporarily abandoned case and, by repeating the procedure two more times, eventually make it back to where I had started.  I had no sooner embarked on this plan when a young couple came to my side gesturing that they were there to help.  Running up the stair, the man retrieved my suitcase, ran back down to grab the other, and with both cases in hand led me down the length of the station to my destination-his companion heading off in the opposite direction.  I had obviously obliged him to go out of his way and taken up his time, not to mention his energy, for no better purpose than to help an elderly, obviously confused, foreigner.  After an exchange of mutually incomprehensible pleasantries, we shook hands and he was off.  My first day’s impression of Japan was a favorable one.

KYOTO:  Arriving at my hotel before its normal check-in time, I lunched at its coffee shop and was somewhat taken aback when, afterwards, I converted my yen-denominated check to US dollars.  I was relieved, therefore, when my room number of 1825 was not on the eighteenth floor but on the eighth.  Apparently, I concluded, for some idiosyncrasy of its own, the hotel made a practice of adding a superfluous digit to the left of all the numbers it presented its guests.  What pranksters these Japanese!  And the guide books hadn’t even mentioned it.  At any rate, once this adjustment was taken into account, my lunch bill seemed more or less reasonable given the excellence of the restaurant’s food and service.  Alas, as the reader might have already guessed, later dealings with the hotel proved my supposition unduly optimistic.

KYOTO:  Streets in the older section of town ran helter-skelter until ramming abruptly into the sheer walls of the adjoining mountain.  The streets were jam-packed with buildings of every sort pressed wall to wall-some of them with frontages that could have been no wider than fifteen feet.  There was no logical explanation for so dense a landscape, it seemed to me, other than at some time in the distant past the town consisted of a normal arrangement of livable spaces when some huge seismic event caused the mountain to shift inward thereby compressing, accordion like, everything in its path. 

KYOTO:  Glimpses of Japanese culture along a particularly pleasant, personally-guided walk in the western outskirts of the city reached by subway and local train:

A small, confined schoolyard in which two rows of uniformed schoolchildren stood quietly at attention while listening to their teacher’s instructions.  Above them wafted four or five kites tethered to a mast.  The kites were in the form of carp-a fish known for its determination to swim upstream in the face of daunting obstacles.  It seemed that in Japan children are taught that self-esteem had to be earned as opposed to something with which one was automatically endowed.

A small plot of land spilling over with miniaturized shrines served as a cemetery of sorts where surviving kin could pay homage to their ancestors, the bodies of whom had been cremated.  Yet another practical Japanese solution to their perennial shortage of space. 

A contemplative garden renowned for its designer who had the uncanny ability to carefully study each prominent stone prior its placement and then, in one bold stroke, directed it to be planted in such orientation as to be in perfect harmony with its surroundings-the same sort of keen expertise, one imagined, as that of calligrapher who had mastered a perfect brushstroke.

A small courtyard in front of one of the more modest Buddhist temples where the resident priest was kind enough to patiently and earnestly explain, with the aid of my guide-interpreter, a few tenets of his faith.  No amount of book learning would have been nearly as comprehensible as his brief lecture.    

A solitary, open-air stand perched high up on one of the hillside walkways on temple land.  It was manned by an elderly retired merchant who daily trudged up the hill to offer an assortment of trinkets to passersby.  After we enjoyed a cup of his tea, he opened his guest book for me to sign and plied me with questions.  According to my guide, who knew the gregarious shop owner well, his objective was not the stall’s meager profits, but the companionship it allowed and the ability to serve, as it were, as the revered ground’s unofficial host.

Reaching a high point on the path, we were rewarded with a beautiful view of the domineering mountains and evidence everywhere of the town’s effort to make peace with them.  My penultimate day in Japan, I decided happily, had turned out to be as favorable as the first.  

FLIGHT FROM OSAKA TO SAN FRANCISCO:  Sat next to an American gentleman who had married a Japanese woman.  By now, he claimed to speak Japanese intelligibly but admitted he still could not read it.  For years the couple had divided their lives more or less evenly between their respective countries, but this trip he was going alone for the purpose of selling their home in Arizona so that, thereafter, they could live exclusively in Kobe.  He seemed content with the prospect.

Our instructors began by summarizing the knowledge gained by generations of Luxan explorers on the life cycle of planets that now contained, or once had contained, intelligent life forms.  Sadly, it turned out, there were far more of the latter.  It seemed that wherever one looked in the galaxy, nature had little tolerance for intelligence.  On planet after planet, higher orders blossomed temporarily only to die out shortly thereafter or to retrogress to such an extent that they could no longer be considered functional.

There being no apparent means to alter the course that nature herself had set, the entrepreneurial Luxanders steeled themselves to these harsh realities and set about making the best of what they found.  And what they found was profit.  Whereas the planets on which intelligence had taken permanent root were a small minority of the total, there were enough of them to provide a ready marketplace for Luxenben’s superior goods and services.  In time, then, a number of Luxan trading companies were formed to exploit this business opportunity and, in the early days of space travel, these firms were, on the whole, successful.

But as in all commercial ventures, there were difficulties along the way.  Whereas there was no problem in exporting their own merchandise overseas, as it were, the Luxan companies had difficulty in extracting comparable worth in exchange.  At first, the imported native handicrafts and homespun products proved merchantable, but, once the novelty of these primitive items wore off, their sales fell and a trade balance could no longer be maintained.  Looking ahead, the trading companies could foresee the prospect of returning to their home ports with near-empty bottoms and nothing more to show for their efforts than mounting paper credits of questionable worth.

Casting about for alternatives, the trading companies discovered that their overseas customers had one asset that was capable of producing a steady stream of income back home.  The Luxan populace, it seemed, was fascinated by biological exotica from foreign planets and was more than willing to pay for the privilege of viewing it.  To satisfy this demand, returning spacecraft took on a Noah’s Ark character-their holds bulging with every life form imaginable and, indeed, a few that weren’t.  And thus were born a number of commercial zoological gardens built and operated by the various trading companies.

Having provided this general background, our orientation instructors narrowed their focus to the particular zoo we inhabited and its immediate surrounds.  Alone among the trading companies, Space Ventures, Inc., had the ambition and the wherewithal to develop a general recreational venue called Ventureland, of which our zoo was only a part.  The vast complex, some seven square miles in extent, sprawled over several thou­sand acres of rolling countryside and contained interpretive centers, playgrounds, viewing stands, gift shops, exhibit halls, amusement areas, restaurants of every description, miniature train rides, and the like.  In addition to these expected attractions, Ventureland boasted museums of natural history, art, and science; a planetarium; an extensive library; and a performance hall-cultural facilities one would not normally associate with a privately owned enterprise.  Yet despite all this development the Ventureland site was large enough to allow much of the land to be left in a wild state.  For hikers and picnickers there were large stretches of woodland interspersed with well-tended clearings interconnected by footpaths through the trees.  And for kayakers there was a network of lagoons and small lakes that snaked through the complex and contributed much to its scenic splendor.

However varied were Ventureland’s offerings, the zoo remained its chief attraction, so it hardly need be added that SVI (the acronym for Space Ventures, Inc.) spirited away every animal it could get its hands on from all the planets that its spaceships visited.  An ancillary benefit of this effort was that Ventureland’s zoo grew into such a rich depository of fauna that it became a valuable resource for Luxenben’s scientific community.  Responding to this interest, SVI created its own well-funded Research Institute as a semi-autonomous affiliate and provided it with an enclosed campus on Ventureland grounds.  And it was this facility that sponsored the exploratory mission to Earth that brought Neuman and me here.

A yet narrower view of our circumstances led our instructors to a discussion of Semiland, the area within the zoological garden where specimens possessed of self awareness were domiciled.  (The name “Semiland” derived obviously from the expression “Semi-intelligents”-or, more often, simply “Semis”-applied to its residents by our hosts for reasons I’ll elaborate on later.  And, understandably enough, we Semis responded by nicknaming our Luxan captors, “Fulls.”)  Disbursed throughout Semiland were several island-like compounds each devoted to a par­ticu­lar group of species in ac­cordance with the zoo’s classification system that factored in both a species’ absolute brain size and its relation to body weight.  As I have mentioned, the Upsem Dorm, to which I was assigned after evaluation, sequestered specimens of the highest order.  Mind you, I take no personal credit for this ranking.  Whatever credit is due belongs to the human species generally in which the reader is entitled to take as much pride as myself.

Of course, much more was covered in our two-month orientation course than what I’ve outlined above.  Once they had furnished this background material, our instructors moved on to provide us with the practical knowledge we would need to fit in with the zoo community.  They explained the organization of the zoo’s administration, the layout of Ventureland’s grounds, its transportation and communication systems, the resources available to us to further our education, the rules of conduct expected of us, and so on.  At the end of the course, a series of field trips gave us a chance to relate our classroom studies to the world outside.

   *    *    *

Graduation from orientation conferred upon the top rank of students the status of “trusty,” and I was happy to be among this small number, for the designation conferred the right of free movement within Ventureland’s perimeter.  Why this privilege could not be granted automatically to every Semi-intelligent should be clear from the fact that one of Semiland’s compounds contained the Carnivore House.  Nor was savagery the only reason for disqualification; questionable levels of intelligence and/or morality were not uncommon among the disparate Semi population.  Most newcomers had to repeat the orientation program a second or third time before making the grade and many, I am afraid, never made it at all.

Naturally I took satisfaction in my achievement, but the fact is I could not have done it without help.  To begin with, credit must go to Matilda.  The good start with which our acquaintanceship had begun blossomed over the succeeding weeks into genuine friendship.  Her­self a Semi-intelligent and longtime resident of our compound, she went beyond her nominal house-mother duties by tutoring me in a number of areas in which the testing authorities demanded proficiency.  As the reader might imagine, these included social skills, personal hygiene, and obedience training.

Indeed Matty provided more than a strictly educational boost during those early days.  By taking me under her wing, as it were, she did much to assuage my confusion when so much was new and bewildering.  Her sensitivity to my feelings was all the more surprising in that she had never been exposed to such trauma herself, having lived her entire life within Luxenben’s shel­tering ambiance.  The only explanation, of course, was that she was a particularly caring creature at­tuned to any sort of difficulty experienced by the often bewildered “greenhorns” who sought her solicitude.  (Once, out of misplaced chauvin­ism, I pitied her for having known neither real parents nor homeland.  Her plucky response was that she considered herself lucky rather than deprived.  It turned out that shortly after her egg’s op­portune deliverance by Luxan explorers, her native planet had been totally obliterated by in­ternecine warfare. “Better over here than over easy,” she concluded with inarguable logic.)

