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What does it mean when we can no longer distinguish between the actions of the left and the right? If that dynamic no longer accurately distinguishes what occurs, why are so many of our policy debates framed in Left/Right terms? In many ways, American society is increasingly less married to this dynamic: Party Affiliation continues to fall, approval of Congress is at record lows, and voter participation hovers at very low rates.

There is some pushback already taking place against the concentration of corporate power: Mainstream corporate media has been increasingly replaced with user created content – YouTube and Blogs are increasingly important to news consumers (especially younger users). Independent voters are an increasingly larger share of the US electorate. And I suspect that much of the pushback against the Elizabeth Warren’s concept of a Financial Consumer Protection Agency plays directly into this Corporate vs. Individual fight. But the battle lines between the two groups have barely been drawn. I expect this fight will define American politics over the next decade.

first question we can reasonably ask is whether all moral systems are indeed focused on benefiting human happiness and decreasing pain.

Jeremy Bentham, the founder of utilitarianism, wrote the following in his Introduction to the Principles of Morals and Legislation: “When a man attempts to combat the principle of utility, it is with reasons drawn, without his being aware of it, from that very principle itself.”

Michael Sandel discusses this line of thought in his excellent book, Justice: What’s the Right Thing to Do?, and sums up Bentham’s argument as such: “All moral quarrels, properly understood, are [for Bentham] disagreements about how to apply the utilitarian principle of maximizing pleasure and minimizing pain, not about the principle itself.”

But Bentham’s definition of utilitarianism is perhaps too broad: are fundamentalist Christians or Muslims really utilitarians, just with different ideas about how to facilitate human flourishing?

one wonders whether this makes the word so all-encompassing in meaning as to render it useless.

Yet, even if pain and happiness are the objects of moral concern, so what? As philosopher Simon Blackburn recently pointed out, “Every moral philosopher knows that moral philosophy is functionally about reducing suffering and increasing human flourishing.” But is that the central and sole focus of all moral philosophies? Don’t moral systems vary in their core focuses?

Consider the observation that religious belief makes humans happier, on average

Secularists would rightly resist the idea that religious belief is moral if it makes people happier. They would reject the very idea because deep down, they value truth – a value that is non-negotiable.Utilitarians would assert that truth is just another utility, for people can only value truth if they take it to be beneficial to human happiness and flourishing.

. We might all agree that morality is “functionally about reducing suffering and increasing human flourishing,” as Blackburn says, but how do we achieve that? Consequentialism posits that we can get there by weighing the consequences of beliefs and actions as they relate to human happiness and pain. Sam Harris recently wrote: “It is true that many people believe that ‘there are non-consequentialist ways of approaching morality,’ but I think that they are wrong. In my experience, when you scratch the surface on any deontologist, you find a consequentialist just waiting to get out. For instance, I think that Kant's Categorical Imperative only qualifies as a rational standard of morality given the assumption that it will be generally beneficial (as J.S. Mill pointed out at the beginning of Utilitarianism). Ditto for religious morality.”

we might wonder about the elasticity of words, in this case consequentialism. Do fundamentalist Christians and Muslims count as consequentialists? Is consequentialism so empty of content that to be a consequentialist one need only think he or she is benefiting humanity in some way?

Harris’ argument is that one cannot adhere to a certain conception of morality without believing it is beneficial to society

This still seems somewhat obvious to me as a general statement about morality, but is it really the point of consequentialism? Not really. Consequentialism is much more focused than that. Consider the issue of corporal punishment in schools. Harris has stated that we would be forced to admit that corporal punishment is moral if studies showed that “subjecting children to ‘pain, violence, and public humiliation’ leads to ‘healthy emotional development and good behavior’ (i.e., it conduces to their general well-being and to the well-being of society). If it did, well then yes, I would admit that it was moral. In fact, it would appear moral to more or less everyone.” Harris is being rhetorical – he does not believe corporal punishment is moral – but the point stands.

An immediate pitfall of this approach is that it does not qualify corporal punishment as the best way to raise emotionally healthy children who behave well.

The virtue ethicists inside us would argue that we ought not to foster a society in which people beat and humiliate children, never mind the consequences. There is also a reasonable and powerful argument based on personal freedom. Don’t children have the right to be free from violence in the public classroom? Don’t children have the right not to suffer intentional harm without consent? Isn’t that part of their “moral well-being”?