Enjoying a very large measure of personal freedom themselves, our orientation instructors were pleased to extend it to those of their Semi charges they deemed deserving.  Practical as well as compas­sionate motives encouraged this attitude; simple good husbandry required that the specimens exer­cise, and it was obviously easier for the keepers when their wards took it upon themselves.  Not to mention the concurrent contribution to a Semi’s mental health when he was free to move about on his own.  Furthermore, the very presence of diverse species of trusties wandering about the park grounds was a sure crowd pleaser for the throngs of Luxan sightseers who, out of common courtesy, would gently restrain the pointing fingers of their excited offspring as we walked by.

On the grounds of full disclosure, I cannot omit my own contribution toward attaining trusty status.  Even had I not mentioned it, the reader would have assumed that various aptitude tests were involved and I can only admit hav­ing fully sat­is­fied my hosts in this re­gard-in fact scoring top percentile ratings in the categories of adaptability and assimi­lation.  I had always considered these traits to be my strong suits on Earth and had only to apply them to my new surroundings.

Finally, my promotion to trustyship was aided by fortunate timing.  Founder’s Day-the most important event on the Luxan calendar-was in the offing.  The holiday celebrated the Herculean efforts of its protagonist in forging together the planet’s hitherto competing nations into the present day, globe-encircling Planet/State of Luxenben.  Understandably, then, Luxanders regarded it as the equivalent of the Fourth of July, Memorial Day, and New Year’s rolled into one.  And, as might be imagined, they expressed their patriotism enthusiastically with the performance of pageants, festivities of all kinds, and extravagant displays of fireworks.

As their contribution to the holiday spirit, our instructors made every al­lowance to advance those of us nearing qualification so that we might participate in the festivities as free agents rather than as anonymous inmates granted a supervised outing for the occasion.  Apparently our conscientious instructors felt that, as newly-freed trusties, we would much better appreciate the freeing of the Luxan populace from the yoke of xenophobia.  Thus, in a manner reminiscent of early parole granted Earthly prisoners at Christmas time, those of us students who were qualified were assembled only two days before the holiday and awarded our promotions.

*    *    *

Immediately after the award ceremony, I sought out Matilda and sug­gested that we observe the coming holiday by enjoying a picnic in the park and attending the Founder’s Day Pageant together on the day following.  She readily agreed, saying that she knew a fine spot for our outing well within walking distance of the Upsem Dorm and promised to take care of procuring a picnic lunch from the commis­sary.  And as far as the pageant was concerned, the patriotic creature wouldn’t dream of missing it despite having seen it many times before.

The very next morning, I awoke to the sound of knocking on the door to my dor­mitory suite and re­luc­tantly quit the comfort of my bed to answer it.

There, in particularly fine feather, stood Matilda.

“Room ser­vice,” she announced before adding signifi­cantly, “Don’t worry about paying.  They put it on my bill.”  So saying, she extended a picnic lunch bag heavy and aromatic with life-sustaining delicatessen.

The dear old girl’s features were so rigidly assembled that, at any given moment, one could, with equal confidence, imagine her smiling or frowning-a char­acteristic that obvi­ously imposed on her listeners an entirely subjective inter­preta­tion of her more enig­matic remarks.  In this case, how­ever, there was no question of her good humor; indeed, it was clear that she had gone out of her way to cajole the commissary proprietor into opening his counter earlier than usual in order to secure, not just any lunch, but one she knew to be my favorite.  It touched me to see that the bag contained a couple of toothsome deviled eggs which, when one considered the implications, must have involved no lit­tle squeamishness on her part.

“You have found a way to my heart,” I gratefully ac­know­ledged.

“Such talk from a married man,” she twittered and promptly set about tidying my room as I readied myself for the day’s outing.

Under Matilda’s direction, we set forth on foot along a trail paralleling the eastern edge of the zoo before branching off to the right into a wooded area.

During our walk, I related to her a humiliating in­ci­dent that had happened to me the previous afternoon shortly after the award ceremony.  On my first unaccompanied outing I hesitated to go beyond Semiland’s familiar limits and so chose to visit the Grunt House-an exhibition of creatures who were nominally Semis but of the lowest order of intelligence within that classification.  In part, I wanted to satisfy my curiosity about the specimens themselves and, in part, to investigate the troubling rumors surrounding their compound as a so-called “dumping ground” for Research’s failed experimental specimens.

On my brief tour of the place-at least of those areas open to visitors-I saw no creature that gave me reason to feel it was being interned there unreasonably.  Indeed, I was so taken aback by the appearance of some of nature’s practical jokes, as it were, that I felt compelled to sit down on a leather-covered settee to collect myself.   As luck would have it, no sooner than I had done so, I was rudely helped to my feet by a churlish park po­liceman.  Apparently, what I had mistaken for a settee was, in fact, a live ex­hibit.

“You could just tell he was a specist, damn it,” I com­plained to Matty.  “I’d bet anything that if a Full accidentally made a mistake like that, the same cop would have just po­litely moved him along.  Anyway, it’s stu­pid to let a piece of furniture plod around on its own.  They ought to either cage it or slipcover it-one or the other.”

“Oh, you mustn’t tweed the animals,” said Matilda ab­sent­mindedly while arching her neck and pretending to con­centrate on some distant point.  Then return­ing her atten­tion to my wounded feelings, she admitted that she, herself, had been insulted from time to time by unthinking Luxanders.

“You’d think that being as smart as they are, they’d be just as advanced emotionally, but they’re not,” she said.  “So you might as well get used to it.  Once in a while you’re going to run into prejudice and the only thing you can do about it is do what I do.  Let it run like water off your back.”

“I’m not equipped for it as well as you are,” I muttered.

“You don’t have to be,” she admonished.  “There aren’t many hardcore anti-Semis around.  A few bad apples, yeah, but for the most part, Fulls are surprisingly tolerant.”

“Tolerant, or do they just take pity on the handicapped?”

“Probably some of both, I guess.  Doesn’t make any difference to me.”

I grudgingly agreed and assured the old girl I would not let my memories of the Grunt House incident spoil my day.

*    *    *

Matty’s lakeside destination with its grassy banks and cypressed shore­line made for as picturesque a picnic area as one could wish.  We oc­cupied our morning pleasantly with a relaxed game of Frisbee during which Matty could not help extemporizing countless variations.  After this unaccus­tomed ac­tivity, I dropped lazily on the grass to regain my breath while Matilda, with wind to spare, hopped down to the lake and began wading purposefully along its shore.  From my van­tage I could not help but admire her long legs as she splashed about with her back to me.

In one of our first conversations, Matty told me that, although she had never seen her native planet, it had been described to her as being composed of nothing but wetlands-a disclosure, I must say, that came as no surprise, for one glance at her allowed no other deduction.  Seemingly un­conscious of my attention, she appeared not the least embarrassed when she swung around to show me her first catch-a flapping bluegill about four inches long-and found my eyes already on her.

“Beginner’s luck,” I shouted as she swallowed the fish whole and returned to her sport.

In that Matilda had seen fit to begin her meal, I saw no reason to further delay mine, so, taking a chopped liver sandwich in hand, I contentedly surveyed the landscape as I ate. Then with luncheon accomplished, the opportunity for a bit of a rest on cool grass under a couple of gently warming suns proved irresistible.

Thanks to the intensity of orientation course I had just completed, this was the first chance I had since my arrival to truly relax.  There was so much to learn about Luxenben’s history and customs that, if we weren’t being lectured to, we had our noses in our books cramming for the next exam.  This seemed an opportune moment to take stock.

The reader would no doubt look upon any confession of happiness on my part with skepticism.  Did I not take umbrage at being a zoological specimen entirely beholden to the whims of my keepers?  Was it not demeaning to be exposed to public scrutiny the minute I stepped outside?  Didn’t I find it confining to be restricted to Ventureland’s boundaries unless accompanied by a Full?  The answer to these questions was obviously yes, yes, and yes.  And yet the answer to the question “was I happy?” was likewise a resounding yes.

One way of putting it, I suppose, was that I had sold my soul and was well satisfied with what I got in return: scenic surroundings, uniformly clement weather, unpolluted air, quality foods expertly prepared, fine lodging, unlimited leisure, medical care, a modest allowance for personal items, access to a well-supplied library, and, best of all, although I was but on its fringes, life within a rational society.  All told, this was a good deal more than I would have thought my soul to be worth here and certainly more than I would have gotten for it on Earth.  

But, the reader might ask, what about the loss of companionship with your fellow man?  A reasonable question from someone who knew mankind as the only kid on the block; an unreasonable one from someone who has had the pleasure of associating with Semis-albeit a small minority of the Semi population as a whole-who were more convivial, more interesting, more kindly, and far more enlightened than the people I had left behind on Earth.  Please take no offense, but the truth is that I would have no difficulty resigning myself to the prospect of never seeing another human being other than Neuman for the rest of my life.

And there was another benefit I had gained from the transaction.  Not only had I got a good price for the asset I had sold, I had sloughed off my liabilities in the process.  No more of Earth’s bank accounts, charge accounts, tax accounts, brokerage accounts, financial reports, government forms, and the like.  And gone were the harassing swarm of CPAs, au­di­tors, creditors, debtors, clients, associates, and competi­tors who had done their best to make my life uncomfortable.  It was no longer my worry if, back home, the lawyers cleaned me out.  They were welcome to every penny.  It wouldn’t hurt my wife to work for a change.

The reader might disagree with my sense of values, but he could not argue with one advantage my lifestyle had attained.  It possessed a pristine simplicity.  In concert with the innocent squirrel I saw scurrying across the park lawn, the sum total of my income and expenditures was embodied in one physical entity.  Who would have thought that, by merely transporting it from one place to another, this noticeably shopworn body could earn a good living by merely being on display?  In acknowledgment of its achievement, I strained my eyes downward to admire the sets of rolling contours that culmi­nated at my protruding feet and rewarded the highest of these with a grateful pat.

True, eventually I would probably want to find something to do to keep myself occupied besides keeping up my journal, but I felt no urgency in the mat­ter.  For the time being, there were big stretches of parkland to explore and much more to learn about Luxan society than the necessarily condensed information given us in orientation.  Once I had my fill of idleness I was sure I could find something suitable for a gentleman of independent means.  Indeed, Matilda had hinted that there were any number of volunteer positions I might be interested in.  Whereas there was no official SVI requirement that every competent Semi undertake a constructive task, the Semi community itself exercised subtle social pressure to encourage malingerers to do so.