If consequences were really at the heart of all our moral deliberations, we might live in a very different society.

what if economies based on slavery lead to an increase in general happiness and flourishing for their respective societies? Would we admit slavery was moral? I hope not, because we value certain ideas about human rights and freedom. Or, what if the death penalty truly deterred crime? And what if we knew everyone we killed was guilty as charged, meaning no need for The Innocence Project? I would still object, on the grounds that it is morally wrong for us to kill people, even if they have committed the crime of which they are accused. Certain things hold, no matter the consequences.

We all do care about increasing human happiness and flourishing, and decreasing pain and suffering, and we all do care about the consequences of our beliefs and actions. But we focus on those criteria to differing degrees, and we have differing conceptions of how to achieve the respective goals – making us perhaps utilitarians and consequentialists in part, but not in whole.

The corporate blogging silos Winer is thinking of are services like Twitter, Facebook and WordPress. All three have been instrumental in the growth of the web, they make it easy for anyone publish. But they also suffer denial of service attacks, government shutdowns and growing pains, centralized services like Twitter and Facebook are vulnerable. Services wrapped up in a single company are also vulnerable to market whims, Geocities is gone, FriendFeed languishes at Facebook and Yahoo is planning to sell Delicious. A centralized web is brittle web, one that can make our data, our communications tools disappear tomorrow.

But the web will likely never be completely free of centralized services and Winer recognizes that. Most people will still choose convenience over freedom. Twitter’s user interface is simple, easy to use and works on half a dozen devices.

Winer isn’t the only one who believes the future of the web will be distributed systems that aren’t controlled by any single corporation or technology platform. Microformats founder Tantek Çelik is also working on a distributed publishing system that seeks to retain all the cool features of the social web, but remove the centralized bottleneck.

to be free of corporate blogging silos and centralized services the web will need an army of distributed servers run by hobbyists, not just tech-savvy web admins, but ordinary people who love the web and want to experiment.

Winer wants to start by creating a loosely coupled, distributed microblogging service like Twitter. “I’m pretty sure we know how to create a micro-blogging community with open formats and protocols and no central point of failure,” he writes on his blog.

that means decoupling the act of writing from the act of publishing. The idea isn’t to create an open alternative to Twitter, it’s to remove the need to use Twitter for writing on Twitter. Instead you write with the tools of your choice and publish to your own server.

If everyone publishes first to their own server there’s no single point of failure. There’s no fail whale, and no company owns your data. Once the content is on your server you can then push it on to wherever you’d like — Twitter, Tumblr, WordPress of whatever the site du jour is ten years from now.

The glue that holds this vision together is RSS. Winer sees RSS as the ideal broadcast mechanism for the distributed web and in fact he’s already using it — Winer has an RSS feed of links that are then pushed on to Twitter.

With a growing community of people determined to become collaborative producers rather than fit into the producer/consumer paradigm, and 3D files for physical objects already being shared like movies and music, the implications are profound. Products, and the manufacturing technology used to make them will continue to drop in price, become easier to make for individuals rather than large corporations, just as media is now shifting into the hands of the common people. And like the shift of information, industry will move from the elite and their agenda of preserving their power, to the end of empowering the people.

In a future alternative economy where everyone is a collaborative designer, producer, and manufacturer instead of passive consumers and when problems like "global climate change," "overpopulation," and "fuel crises" cross our path, we will counter them with technical solutions, not political indulgences like carbon taxes, and not draconian decrees like "one-child policies."

We will become the literal architects of our own future in this "personal manufacturing" revolution. While these technologies may still appear primitive, or somewhat "useless" or "impractical" we must remember where our personal computers stood on the eve of the dawning of the information age and how quickly they changed our lives. And while many of us may be unaware of this unfolding revolution, you can bet the globalists, power brokers, and all those that stand to lose from it not only see it but are already actively fighting against it.Understandably it takes some technical know-how to jump into the personal manufacturing revolution. In part 2 of "Alternative Economics" we will explore real world "low-tech" solutions to becoming self-sufficient, local, and rediscover the empowerment granted by doing so.

This is why, for example, large numbers of Americans oppose the idea of an estate tax even though the current form of the tax, slated to return in 2011, is very unlikely to affect them or their estates. In narrowly self-interested terms, that view may be irrational, but most Americans are unwilling to frame national issues in terms of rich versus poor. There’s a great deal of hostility toward various government bailouts, but the idea of “undeserving” recipients is the key factor in those feelings. Resentment against Wall Street gamesters hasn’t spilled over much into resentment against the wealthy more generally. The bailout for General Motors’ labor unions wasn’t so popular either—again, obviously not because of any bias against the wealthy but because a basic sense of fairness was violated. As of November 2010, congressional Democrats are of a mixed mind as to whether the Bush tax cuts should expire for those whose annual income exceeds $250,000; that is in large part because their constituents bear no animus toward rich people, only toward undeservedly rich people.

envy is usually local. At least in the United States, most economic resentment is not directed toward billionaires or high-roller financiers—not even corrupt ones. It’s directed at the guy down the hall who got a bigger raise. It’s directed at the husband of your wife’s sister, because the brand of beer he stocks costs $3 a case more than yours, and so on. That’s another reason why a lot of people aren’t so bothered by income or wealth inequality at the macro level. Most of us don’t compare ourselves to billionaires. Gore Vidal put it honestly: “Whenever a friend succeeds, a little something in me dies.”

Occasionally the cynic in me wonders why so many relatively well-off intellectuals lead the egalitarian charge against the privileges of the wealthy. One group has the status currency of money and the other has the status currency of intellect, so might they be competing for overall social regard? The high status of the wealthy in America, or for that matter the high status of celebrities, seems to bother our intellectual class most. That class composes a very small group, however, so the upshot is that growing income inequality won’t necessarily have major political implications at the macro level.

All that said, income inequality does matter—for both politics and the economy.

The numbers are clear: Income inequality has been rising in the United States, especially at the very top. The data show a big difference between two quite separate issues, namely income growth at the very top of the distribution and greater inequality throughout the distribution. The first trend is much more pronounced than the second, although the two are often confused.

When it comes to the first trend, the share of pre-tax income earned by the richest 1 percent of earners has increased from about 8 percent in 1974 to more than 18 percent in 2007. Furthermore, the richest 0.01 percent (the 15,000 or so richest families) had a share of less than 1 percent in 1974 but more than 6 percent of national income in 2007. As noted, those figures are from pre-tax income, so don’t look to the George W. Bush tax cuts to explain the pattern. Furthermore, these gains have been sustained and have evolved over many years, rather than coming in one or two small bursts between 1974 and today.1

At the same time, wage growth for the median earner has slowed since 1973. But that slower wage growth has afflicted large numbers of Americans, and it is conceptually distinct from the higher relative share of top income earners. For instance, if you take the 1979–2005 period, the average incomes of the bottom fifth of households increased only 6 percent while the incomes of the middle quintile rose by 21 percent. That’s a widening of the spread of incomes, but it’s not so drastic compared to the explosive gains at the very top.

The broader change in income distribution, the one occurring beneath the very top earners, can be deconstructed in a manner that makes nearly all of it look harmless. For instance, there is usually greater inequality of income among both older people and the more highly educated, if only because there is more time and more room for fortunes to vary. Since America is becoming both older and more highly educated, our measured income inequality will increase pretty much by demographic fiat. Economist Thomas Lemieux at the University of British Columbia estimates that these demographic effects explain three-quarters of the observed rise in income inequality for men, and even more for women.2

Attacking the problem from a different angle, other economists are challenging whether there is much growth in inequality at all below the super-rich. For instance, real incomes are measured using a common price index, yet poorer people are more likely to shop at discount outlets like Wal-Mart, which have seen big price drops over the past twenty years.3 Once we take this behavior into account, it is unclear whether the real income gaps between the poor and middle class have been widening much at all. Robert J. Gordon, an economist from Northwestern University who is hardly known as a right-wing apologist, wrote in a recent paper that “there was no increase of inequality after 1993 in the bottom 99 percent of the population”, and that whatever overall change there was “can be entirely explained by the behavior of income in the top 1 percent.”4

And so we come again to the gains of the top earners, clearly the big story told by the data. It’s worth noting that over this same period of time, inequality of work hours increased too. The top earners worked a lot more and most other Americans worked somewhat less. That’s another reason why high earners don’t occasion more resentment: Many people understand how hard they have to work to get there. It also seems that most of the income gains of the top earners were related to performance pay—bonuses, in other words—and not wildly out-of-whack yearly salaries.5

It is also the case that any society with a lot of “threshold earners” is likely to experience growing income inequality. A threshold earner is someone who seeks to earn a certain amount of money and no more. If wages go up, that person will respond by seeking less work or by working less hard or less often. That person simply wants to “get by” in terms of absolute earning power in order to experience other gains in the form of leisure—whether spending time with friends and family, walking in the woods and so on. Luck aside, that person’s income will never rise much above the threshold.