One project I had in mind was delving into the issue raised by Joseph Brimley, the executive officer of the Starbound, on my very first night on board.  He had stated, in effect, that what differentiated Earth’s chaos from Luxenben’s harmony had nothing to do with their technological superiority and everything to do with their moral superiority.  His words had ingrained themselves in my memory.  “We know what to believe.”  Even more intriguingly, he contended that nothing prevented humankind from attaining the same enlightenment.  All it took, presumably, was our believing in whatever it was they believed in-our character faults notwithstanding.  “We’re not a bunch of saints, either” was another of his memorable phrases.  Well, the discourtesy I was subjected in the Grunt House had confirmed that much of his thesis.  But what of the rest?  I made it my business to find out.    

With these thoughts in mind, I encouraged the enzymes embodied in delicatessen food to find their way to my brain and I dozed off to sleep.

*    *    *

A poke or two from Matty was enough to get me to my feet.  The afternoon was getting on and my date did not want me to miss a stroll down the gravel path that wove around the lake.  The splendid views and Matty’s ever-witty companionship ended a day that could not have been more pleasant.

As was my habit upon returning to the dorm, I inquired at the desk if a Mr. Neuman had been checked in.  As usual, I learned from the desk clerk that he had not and, as usual, I felt a fleeting twinge of disappointment.  Mind you, I had seen neither hide nor hair of the boy since we boarded the spaceship over two months ago.  That our paths had not yet crossed was puzzling but not wholly inexplicable.  On board the spaceship our captain kept us apart as requested by the company authorities who, quite naturally, did not want our separate interrogations to be compromised.  And, for the following two weeks, I assumed his failure to show up was on account of his being hustled off for his obligatory gig in the new acquisition arena which I had fortunately escaped.  But as far as the next seven weeks were concerned, I had no explanation for his absence other than the inconclusive inquiry I had made about the boy with the company’s immigration department.  In that telephone conversation I was told that his integration into Semiland’s society was more complicated than mine and that they could as yet give no definite date as to when he might be released.  When I asked “released from where?” my informant would not say.  Instead, she rather abruptly broke off our conversation after reassuring me that Neuman was in good health and that I would be automatically informed if there was any change in his situation.  Without saying so, the tone of her voice clearly implied that I was not to phone again.  This should have been worrisome, I suppose, but I recalled my conversation with the Starbound’s captain, and this made me sanguine about the boy’s absence.  As incomprehensible as it seemed, out of the billions of Earthlings the Luxanders had to choose from, they targeted Neuman as one of two specimens to bring home.  So my guess was that he was being quartered at some location reserved for special newcomers.  For all that, I remained curious as to the boy’s situation.  Now that I was relieved of my orientation courses and had more time, I determined to make an effort to find him.  How, I had no idea.

*    *    *

This essay is a companion to “Money Redefined” posted on this blog October 1, 2009 and may still be found under the Economics heading.

 ABSTRACT

 Examples are given of the poor performance of the US Government in meeting today’s problems.  The conclusion is reached that its deficiencies are endemic to representative democracies in general thanks to their inherent structural faults.  These faults are then enumerated including the misdirected election of the representatives themselves and the negative factors that influence their performance in office.

 The reader is then asked to imagine a country I call “Postcapia” that boasts a new form of democracy entirely free of such problems by virtue of having dispensed with both administration and legislature.  Though hypothetical, this new form of government is solidly grounded on a perfected system that utilizes a methodology based on human intelligence.

 A description is then given of the organic Postcapian government in which its functions are cleanly divided between its routine-management responsibilities and its law-making processes.  Some of the advantages claimed for this idealized system is a governmental apparatus that is:

 A fraction of the size of our existing government

1. Far more efficient costing less than one-third of our present budget
2. More responsive to changing conditions
3. Devoted to evolutionary advance
4. In the hands of genuinely capable administrators
5. Incapable of large-scale error thanks to feedback measures
6. More respectful of personal freedom
7. Conducive to greater prosperity

 It is the author’s intention that the views expressed are addressed in a rational, problem-solving, apolitical manner.  It is safe to say that they would not fit comfortably in either the left or right political camps.

 The essay is divided into four parts:

 I. WHAT’S WRONG WITH GOVERNMENT.  Why representative democracy doesn’t work.

II. THE GOVERNMENT OF POSTCAPIA.  Characteristics of a model biological system that does work.

III. THE AUTONOMENT.  How Postcapia handles its routine administrative tasks.

IV.  THE VOLITIONMENT.  The workings of the Postcapian law-making process

PART I. WHAT’S WRONG WITH GOVERNMENT

 THE FINANCIAL CRISIS OF 2008

 Immersed in day-to-day demands upon our time, most of us understandably shy away from facing up to our lives’ less immediate, but perhaps more destructive, problems.  Nevertheless, if we don’t face up to such issues we have no means of correcting them.  So allow me to address what many would agree is the most galling of such matters that complicate our lives-the perfectly miserable way in which we are governed.. 

 Take, for example, the government’s involvement in the financial crisis of 2008.  Before the housing bubble burst, those associated with it-the home buyers, real estate salesmen, mortgage writers, bankers, and financiers, among them-profited handsomely.  And, in hindsight I suppose, they could all be accused of greed, if being reluctant to walk away from a highly lucrative spot along the feeding trough can be so characterized.  (Although, most of us, I daresay, would behave no better if offered the same opportunity.)  Certainly none of these groups were entirely blameless and some outright dishonest.  But there was no formal collusion between them and none were in position to orchestrate the entire scheme.  It took the intervention of government at each and every step down the slippery slope to create the resulting debacle.  The same sanctimonious, two-faced do-gooder government, , by the way, that came out from behind the tree when it was all over with profuse-and needless to add, ineffectual-offers of assistance. 

Consider the main factors in the bubble: 

One, an unusually low interest-rate environment made home ownership particularly attractive. Credit the Federal Reserve for keeping rates artificially low (and mortgage payments particularly affordable) from 2001 to 2004.  This greatly stimulated the housing market, created the delusion of ever increasing home values, and encouraged many buyers to overextend themselves.  Minimal down payments and adjustable rate mortgages proved a trap for those who assumed that low rates would continue forever.

Two, the number of mortgage originations rose steeply while their creditworthiness declined.  Normal good business practices were set aside in favor the government’s single-minded, politically-motivated determination to increase the percentage of home ownership at any cost.  The authorities in the Federal Housing Agency, the Treasury and elsewhere in government looked the other way in the face of rampant fraud by borrowers and lenders alike.  In effect, government became a silent partner in these crimes.

Three, syndication allowed the banks to pass on the paper to financial houses that repackaged them into CDO’s and other negotiable instruments.  The increasingly suspect credit instruments could never have been marketed had not the quasi-governmental (now fully government owned) organizations, Fannie Mae and Freddie Mac, provided a lender of last resort for as much housing paper as the industry could generate, no questions asked.

Four, credit agencies obligingly gave an undeserved portion of the instruments their highest ratings. The SEC accorded only three companies-Standard and Poors, Fitch, and Moody’s-rating authority for official purposes even though their income came from the very companies being rated-an open invitation for manipulation.  Not surprisingly, the firms, in exchange for fat fees, stamped “AAA” or “AA” willy-nilly on bonds that little deserved it.  Had the government not granted this oligopoly-had more eyes scrutinized the underlying weakness of this indebtedness-it is reasonable to assume that ratings would have been far more conservative.  This would have made a critical difference in the bonds’ salability, for only the highest rated ones could maximize the banks’ all-important leverage as mandated by government regulations.   For all practical purposes, then, the government forced the banks to overextend themselves.   The artificially high ratings also opened the door to naïve foreign marketplaces further fueling sales.   

Five, once significant numbers of home-owner mortgagees reneged on their monthly payments, the quality of the paper that depended on this income collapsed and the entire financial system was thrown into disarray.  And again the government was on hand to make matters worse.  Subject to the recently introduced regulatory “mark-to-market” accounting, the banks’ vast holdings of this dubious paperwork sank like a stone leaving many technically bankrupt and panic ensued.  

 One conclusion one can safely come to in this sorry affair is that government officials, up and down the line, made grievous mistakes both in terms of their active involvement and their inexcusable lapse in regulatory responsibility.  But I want to make a larger point-i.e., our government is not only capable of making mistakes, but that it is capable of little else no matter what it undertakes. 

Look carefully into any federal program and you will find the same waste, corruption, inefficiency, ill-advised actions, and, like as not, counterproductive outcomes.  True, some programs are less worse than others and naturally there are always bound to be beneficiaries.  Naturally, if the government spends one-hundred dollars, some fraction of that is bound to benefit someone.  But that is hardly a valid test of the efficacy of the program as a whole.  By any rational accounting system there simply are no efficacious government programs.  A closer look at the workings of Congress reveals why this is so.

 THE DRIVE FOR MEDIOCRITY

Start with the electorate itself.  It should be self-evident that anyone drawing governmen­tal subsis­tence or a government paycheck should not be allowed to vote on grounds of conflict of interest.  It does not, after all, take a very large block of government employees handing out cash along with a second block of receiving it to determine the course of an election.  Imagine, for example, that among the general population of ten million, 52% prefer a change in government and 48% are in favor of the status quo.  Given this distribution, one would, of course, expect a turnover of power in the next election.  However, if in addition to the general population, there exists a voting block of 500,000 government workers and handout recipients-a mere 5% of the population-then the next election would retain the existing government by a margin of 100,000 votes.  And it goes without saying that such a government would dedicate itself to expanding its locked-in constituency from 500,000 to 750,000 before the next election to widen its margin of safety still further.  Obviously, it would not take many such iterations to cement one-party rule in a nominally democratic society.

A second perversity that distorts our elections is our preoccupation with the sheer quan­tity of votes-the absurd assumption being that, no matter how badly informed, the public can be counted on to make the right de­cision pro­vided the number of votes cast is high enough.­  By the same reasoning, one could argue that a classroom of illiterates should be graduated with honors provided the class size were only made large enough.  However ap­parent are the failings of individual ignorance, somehow it is assumed that collec­tive ignorance in large enough concentrations has some magical ability to sum­mon divine, and presumably enlightened, intercession.  It doesn’t.  All that happens is that the votes of knowledgeable citizens are effectively drowned out by the numbers game.

If these first two internal drawbacks were not enough to incapacitate the election process, external factors surely accomplish whatever else is needed.  Our media-dominated election circuses are little more than beauty contests in which the candidates are judged on the basis of their appearance, articulateness, professed sensitivity, glibness at spouting platitudes, and other superficialities that have absolutely nothing to do with their eventual competency in office.  All that is missing is a swim suit competition and it would not surprise me over much if that too were made a fixture in future campaigns.  Sadly, the political attributes most touted are actually counter-indicatory to what is really wanted in public office: personal integrity, intellectual accomplishment, in-depth understanding of national issues, a realistic sense of how to deal with them, and managerial ability to take action.

Lack of proven competence is not the only qualification our political system requires of its practitioners; cynicism is another.  Every candidate worth his salt is expected to be able to lie through his teeth whenever the occasion warrants, while masking his deception behind an earnest, pure-as-the-driven-snow countenance.  Such cynicism is best exemplified by each candidate’s heartfelt pledge to spend whatever taxpayer dollars are necessary to demonstrate the depth of his compassion.  Throughout his campaign he assures his constituents that their every need will be fulfilled once he is in office, be it healthcare, education, a well-paying job, adequate housing, a safe environment, or whatever else they fancy as essential to their contentment.  Don’t worry about the cost, he adds, with a perfectly straight face.  The source of funding necessary to accomplish all these good things will be magically revealed to one and all at some future, post-election date.

Our election process further requires candidates to kowtow to particular constituencies.  In that virtually every ethnic, religious, economic, and social group has some legitimate grievance against the rest of society dating back to some point in its history, it is not difficult to persuade a targeted group that its case is special and that its particular grievances are most egregious of all.  Vote for me, the candidate proclaims, and I’ll see to it that ultimate justice shall prevail.  You victims shall be recompensed in accordance with a master ledger on which all such injustices have been duly registered along with their appropriate compensation.  That such fraudulent appeals are destructive to America’s social fabric and ultimately to her success as a nation, is, of course, a matter of secondary importance when the main object is winning the race at all costs.  Victory at the polls is paramount.  All’s fair in love, war, and politics.

Taken together, these defects in our election system practically guarantee a government of mediocrities.

MEDIOCRITY AT WORK

Under our perverted political system, elections are the main events and the intervals between little more than staging periods for the battles ahead.  Just as it is said that ‘diplomacy is war by other means,’ so office-holding is thought to be ‘election by other means.’

Once in office, most politicians have every intention of staying there and the one sure way of doing so is to buy as many votes as necessary.  And, obligingly, the political system makes great sums of public monies available for the purpose.  At one time in the distant past, vote buying was confined to paltry sums more or less openly proffered on election day in exchange for a voter’s one-time support.  Now that politics has become more sophisticated, however, the practice has expanded from one-bribe-one-vote to a continuous flow of goodies to entire voting blocks in exchange for their lifelong support.

This advance in the brazenness of civic bribery is evidence of a systemic fault in the workings of representative democracy.  On the one hand, there sits this pile of public funds seeming to belong to no one in particular, and, on the other hand, there are these hordes of special interest groups hungrily milling around it.  As the officially designated middlemen between these two mutually-attracting elements, what are the poor, vote-dependent politicians to do?  The very least that tradition demands is that monies be sprinkled among the poor and downtrodden with all the noblesse oblige of medieval monarchs;  that a profusion of earmarks be handed out to demonstrate the politicians’ attachment to their humble roots; and that juicy allowances be advanced to every friendly corporation and nonprofit under the sun.  And who would be so crass as to call attention to the fact that the money, with which our compassionate public servants are so generous, is not their own?

Sooner or later, everybody who can makes their way to the trough.  Majority groups push through legislation giving them special status at the expense of minority groups.  And, at the other end of the scale, focused “rent-seeking” minorities obtain disproportional benefits for themselves because the cost, spread over the entire base of taxpayers, appears inconsequential.

It’s not only votes that are on sale in the Washington marketplace, so are politicians.  And the commerce thrives.  Money flows out and in-both in good measure.  Political campaigns require money and lots of it.  Indeed, the mere display of a bulging war chest is enough to ward off political rivals in the same way that a bull moose’s wide rack of antlers poses a warning to sexual rivals.  Not surprisingly, then, our good representatives devote much of their time and energy to bulking up their campaign funds.  Thus they constantly solicit contributions by implying that any such donations would not go unnoticed when the next opportunity arises to hand out political favors.  Naturally, contributions flow largely to the most likely winners-that is to say, those incumbents already well financed-creating a self-reinforcing cycle that has the effect of turning incumbency practically into a monarchical right.

One might wonder at the scale of campaign contributions-in the millions annually-until he becomes aware of how much they can buy, often at relatively modest cost.  Every group-be it a corporation, trade association, religious faction, farming cooperative, racial minority, labor union, rent-seeking profession, and so on-would rather compete on a playing field tilted in its favor.  And who is in a better position to do the tilting than a government empowered by legalized force?  Thus petitioners have every motive to contribute and their thankful beneficiaries every motive to further expand their authority so as to have more favors to put on sale.

As yet another distortion of the democratic process, consider the practice of gerrymandering.  To perpetuate their control over supporters concentrated in certain specific areas, state politicians twist and turn boundaries until their voting districts appear to be literally howling in pain.

What it boils down to is that a goodly portion of a politician’s time and energy is spent, not on the nation’s business, but on his own with the result that, though the former may be neglected, the latter will be faithfully attended to.

STRUCTURAL PROBLEMS

But stay.  Perhaps I have been unduly critical of our public servants.  Certainly there are among them a number of energetic, intelligent, trustworthy, altruistic members of Congress.  Does not that alter the negative portrait of the institution that I have painted?  Not at all.  Even if we filled every seat in Congress with the likes of these dedicated legislators, it would still be prevented from functioning properly by a number of structural problems that beset all representative democracies.

First, a command political system cannot work any better than a command economic system.  After multiple failed attempts at central planning, economists have come to recognize that such a system can’t possibly keep track of the myriad perturbations of the marketplace.  It is time that centralized law-makers recognize that they suffer from the same sort of delusions and hubris as centralized planners.  The difference is we have allowed the former to stay on the job.  Like the socialists of yesteryear, we maintain the pretense that our legislators can successfully distill all the pertinent information emanating from their respective constituencies and from that distillation effectively govern from afar.  Then we express dismay when the laws they pass fall wildly off the mark or, more probably, are so divorced from any mark whatsoever as to be altogether pig-headed.  Indeed, we rightly consider ourselves fortunate on those rare occasions when the laws emanating from Washington do not actually exacerbate the problems they meant to address and trigger another round of law-making to correct the shortcomings of the last.

Second, the competitive nature of general elections leads inevitably to the formation of political parties which, in turn, practically ensure that consequent infighting between them will triumph over rational law making.  To gain public office, every candidate must first sell his soul to the devil-i. e., in order to obtain the recognition and acceptability that comes with party affiliation, he must commit himself to surrendering his independence of thought.  And once elected, he may be sure the devil collects his due.  He must keep looking over his shoulder for the current party line and, whether he agrees with it or not, vote accordingly.  Whatever his better-self leanings, he finds himself acceding to cloakroom deals, attacking policies with which he may be secretly in accord, defending policies with which he is in basic disagreement, and otherwise acting as a foot-soldier in the political wars.  And what political wars accomplish is what wars accomplish generally: unnumbered casualties, torn up landscapes, and the ruination of national treasuries.

Third, representative democracy has a built-in growth factor.  Bureaucracies spring up like green shoots after the rain-makers’ law-making sessions and, once established, burgeon under government’s tender care.  Unlike nature’s offspring, bureaucracies have no natural enemies and thus manage to keep taking on more responsibilities, adding more staff, and positioning themselves so as to claim to be more and more indispensable to the nation’s well being.  Managers have little incentive to make their bureaus more efficient but much incentive to seek greater funding; have little incentive to go to the trouble of firing incompetent unionized employees and much incentive to hire additional people to make up for the shortcomings of other workers; have little incentive to do anything constructive and much incentive to cater to the whims of legislators in whose hands their funding depends; and, for that matter, have little incentive to promote effective government and much incentive to devote their time and energy to self-preservation.  The result, not unexpectedly, is that governmental apparatus becomes more and more encumbered with overlapping bureaucracies, bloated staffs, unimaginable volumes of paperwork, ever more intrusive computer systems, snarled communication, diluted responsibility, and growing paralysis.

Fourth, representative democracies lack the ability to correct themselves.  No matter how outdated, how inefficient-for that matter, how destructive-a governmental activity has become, political cover for maintaining it is always at hand.  The ‘do nothing’ official can count on the support of the special interests benefiting from the status quo and the opinion of the in-house ‘experts’ who had recommended the failed policy in the first place.  On the other hand, attempts to introduce real change, however urgently needed, have no natural champions.  Instead any official attempting reform finds that he has handed his opponents a lethal political weapon for use in the next election in the form of whatever controversial side effects his proposal introduces.  Thus every legislator soon learns ‘don’t rock the boat.’  The result: political inertia.

Fifth, then there is the all-important matter of what representative democracies fail to do.  The most efficacious time to address a problem is when it is in its infancy, but our public officials are motivated to do just the opposite.  The media obliges them to focus their attention on issues that command the greatest public notice at the expense of what may well be more important, but less sensational, problems.  Thus critical issues fester until reaching the point that corrective action is either prohibitively expensive or virtually impossible.  For example, the maintenance of public infrastructure is normally a back-burner issue until newspaper headlines scream of a major bridge collapse that took with it a score or so of passenger-filled cars.  Then every political foghorn in the country is turned up to its loudest volume lambasting the guilty parties and demanding the inspection of every still-standing bridge in the country forthwith.

CONCLUSION

 Back in 1787, when American democracy took shape, there was no better way to channel the voice of the people into governmental action than through a freely elected legislative body.  Indeed, at that time, the legislative process was considered ’state of the art,’ a bold, innovative way to govern without the monarchial rule that prevailed elsewhere.  Our Founding Fathers rediscovered the beautiful flower of democracy that had sprouted in ancient Athens and lovingly transplanted it in North America.