The funny thing is this: For years, many cultural critics in and of the United States have been telling us that Americans should behave more like threshold earners. We should be less harried, more interested in nurturing friendships, and more interested in the non-commercial sphere of life. That may well be good advice. Many studies suggest that above a certain level more money brings only marginal increments of happiness. What isn’t so widely advertised is that those same critics have basically been telling us, without realizing it, that we should be acting in such a manner as to increase measured income inequality. Not only is high inequality an inevitable concomitant of human diversity, but growing income inequality may be, too, if lots of us take the kind of advice that will make us happier.

Why is the top 1 percent doing so well?

Steven N. Kaplan and Joshua Rauh have recently provided a detailed estimation of particular American incomes.6 Their data do not comprise the entire U.S. population, but from partial financial records they find a very strong role for the financial sector in driving the trend toward income concentration at the top. For instance, for 2004, nonfinancial executives of publicly traded companies accounted for less than 6 percent of the top 0.01 percent income bracket. In that same year, the top 25 hedge fund managers combined appear to have earned more than all of the CEOs from the entire S&P 500. The number of Wall Street investors earning more than $100 million a year was nine times higher than the public company executives earning that amount. The authors also relate that they shared their estimates with a former U.S. Secretary of the Treasury, one who also has a Wall Street background. He thought their estimates of earnings in the financial sector were, if anything, understated.

Many of the other high earners are also connected to finance. After Wall Street, Kaplan and Rauh identify the legal sector as a contributor to the growing spread in earnings at the top. Yet many high-earning lawyers are doing financial deals, so a lot of the income generated through legal activity is rooted in finance. Other lawyers are defending corporations against lawsuits, filing lawsuits or helping corporations deal with complex regulations. The returns to these activities are an artifact of the growing complexity of the law and government growth rather than a tale of markets per se. Finance aside, there isn’t much of a story of market failure here, even if we don’t find the results aesthetically appealing.

When it comes to professional athletes and celebrities, there isn’t much of a mystery as to what has happened. Tiger Woods earns much more, even adjusting for inflation, than Arnold Palmer ever did. J.K. Rowling, the first billionaire author, earns much more than did Charles Dickens. These high incomes come, on balance, from the greater reach of modern communications and marketing. Kids all over the world read about Harry Potter. There is more purchasing power to spend on children’s books and, indeed, on culture and celebrities more generally. For high-earning celebrities, hardly anyone finds these earnings so morally objectionable as to suggest that they be politically actionable. Cultural critics can complain that good schoolteachers earn too little, and they may be right, but that does not make celebrities into political targets. They’re too popular. It’s also pretty clear that most of them work hard to earn their money, by persuading fans to buy or otherwise support their product. Most of these individuals do not come from elite or extremely privileged backgrounds, either. They worked their way to the top, and even if Rowling is not an author for the ages, her books tapped into the spirit of their time in a special way. We may or may not wish to tax the wealthy, including wealthy celebrities, at higher rates, but there is no need to “cure” the structural causes of higher celebrity incomes.

to be sure, the high incomes in finance should give us all pause.

The first factor driving high returns is sometimes called by practitioners “going short on volatility.” Sometimes it is called “negative skewness.” In plain English, this means that some investors opt for a strategy of betting against big, unexpected moves in market prices. Most of the time investors will do well by this strategy, since big, unexpected moves are outliers by definition. Traders will earn above-average returns in good times. In bad times they won’t suffer fully when catastrophic returns come in, as sooner or later is bound to happen, because the downside of these bets is partly socialized onto the Treasury, the Federal Reserve and, of course, the taxpayers and the unemployed.

if you bet against unlikely events, most of the time you will look smart and have the money to validate the appearance. Periodically, however, you will look very bad. Does that kind of pattern sound familiar? It happens in finance, too. Betting against a big decline in home prices is analogous to betting against the Wizards. Every now and then such a bet will blow up in your face, though in most years that trading activity will generate above-average profits and big bonuses for the traders and CEOs.