 But, as has been discussed, our government has become dysfunctional.  ‘Vox populi’ is heard so distantly as to be inaudible.  Year after year goes by without significant improvement in our educational system, with no lessening of the traffic congestion on our roadways, with no letup in governmental waste and extravagance, with no better control of the budgetary process, with no solution to the inevitable shortfall in social security funding, and with no meaningful remediation in drug use despite billions spent on the effort.  Millions of Americans are jobless, homeless, and broke.  The beautiful flower from Athens has been overgrown by a thicket of kudzu. 

 There has not been a lack of reforms proposed to overcome our government’s failings: term limits, restrictions on campaign financing, and any number of other measures have been proffered in the name of better government.  But none of these, I contend, would correct its systemic problems.  Fundamental reform won’t be found by tinkering at the edges.  When one thinks of alternatives to representative democracy, such autocratic forms as monarchist, fascistic and socialist states come to mind.  What, in all probability, doesn’t come to mind is a radically improved version of democracy itself, starting with a clean slate.  Nevertheless, the following segments of this essay consider just such a possibility. 

 PART II. THE GOVERNMENT OF POSTCAPIA

 Were the writer to claim the invention of an entirely new and presumably improved form of government, the reader would have good reason to question his presumption.  And it would only deepen his skepticism to learn that the author of these alleged revelations boasts so little qualification in his chosen subject-neither a whit of education nor experience in political science much less professional recognition.  But that is not the case.  I make no such claim.  I have invented nothing.

My sole function is that of a copyist in the manner of the Renaissance artists who used the camera obscura to project an optical image of the subject they wished to paint and then selectively trace on paper whichever of its outlines suited their artistic purpose.  Following their example, I have elected to utilize the same apparatus with the same intention of putting something down on paper.  My purpose, however, is different than that of those venerable artists.  Whereas their eventual goal was a fine oil painting, mine is the delineation of a new form of government.

Whereas the Renaissance artists would no doubt have been content with an attractive piece of scenery such as a Roman arch that might have stood a mere few centuries, I needed a subject that was even more beautifully engineered and better time tested-one proven to have survived every imaginable condition over timeless epochs.  Where could such a subject be found?  Rather readily, actually.  It is, in fact, one with which the reader himself is, certainly, already intimately acquainted.  It is, in fact, none other than the form that greets him in the morning mirror and then obliges him to tote it around for the rest of the day.  I am speaking, of course, of that package of miraculous processes that comprise the human body.

With the projection of this wondrous figure at hand, I can now go about tracing whichever of its various parts might be usefully incorporated into a governmental structure.  At this point, the reader, although sharing, perhaps, my admiration for the human body, might still question this choice of subject matter.  At first thought, there would seem to be little resemblance between it and the pompous halls of government.  But I would ask him to think again.  Functionally, the two have much in common, do they not?  The human body gathers external data from all its sensory organs and internal data from all its attached parts, merges the two streams of information, considers alternate courses of action based on that flow of data, selects the most promising solution, instructs the body as to how best execute that action, and then monitors the effectiveness of the solution.  In short, both our body and our government strive to optimally enlist human intelligence in the execution of physical tasks.  Substitute ‘body politic’ for ‘body’ in what I’ve just said and you have my aspiration for an effective government.  From a performance standpoint, then, they are two of a kind, outward appearance notwithstanding.

I would hope that whatever reasonable doubts the reader may have with respect to the author’s expertise do not unreasonably lead him to question that of nature’s.  After all, has she not demonstrated her genius in organizing living things of every size and description-ant colonies, flocks of geese, herds of elephants, and the like-not to mention her success in harmonizing the forces governing quarks and quasars and everything in-between?  Why shouldn’t we then rejoice in finding so close to home a near-perfect model for government in her marriage of intelligence and muscle?  Why not take advantage of the administrative techniques that nature has spent millions of years perfecting?  Why not extrapolate her state-of-the-art system for governing individual human behavior and use it to govern the behavior of groups?

There are limitations to this approach, for we have but an imperfect understanding of how nature’s systems govern the human body.  Nevertheless we can, I believe, greatly profit from those unmistakable features we are familiar with.  Witness the effective medications our scientists have created by copying certain plant and animal characteristics despite having little understanding of their underlying function.

With these observations out of the way, let me get back to my camera obscura, plant a stationary human figure in front of it, and see what can be made from the projected image.  My approach will be to make a cursory study of its prominent features and then take up their individual features in greater detail to create a portrait of the estimable-albeit imaginary-government of Postcapia.    

THE INDISPENSIBLE BRAIN

Nature has not only found it necessary to concentrate our species’ mental activity in a single organ, she has devoted extraordinary effort to progressively expand its information gathering and processing powers.  So ardently and effectively has she pursued this endeavor that the human brain might arguably be regarded as her finest masterpiece.

It goes without saying, then, that an organization modeled after the human body must, perforce, contain an instrument analogous to the brain-that is to say, government.  This rules out the possibility of a political system possessed of no brain at all-anarchy, if you will-but it is by no means an argument for an over large one.  True, the brain is absolutely essential for the administration of our bodies, but it is also a form of overhead that saps resources from our working parts such as sensory organs, bone, muscle, etc.  Our evolutionary development has, therefore, been obliged to strike a balance between what can be afforded for intellectual activity and the physical prowess needed for gathering food, self defense, finding a mate, and other survival essentials.  This finely-honed compromise has resulted in a brain that weighs only about three pounds-some two percent of body weight-and consumes no more than eighteen percent of our blood flow.   Compare that with the twenty-five percent plus of the gross national product that’s eaten up by our gargantuan federal government while accomplishing, in makeshift fashion, only a fraction of the brain’s functions.  Needless to add, the Postcapian government faithfully adheres to nature’s guidelines in this regard.

THE IMMOBILIZED BRAIN

In her design of our brains, nature resisted whatever temptation she may have had to incorporate muscles such as those that might tip a male’s hat or flounce a female’s hair.  To wit, she has seen to it that the brain has all the prowess of a bowl of Jello.  Apparently, this was the best way she knew how to achieve a stronger, more competitive body overall.

Being true to its model, Postcapia’s government is likewise incapacitated.  It has none of the operative divisions that burden our political apparatus such as police and fire de­partments, educational facilities, highways, national parks, water and sanitation projects, not to mention mili­tary and foreign ser­vice estab­lish­ments.  Likewise dispensed with are what we label “programs” such as farm subsidies, mortgage purchases, health ser­vices, student loans, so­cial ser­vices, and banking deposit insurance.  In sum, Postcapia’s government is solely devoted to data processing, decision mak­ing, regulating, and creative thinking.  And, as in the case of the human body, the end result is an overall organization that is vastly more economical, more manageable, more flexible, and more effective.

Less obvious, but important as well, is the ability of Postcapia’s government to self-correct.  It is obvious that a government such as ours cannot engage in operations and, at the same time, be expected to impartially monitor those same operations.  Consider what would happen in the event a bridge, built under our government’s direct auspices, were to collapse.  One certain outcome would be that a contentious and interminable series of investigative panels and law suits would arise between federal highway engineers, the state testing agency, private contractors, county inspectors, and the material suppliers-all blaming one another for the disaster.  Finally, a scapegoat would be identified, some cosmetic re­form introduced, and the governmental entities involved not only al­lowed to continue to operate as before, but in all likelihood, rewarded with larger appropriations.  What most certainly would not happen would be a genuine improvement in public safety.  Not so in Postcapia.  Expert analysis by impartial government engineers would determine the cause of the bridge failure, identify the malefactors, and leave it up to the private sector to sort things out.

The argument could be raised by some in this country that operations such as policing, fire protection, and the military services are simply too essential to consign to anything but governmental control.  Postcapians would respond by saying that literally every prod­uct and service in an integrated economy can rightfully be construed as “essential,” but, if so, that is the best reason for keeping them out of the hands of government-demonstrably the worst of all man­agers.

THE DIFFERENTIATED BRAIN

The determination of Postcapians to mimic the human brain led them to introduce other changes to their government that we would consider novel.  Of special interest to them was the brain’s division into specialized areas, particularly the  fundamental demarcation between its lower and upper parts-that is to say, between the parts devoted to voluntary activities (reasoning, invention, sensory perception, initiation of action, etc.) and those associated only with its autonomic functions (regulation of body temperature, heart rate, blood chemistry, etc.). 

Applying the brain’s segmentation to their governmental organization, the Postcapians cleaved it into two distinct halves: one, they call the “Autonoment,” involved exclusively with the routine administration of governmental services (regulation of utilities, highway planning, flood control, law enforcement, etc.)  and the other, the “Volitionment,” exclusively engaged with voluntary matters (planning, drafting of new legislation, etc.)

 THE LEADERLESS BRAIN

A final observation is in order before we wheel away our optical device.  No where to be seen in the projected image of the brain, however intensely it is scrutinized,  is a presidential cell exercising its authority over cells or, for that matter, a group of legislative cells promulgating instructions hither and yon.  Somehow the brain is capable of decision making without these contrivances.  It does so by linking ad hoc groups of cells together which then pass on information to other linkages until a determination is reached.

Following the dictates of their parsimonious model, the founders of Postcapia’s government likewise disposed of what we would consider to be the very core of governmental apparatus-its administration and legislature.  In doing so, they were further motivated by their distrust of centralized authority whether circumscribed by a presumed balance-of-power arrangement or no-noting that, time and time again throughout history supposedly legalized authority managed to acquire autocratic illegal powers with always grim consequences.  In lieu of a deliberative body, the Postcapian founders followed the brain’s deliberative methodology by allowing anyone to initiate a proposal for a new law and then passing the proposal around for comment and resolution.

THE PERIPHERAL BRAIN

The human brain does not connect directly to either the autonomic or voluntary functions it controls.  Instead its messages are funneled through a series of specialized bundles of nerves that, in turn, issue the actual orders that operate the body’s machinery.

Whereas Postcapia’s government cannot begin to match the sophistication of the network that nature has endowed us with, it does its best to match the network’s basic design-that of interposing teams that intercept “bottom-up” information and convert it into actionable orders to the private sector.  As will be seen, the intermediate bodies for the Autonoment and the Volitionment are not at all alike in composition but their function is much the same.

FINAL WORD

Before leaving this brief description of Postcapia’s government, it might be well to remind the reader that it is but one element in Postcapia’s grand design modeled after nature’s crowning achievement-a system that embraces all her disparate inventions and allows them to work together harmoniously.  Emulating nature in this regard, the Postcapians have adopted a set of metarules covering an overarching coherent system-a consilience, if you will-in which the economy meshes smoothly with government, government with religion, religion with the social sciences, the social sciences with the economy, and so on.  In short, their government should be appreciated not so much as a free standing entity but rather as but one more piece in their cultural framework.

Now let’s see how the rudimentary features of the brain we have discussed have asserted themselves when incorporated in the working machinery of Postcapia’s government.

PART III.  THE AUTONOMENT

Picture a darkened, round room of some forty-feet in diameter.  On its walls are nine, evenly-spaced, large electronic displays each registering an index measuring the extent to which the needs of Postcapians are currently being fulfilled in a particular sector.  The sectors undergoing this surveillance are: sustenance, shelter, health, safety, education, environment, works, research, and personal freedom-the assumption being that any citizen enjoying the wherewithal to survive, decent shelter, good health, a sense of security, the opportunity to educate himself, a livable environment, satisfactory public works, the fruits of ongoing research, and personal freedom would be equipped with the basics needed for a satisfied and productive life.

 Clustered around each of the main displays are anywhere from ten to thirty smaller panels devoted to the sub-sectors contributing to the tallies presented on the main displays.  Within the health sector, for example, there is continuous monitoring of the prevalence of heart disease, the robustness of the na­tional liver, physical condition­ing, mental health, and so on.  Within the safety sector are sub-sectors devoted to the incidence of crime, accidental deaths, industrial injuries, and suicides.  Within the environmental sector are indices devoted not only to air and water pollution but to the less obvious assaults on the quality of life such as damage to oceanic reefs, shrinkage of forests, inappropriate land use, and so on. 

 To complete the picture, imagine rows of desks in the center of the room occupied by the response teams that are always on hand.  These will be discussed later.

We are looking at the Autonoment, Postcapia’s control center, or, for those who wish to be reminded of its biological association, its hypothalamus.  In a way, the latter name is the more descriptive.  Like the hypothalamus, the facility not only passively produces statistics but uses them to automatically generate a constant flow of instructions designed to maintain the indices within their preset parameters.  The determination of these instructions is accomplished by sets of linear equations that have been developed over the years to measure the disparity between actual current conditions and their comparable nadirs-that is to say, the index readings at which the sectors would no longer be capable of meeting basic needs.  The greater the disparity between these two conditions, of course, the more favorable the current state of affairs.  To cite a simple example, one component of the works sector is devoted to Postcapia’s highway traffic flow index.  A zero reading in this index would represent universal gridlock while a reading of 58 mph would represent the average speed over the current week’s period.  If a speed of 60mph were nominal, the computer system would produce an instruction requiring an increase of two miles per hour.  Other instructions, of course, have a more direct bearing on social issues.  Within the health sector, the state of children’s health is monitored on a series of panels showing the current incidence of various diseases compared to epidemic conditions.  And within the sustenance sector, a panel tracks the level of farm workers’ income by its margin over their impoverishment, and so on-in every case, the higher the reading the more favorable it is.

The reader might question the Postcapians’ preference for tracking data built around eschewing known perils as opposed to the attainment of predetermined goals.  The explanation is that, when formulating policy, agreement is easier to obtain on the avoidance of unwanted outcomes than on the establishment of disputable targets.  A second reason is that nadirs can be kept constant as opposed to subjective goals that are bound to fluctuate.  The Postcapians always have the ability, therefore, to resurrect historical data upon which useful benchmarks can be set.  And, third, Postcapians are firmly convinced their methodology more nearly parallels nature’s own techniques-no small matter to those for whom such things are of great importance.

The Postcapians liken the process to that of a cart proceeding down a road lined with sensors.  Were one of the cartwheels to approach a sensor-let’s say a perceptible increase in tuberculosis-warning signals would be triggered in the form of corrective instructions thus giving society time to correct the perceived problem long before the cart went off the road-that is to say, before a serious threat arose to Postcapia’s well being.

THE REGULATORY AGENCIES

As mentioned earlier, the Autonoment’s computers that generate the index readings also create feedback meant to fine tune the economy so as to maintain stability and steady improvement within each of its sectors.  Since the process is a continuous one, the generated instructions typically specify small, incremental changes expressed in terms of quantitative objectives stopping short of indicating how those objectives are to be met. 

The job of translating the objectives into action is left up to nine public agencies, corresponding to the Autonoment’s nine sectors.  And it is the agencies’ staffs that bear the responsibility of achieving results on the ground that are in accord with the computer-generated directives they have received.  Thus as mechanized as it might first appear, Autonoment’s system is best described as “semi-automatic” rather than fully automatic.

Each of the agencies is managed by an elected head, unimaginatively called the “agent,” who appoints his own staff numbering fifty or so qualified professionals.  In keeping with Postcapia’s prohibition against direct governmental involvement in operations, they accomplish their mission indirectly by persuading elements within the private sector or, if necessary, by imposing governmental regulations.  Let us say, for example, that the most recent Autonoment’s sweep of high school students’ proficiency in mathematics determines that this sub-index has fallen below its prescribed lower limit.  The sector’s programming would then automatically deliver to its corresponding regulatory agency an order to raise mathematics test scores by say 5% by a given date.  Upon deliberating on how to best meet this objective, the regulators assigned to education might elect to issue a regulation requiring high school teachers of mathematics to pass demanding refresher courses.  If this regulation failed to do the job, the agency would be obliged to pursue others until it was able to report back to the Autonoment that its assignment had been fulfilled.

What might surprise the reader in this regard is that the agencies are as mindful of their instructions’ upper limits as their lower.  Were test scores in our example to jump 10% instead of the targeted 5%, the agency would have to advise the response team (see below) of the anomaly and submit to its decision on the matter.  In any case, the offending regulators were certain to be reprimanded for having violated their duty as technocrats and straying into the forbidden territory of policy making.

Regulations in Postcapia, it should be noted, do not excite the rancor they ofttimes inspire in our society.  To begin with, each one must be accompanied by a feedback loop that circumscribes its impact to that dictated by the Autonoment.  In addition, the incremental corrections demanded of the regulators tend to be of less impact thanks to their very frequency.  Another moderating factor is that laws issued by the Volitionment, as will be discussed later, have precedence over regulations.  Were any of the latter to be unusually abusive, therefore, legal remedy would be at hand to contain them.  Finally, as elected officials, agency heads are reluctant to incite any widespread dissatisfaction that might cloud their political future.

Situations can arise in which neither persuasion nor regulation can achieve the wanted result simply because the private sector does not have sufficient resources to do the job.  The Postcapians compare this dilemma to that experienced by a weight lifter whose brain urges him to press 75kg but his muscles refuse to lift a gram more than 70.  In like manner, an agency frustrated in this regard can do no more than report back to the Autonoment of its failure.  The Postcapians regard such incidents as healthy reality checks that call upon the response teams, described below, to take corrective measures.

RESPONSE TEAMS

 Ordinarily the Autonoment-Regulator system runs smoothly keeping Postcapia on even keel, but at times it does face problems, such as the following, that it cannot handle without assistance:

a) As discussed above, the inability of the private sector to meet the Autonoment’s demands in a particular area
b) Exogenous events such as natural disasters involving multiple agencies that must be coordinated to work effectively
c) Some new issue for which the Autonoment’s software has not yet been programmed

To meet such contingencies, there is always a response team at their desks in the middle of the control room that are prepared to usurp the computers’ normal functions and assume control.

Three teams, each filling eight-hour shifts, provide coverage twenty-four hours a day, seven days a week.  Members of the team are primarily young, innovative technical people-systems analysts, engineers, and scientists-appointed for one six-year term by professional societies on the strength of their probity, impartiality, and intelligence.  The size of the teams is defined by law, but they are free to summon outside experts as the occasion warrants.  To reduce friction and maintain the group’s collegiate spirit, all team members are paid alike and are prohibited from earning money from outside sources during their employment-policies that produce teams that function well and cohesively.  Member salaries are not large, but their prestigious positions often provide stepping stones to excellent jobs in the private sector after their term is over. 

To illustrate the response teams’ function, imagine that a hurricane has struck Postcapia.  Flooding has occurred, residential neighborhoods have been demolished, power lines downed, sections of roads washed out, people injured, and a number of schools made unserviceable.  To address the situation, the next response team available is tasked with parceling out instructions to the regulators across the affected sectors-works, sustenance, education, and health among them.  Such instructions would, as always, be in the form of desired objectives leaving it up to the regulators to evolve the necessary operations on the ground.  And, as always, the regulators would, in turn, limit themselves to directing private and nonprofit organizations rather than taking an active role themselves in any of the restoration measures.  This limitation, however, would not prevent the regulators from setting up information centers and otherwise coordinating the operations needed.  When, in cases such as this, several regulatory agencies are impacted by the same incident, the response team appoints a lead agency to coordinate the effort.  

Interestingly enough, the response teams require no government funding to rectify the hurricane’s effects.   Since the government owns no property, it need not spend a farthing on repairs-schools, roads, power lines, etc. all being owned by outside interests.  Damage to private property is largely covered by insurance and that which is not comes out of the pockets of the corporate and individual owners directly involved.  Every storm, therefore, becomes a learning experience and the economy thereby made more efficient.

THE ELECTION OF AGENTS

Before leaving this discussion of the Autonoment, it may be well to briefly touch on Postcapia’s election process for it differs so much from, and, in my opinion, is so superior to, our own.  For reasons already mentioned, general elections are resorted to sparingly and never for individual candidates.  On the other hand, Postcapians are adherents of strongly focused elections as described below.

First it must be understood that the country is permanently divided into nine voting districts, each devoted to the selection of a single agent.  The rationale for this demarcation hearkens back to the brain/government analogy.  Somehow, by activating some sites and deactivating others, the brain creates a fleeting image of reality from which it determines its next course of action, so setting off another cycle of trial, error, and readjustment.  The point is, at any given moment, only those cells with a “need to know” are involved in the process.  The implication the Postcapians draw from this otherwise mysterious process is the seemingly undemocratic principle that, in arriving at decisions, the will of the people need not translate into the will of all the people.  In short, the Postcapians are convinced that it is far preferable for one million people to vote intelligently than for ten million to vote stupidly.

Aside from this biological justification, the Postcapians believe that it is hard enough for an elec­torate to grapple with a single set of issues and per­sonalities let alone tangle with the totally incomprehensi­ble snarl of words, voices, and faces that accompany the election of multiple candidates and ballot propositions.  Moreover, obliging a population to concentrate on the job of filling just one office enables them to become more familiar with the issues relating to it with each successive election.

Once election time rolls around, there is never a shortage of cit­i­zens willing to toss their hat into the ring, for the job of agent, while demanding, is well paid, prestigious, gratifying, and rela­tively secure over its six-year term.  On the other hand, getting on the ballot is not an easy matter.  Theoretically, any citizen can run, but, as a practical matter, the process limits candidature to those who have a reasonable chance of winning.  In any case, the old saw, “Anyone can grow up to be President,” that is tossed about so readily on Earth (and so often turns out to be agonizingly prescient) would be characterized on Postcapia as egali­tarian­ism run amuck.  Here, high in­telli­gence, a solid record of professional accom­plishment, and the endorsement of one of the ad hoc, apolit­ical nomi­nating committees are all prerequisite for a sporting chance of win­ning office.

During the campaign period, not much time is given over to debate between the candidates less their appearance and articulation prove distracting-these characteristics taken to be contra indicatory of the their true worth.  On those rare occasions when debates are held, the outsider cannot help but be impressed by the pains the speakers take to emphasize their integrity.  Any opinions expressed are carefully accompanied by possible extenuating circumstances, acknowledgement of the legitimate points in their rivals’ positions, and the error bars that accompany their own.  Also novel to the uninitiated ear is their refreshing dependence on the phrase “I don’t know”-three little words that cannot be pried from the lips of our politicians under any circumstances whatsoever.

Instead of relying on debates, the Postcapians ensure an informed electorate by more thoughtful means.  Fifteen days before an election, every potential voter is furnished a campaign booklet in which all pertinent voter information on the candidates is published in a consistent format allowing ready comparison of their qualifications.  Entire pages are given over to tables of test scores,   academic achievements, and experience.  And yet more pages are given over to the candidates’ vitae, physi­cal and mental health, and publications related to the office being sought.

Finally to be sure that each voter has truly digested the material in the booklet, he is required to answer a series of questions displayed on his voting machine regarding the current challenges facing the agency and the positions taken by each of the candidates on them.  Those who pass the test are then allowed to register their ballot.  Those who fail it are encouraged to study harder and return to the voting booth for another try.

 PART IV.  THE VOLITIONMENT

If Postcapia were an entirely static country, then the Autonoment would suffice to fill its governmental needs.  However, no country is entirely static.  Over time populations change as to their size, composition, tastes, attitudes, living standards, average age, and so on.  Technological innovations alter transportation, manufacturing, distribution, communications, entertainment, and social discourse.  Climate change can affect agricultural practices, water supplies, and the distribution of people and industry.  And, obviously, governments must adjust to meet the challenges posed by these changes.  In Postcapia, the branch charged with this function is the Volitionment.  An explanation of its workings follows.

HOW PROPOSED LAWS ARE SUBMITTED

In general terms, the reader is asked to picture the Volitionment not as a tangible mass of buildings but rather as an ethereal sequence of information-laden waves sweeping back and forth through the entire society crudely mimicking the mysterious currents that course through our brains.

Postcapians start with the notion that there is no single “will of the people” as such.  Rather there are as many “wills of the people” as there are people.  To this end they believe any individual is entitled to propose a new law or amend an old one by applying to the Volitionment.

Given the propensity of people to feel passionately that there “ought to be a law” about this, that, or whatever, one would think that a veritable torrent of submissions to the Volitionment would result.  In fact, the rate of submissions is far less than would be supposed, for their processing is made rigorous, time-consuming, and expensive.  Every submission to the Volitionment can deal with one topic only, must provide a detailed description of its purpose, and be accompanied by several exhibits, among which are the following:

 Exhibit One has to demonstrate that the proposal applies equally to all citizens, respects private property, and is in strict accord with the Constitution. (more of which will be said later)

 Exhibit Two has to show that the proposal either does not conflict with the existing body of law or it must identify any such conflict and spell out how it is resolved by the submission.

 Exhibit Three requires an analysis of how the proposal is to be enforced and an estimate of the cost of such enforcement.

 Exhibit Four has to show that enactment of the proposal would, at the worst, be revenue neutral, taking into account its environmental impact.  As part of the documentation, all savings and/or income claimed to be generated by the proposal has to be audited by an accredited organization.

Exhibit Five has to provide a full description of the quantitative feedback cycle(s) by which the proposal would be tested in the field for compliance with the commitments made in the previous four exhibits.  The feedback control mechanism must spell out in advance what the law is meant to accomplish in quantitative terms and the methodology for measuring its efficacy.  Furthermore, the mechanism may include provisions for expanding the law’s scope if it succeeds in its original mission.  In any case, the mechanism must contain  means for its automatic self-destruction if it fails to do so.

Exhibit Six must detail whatever changes might be necessary in Autonoment’s software if the submission were to become law.

The cost associated with the introduction of any given submission varies greatly, of course, with its scope, but the petitioner is sure to encounter the following.  For one, he is nearly always forced to employ a competent consultant versed in the preparation of the necessary legalistic documentation.  Next a submission fee is required in advance to cover the Volitionment’s cost of reviewing the proposal.  Finally the anticipated expenses related to the submission’s feedback cycle have to be escrowed.  Needless to add, the total of these expenses is bound to be considerable.

On the other hand, genuinely worthy proposals nearly always see the light of day one way or another.  If the author does not have the means to pursue his inventive idea, help is normally available from any one of a number of non-profit foundations set up for the sole purpose of sponsoring proposals that they believe to be socially beneficial.  Failing that, an author can often find a wealthy sponsor who either has a direct financial interest in the proposal or backs it out of a compelling sense of social responsibility.

THE COMMENTARY PHASE

Before describing the path taken by submissions to the Volitionment, I must sketch the political structure of the society through which they flow.  Imagine a pyramid made up of five permeable layers-the word “permeable” meant to emphasize the mobility with which individuals can move freely between its informal divisions.  The bottom layer of the pyramid is devoted to individual activity.  Above it lies the corporate level encompassing every form of commercial enterprise from the single-owner shop to huge conglomerates.  Sitting on top of the corporate layer are the non-profit organizations of every description.  Atop the non-profit layer sits the Autonoment and above it, at the very peak of the pyramid, rises the Volitionment.

Once a submission is found in order, it is routed upward through this pyramid, layer by layer beginning with the undermost.  A full month is allowed for examination and comment by each successive tier-the submission growing ever more heavily burdened by remarks at every stage.  Finally, after the Autonoment’s agents have had their say, the voluminous submission package arrives at the doorstep of the Volitionment.

THE VALIDATION PHASE

 The Volitionment is dominated by its prestigious Validation Board made up of worthies elected by the Society of Econeers from among their own fraternity.  As a rule, those selected are highly-qualified, experienced professionals who are so well-established they can afford to absent themselves from their firms in order to donate six months of non-paying public service.

On a rotating basis, every incoming submission is assigned to a particular board member whose job it is to determine whether or not it meets the Volitionment’s requirements.  He is given two months to arrive at his decision during which time he is expected to refer to all the remarks the proposal engendered on its upward journey through the pyramid.  If need be, he can call upon the support of the Volitionment’s large professional staff of full-time technicians, legal experts, and clerical help.  At the same time he can be counted on to scrutinize the draft’s feedback provision to make certain that a bad measure will die of its own accord.  Another area that is sure to attract his special attention is the submission’s self-financing arrangements that are to provide sufficient income to pay for its anticipated expenses.  What is specifically beyond his authority is making a subjective judgment as to the merits or lack thereof of the proposal itself- the right of each citizen to create law being held paramount.

Only a minority of proposals sail through the vetting process and enter into the law books unscathed.  By the same token, few are summarily rejected.  The great majority of cases are set aside and the authors given every opportunity to correct identified defects and resubmit their proposals.  Authors who feel that their draft has been unfairly dealt with can avail themselves of an appeal process before the full Validation Board, but this is a highly expensive route that is seldom resorted to.

Once a proposal is finally approved, its routing back down the pyramid is as lengthy as its ascent.  Each tier is given a full month to adjust its policies and procedures to conform to the forthcoming statute before its provisions are activated.  This delay is particularly helpful to the Autonoment’s programmers who must update their software to conform to each new law.

Although the reader may well have grasped the matter by himself, it is of such importance that I feel obliged to call his attention to the similarity between Postcapia’s political feedback cycle and nature’s own evolutionary scheme.  Every one of their proposed laws is, in effect, a trial-and-error test analogous to nature’s own random mutations.  In both instances, Postcapian and natural, most attempted innovations fail, but the seemingly inefficient process eventually results in what is wanted-a continuous series of incremental improvements.

THE CONSTITUTION

Some two centuries ago, when Postcapia’s constitutional convention was held, the delegates brought with them many conflicting ideas, but, to get their proceedings off to a constructive start, they began their deliberations with the one concept they all agreed upon: the long-term survival of their society depended upon its integration into the natural world.  Given this imperative, they envisioned their constitution as a means of permanently anchoring their ship of state in nature’s certainties so that no matter what transient forces buffeted it in the future, it would remain intact and afloat.

How then were they to ingratiate Postcapia into nature’s vast dominion?  Living within her physical laws presented no problem.  Gravity, the laws of motion, entropy, relativity, and so on gave them no choice.  However, nature’s metaphysical laws seemed much less discernable until, after talking to scientists, the delegates understood that nature too had a keen interest in self-preservation.  In other words, she was forced to keep everything under her jurisdiction in balance.  Let one spinning plate fall from its spindle, and the whole kid and caboodle would come crashing down.  What to do, then, in a dynamic universe chock full of spinning plates?  Nature’s solution, the scientists explained, was to create a mechanism-known to them as “feedback”-capable of immediately readjusting any impending imbalance.  And she, forthwith, applied it to all her creations whether living or nonliving, whether galaxies or subatomic particles.  Thereafter, absolutely nothing could gain entrance to her dominion that was not so equipped.

The scientists then went on to describe the principles of feedback.  Every feedback cycle, regardless of its character and scale, followed a strict five-stage process:

One, the creation of standards under which the system must adhere
Two, the collection of quantitative data relating to the standards
Three, the comparison of that data to the standards
Four, the transference of any resulting discrepancy to some kind of an actuator, and
Five, the actuator’s reaction bringing the system back to within its original setting

 When the delegates assessed their existing situation in the light of these revelations, they realized, to their dismay, that were any feedback mechanism attempted in their corrupted society, it would be disrupted before it ever got off the ground.  As things stood, Postcapia dared not even knock at nature’s door.  So it was that they felt compelled to craft a set of constitutional clauses establishing an environment conducive to feedback.  These clauses stipulated full freedom of expression; the encouragement of innovation; the unimpeded flow of trustworthy information; and the availability of facilities capable of assessing data impartially.  The scientists added that it “went without saying” that honesty was to prevail at all stages of the loop.  The delegates, having a less sanguine opinion of human nature, decided that “it went with saying” and added a clause to that effect.

Having thus joined their laws to nature’s own, the delegates went on to consider what other clauses were needed to underpin their legal system.  It did not take them long, however, to determine that in satisfying nature’s needs they had simultaneously satisfied their own and that additional guiding principles were neither needed nor wanted.

QUESTIONS AND ANSWERS

In that Postcapia’s political system is so radically different from ours, questions are bound to arise in the reader’s mind that have not thus far been addressed.  The following is an effort to anticipate some of these queries.

Q: Are there other branches in Postcapia’s government besides the ones mentioned in this essay.

 A: Yes.  Chief among these are the Judgment dealing with the judiciary and enforcement agencies and the Datament composed of information specialists.

Q: Regarding the Autonoment, assigning the job of monitoring Postcapia’s routine affairs to computers seems, on the face of it, coldblooded.  Shouldn’t human beings be involved in these critical matters?

 A: No.  For this function, information processing is more responsive, more accurate, and, implausible as it sounds, more humane than the judgment of individuals.  Were each sector manned, personal prejudices and ambitions, jurisdictional disputes, and/or ideological considerations might interfere with the process.  On the other hand, nothing prevents a computer from recognizing a deviation from the norm and demanding that some counteraction be undertaken.  In this connection, it should be noted that, in many areas, the computers are programmed not just to maintain the status quo but to constantly apply incremental improvements so as to advance the culture.  For example, successive flat readings regarding the prevalence of diabetes might prompt a computer to demand that its regulator reduce the rate by one percent.  And, as discussed, response teams are always on hand if the computers go to far astray.

 Q:  As far as the Volitionment is concerned, what stops some of the proposed laws from being selfishly motivated?

 A:  Nothing.  Postcapians would assume that selfishness arises, not in some cases, but in all of them just as it does in all commercial transactions.  This alarms them not at all for, as in the case of commercial transactions, every successful proposal causes the well being of society as a whole to notch up accordingly as each selfish need is fulfilled.  Thus it follows that the more such instances, the better.

Q: Why must every proposed law be self-funded?  What about situations in which no income is possible?

 A:  Obviously, the Postcapian society cannot leave itself open to costs imposed on it by individual citizens.  In compelling circumstances in which government funding would be required, the Validation Board is authorized to grant conditional approval subject to the measure winning acceptance in a general election.

 Q: Are lobbyists allowed to influence the Validation Board?

 A: No.  Just as the brain is wrapped in a membrane that protects it from extraneous elements, Postcapians see to it that their board is not interfered with.

 Q: Are there political parties in Postcapia?

 A: No, but not because they are expressly prohibited.  It’s just that Postcapians find no use for them.  Political parties exist to espouse a set of ideological positions and enact them into law-the very antithesis of the Postcapian approach of solving each problem rationally on its own merits.  And, because Postcapians avoid  political parties, they have the good fortune to avoid politics as well. 

Q: Concerning the government in general, the foregoing discussion makes no mention of checks and balances in the Postcapian political system.

A: They weren’t mentioned because they don’t exist.  Checks and balances are a vital necessity in a government composed of untrustworthy branches.  But they carry a heavy penalty in terms of duplication of effort and the disorderly flow of information.  The Postcapian branches of government, however, are entirely trustworthy, so there is no need to curb them in any way beyond the limitations imposed by the system itself.

Q: There was no mention of planning either.

 A: In the Postcapian system, everyone-buyer, seller, speculator-is constantly staking his hard-earned cash in accordance with his judgment as to what the future holds.  In so doing, he directs his little part of the economy in the most efficient, coordinated, communicative, and forward-looking manner he believes is best.  Society then automatically moves in the direction determined by the net effect of all such myriad decisions.  Government’s only responsibility is to provide the information needed by these marketplace participants to make their individual decisions.

Q: What governmental social services are available for indigents?

A: None.  Those in need of charitable assistance and deserving of help can obtain it through Postcapia’s highly developed network of privately funded charities.  As a practical matter, these dispense help more compassionately, more flexibly, and more broadly than government agencies attempting the same function.  Under the latter’s formulaic approach, for example, an able-bodied idler would be treated as generously as a motivated blind person.  Not so in Postcapia. 

 Q: Why is Postcapia’s government so indifferent to personal suffering?

 A:  Postcapians view the use tax dollars to assist the needy as incompatible with their government’s professed policy of treating all its citizens alike.  Government cannot be in the business of institutionalized compassion and, at the same time, credibly maintain that it is providing a level playing field for everyone.

 Q: How are taxes collected and tax rates set?

 A: As detailed in my essay, “Money Redefined,” (under the Economics heading) taxes are assessed on assets.  The rate of taxation is based on the results of a general election in which voters are asked to choose which, if any, proposed rate adjustments or to be adopted-each adjustment fully enumerated on the ballot as to amount and use to which it is intended.  In effect then, the public enjoys a line item veto on the country’s budget-the very epitome of “taxation with representation.” Needless to add there is a great deal of public debate as to the desirability of each alternative prior to the election itself.

 Q: Expand upon Postcapia’s response to national disasters?

 A: As much as possible the regulatory agents assign as much of the cost as possible to the individuals and companies actually hurt by the disaster.  Thanks to this policy, development in hazardous areas is either avoided altogether or is heavily insured.  And private charities are expected to handle the bulk of the relief effort.  In exceptional circumstances, however, the regulators can draw on an Emergency Fund to subsidize private companies engaged in the relief effort.

Q:  What do Postcapian newspapers write about without the daily antics of duplicitous politicians as they go about pretending to guarantee health and happiness, redress historical wrongs, institu­tionalize compassion, increase the standard of liv­ing, and other feats of supernatural derring-do fi­nanced on the “never-never?”

 A:  Constructive matters such as advances in science, artistic achievement, and commercial success.

Q: How did the Postcapians ever manage to adopt so radical a political system?

 A:  The Postcapians would ask us the same question with, I believe, greater justification.  As they see it, aligning their government with nature’s staid administration is the most conservative policy that can be conceived of.  By contrast, they would consider our form of government to be radically disjoined from the ecological systems upon which we are entirely dependent.  And they would marvel that any civilized people would expose themselves to such a dangerous course.

 The Greek financial crisis has made me realize that, rather than bothering to criticize representative governments, I could have saved myself a good deal of effort and my readers a good deal of time by simply calling attention to the manner in which these nations have condemned themselves.  Greece is but the standard bearer for a long list of representative democracies-among them, Japan, Portugal, Spain, Italy, Iceland, Ireland, Hungary, Great Britain, Latvia and, of course, the United States-that are marching briskly down Fredrich von Hayek’s “Road to Serfdom.”  Although national idiosyncrasies have, of course, introduced variations in their headlong plunge into debt, they have all succumbed in one way or another to the cycle of ever rising expenditures to an ever more demanding public-a cycle that has inevitably led to the exhaustion of their national treasuries and their consequent need to borrow from outside sources.

As all debtors come to know, indebtedness has a price.  Now that their sovereign debt is approaching one-hundred per cent of their gross national product-exceeded it in some cases-these countries face the very real dilemma that their interest costs will absorb whatever growth their economies might have generated.  Forget improvements in infrastructure, education, social services and the like.  It will be all they can do to stay afloat.  And some may not be able to manage that.  Whatever the future holds for these countries, their present course is clearly unsustainable and is bound to lead to a messy resolution.

Mind you, this is not to suggest that autocracies have a better track record in this regard.  Dubai, Egypt, Argentina, and Venezuela, to cite three notable examples, are in as much or more trouble than the democracies I’ve mentioned.  Nor has every representative democracy automatically fallen irretrievably into debt.  Canada, Australia, and Norway have kept their head well above water with the help, it must be noted, of their extensive natural resources.

THE WISDOM OF CROWDS AND TERMITES:

Part Four of “Governance Redefined” describes a “wiki” political procedure that aggregates a continuous series of laws arising from nothing more substantial than individual penchants.  No doubt many readers will regard such a system skeptically.  How can such a chaotic, directionless, more-or-less random process produce anything but an unstable, ineffectual, if not outright dangerous state of affairs?  But I would ask such doubters to think again, for rather than being some untried, blue-sky notion, the basic methodology is well established as documented by James Surowiecki in his book, “The Wisdom of Crowds.”  Surowiecki points out that a solution arrived at by an amalgamation of the opinions of independent contributors most often is better than that posed by experts.  Indeed, some of the largest, most innovative corporations purposely rely on this approach in their policy making.  And let us not forget Wikipedia, that impressive, encyclopedic collection of entries by individuals.  Along similar lines, mathematical algorithms, collectively known as “swarm intelligence,” have been incorporated in such advanced applications as robotics, planetary mapping, and nanobots that, someday, may be injected into the bloodstream to kill cancer cells.

Furthermore, the hypothetical governmental system described in the essay submits each individual contribution to a feedback test to verify its validity.  Thanks to this added precaution, even a set of laws dominated by the most badly-advised, ill-informed, stupidist contributors would produce, in time, a workable government.  Doubters of this proposition are directed to the giant termite mounds in Africa that can reach thirty feet in height.  Gazing at one of these impressive structures, one might well imagine it to be the inspiration of some master termite architect.  But despite that perfectly reasonable assumption, the fact is that the only architect on the job is Captain Feedback.  It seems that whenever the termite colony becomes infected with the building urge, its members fan out over a site, form into groups each of which sets about industriously building a mound of its own.  After a period of time, the Captain signals the end of a cycle; the workers compare the size and quality of their particular mound to others in the vicinity.  If that comparison locates a mound superior to their own, the workers readily desert the structure they had labored on and join ranks with their more successful brethren.  Thus, after this first iteration, fewer than half of the original trial mounds remain active and the remainder left unattended.  After a series of such iterations, the entire colony focuses on a single project and the mound rises into the air-a monument to the efficacy of feedback even in the hands of a species dumber than we are.

DH, April 28, 2010