To this mix we can add the fact that many money managers are investing other people’s money. If you plan to stay with an investment bank for ten years or less, most of the people playing this investing strategy will make out very well most of the time. Everyone’s time horizon is a bit limited and you will bring in some nice years of extra returns and reap nice bonuses. And let’s say the whole thing does blow up in your face? What’s the worst that can happen? Your bosses fire you, but you will still have millions in the bank and that MBA from Harvard or Wharton. For the people actually investing the money, there’s barely any downside risk other than having to quit the party early. Furthermore, if everyone else made more or less the same mistake (very surprising major events, such as a busted housing market, affect virtually everybody), you’re hardly disgraced. You might even get rehired at another investment bank, or maybe a hedge fund, within months or even weeks.

Moreover, smart shareholders will acquiesce to or even encourage these gambles. They gain on the upside, while the downside, past the point of bankruptcy, is borne by the firm’s creditors. And will the bondholders object? Well, they might have a difficult time monitoring the internal trading operations of financial institutions. Of course, the firm’s trading book cannot be open to competitors, and that means it cannot be open to bondholders (or even most shareholders) either. So what, exactly, will they have in hand to object to?

Perhaps more important, government bailouts minimize the damage to creditors on the downside. Neither the Treasury nor the Fed allowed creditors to take any losses from the collapse of the major banks during the financial crisis. The U.S. government guaranteed these loans, either explicitly or implicitly. Guaranteeing the debt also encourages equity holders to take more risk. While current bailouts have not in general maintained equity values, and while share prices have often fallen to near zero following the bust of a major bank, the bailouts still give the bank a lifeline. Instead of the bank being destroyed, sometimes those equity prices do climb back out of the hole. This is true of the major surviving banks in the United States, and even AIG is paying back its bailout. For better or worse, we’re handing out free options on recovery, and that encourages banks to take more risk in the first place.

there is an unholy dynamic of short-term trading and investing, backed up by bailouts and risk reduction from the government and the Federal Reserve. This is not good. “Going short on volatility” is a dangerous strategy from a social point of view. For one thing, in so-called normal times, the finance sector attracts a big chunk of the smartest, most hard-working and most talented individuals. That represents a huge human capital opportunity cost to society and the economy at large. But more immediate and more important, it means that banks take far too many risks and go way out on a limb, often in correlated fashion. When their bets turn sour, as they did in 2007–09, everyone else pays the price.

And it’s not just the taxpayer cost of the bailout that stings. The financial disruption ends up throwing a lot of people out of work down the economic food chain, often for long periods. Furthermore, the Federal Reserve System has recapitalized major U.S. banks by paying interest on bank reserves and by keeping an unusually high interest rate spread, which allows banks to borrow short from Treasury at near-zero rates and invest in other higher-yielding assets and earn back lots of money rather quickly. In essence, we’re allowing banks to earn their way back by arbitraging interest rate spreads against the U.S. government. This is rarely called a bailout and it doesn’t count as a normal budget item, but it is a bailout nonetheless. This type of implicit bailout brings high social costs by slowing down economic recovery (the interest rate spreads require tight monetary policy) and by redistributing income from the Treasury to the major banks.

the “going short on volatility” strategy increases income inequality. In normal years the financial sector is flush with cash and high earnings. In implosion years a lot of the losses are borne by other sectors of society. In other words, financial crisis begets income inequality. Despite being conceptually distinct phenomena, the political economy of income inequality is, in part, the political economy of finance. Simon Johnson tabulates the numbers nicely: From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent. Pay rose just as dramatically. From 1948 to 1982, average compensation in the financial sector ranged between 99 percent and 108 percent of the average for all domestic private industries. From 1983, it shot upward, reaching 181 percent in 2007.7

There’s a second reason why the financial sector abets income inequality: the “moving first” issue. Let’s say that some news hits the market and that traders interpret this news at different speeds. One trader figures out what the news means in a second, while the other traders require five seconds. Still other traders require an entire day or maybe even a month to figure things out. The early traders earn the extra money. They buy the proper assets early, at the lower prices, and reap most of the gains when the other, later traders pile on. Similarly, if you buy into a successful tech company in the early stages, you are “moving first” in a very effective manner, and you will capture most of the gains if that company hits it big.

The moving-first phenomenon sums to a “winner-take-all” market. Only some relatively small number of traders, sometimes just one trader, can be first. Those who are first will make far more than those who are fourth or fifth. This difference will persist, even if those who are fourth come pretty close to competing with those who are first. In this context, first is first and it doesn’t matter much whether those who come in fourth pile on a month, a minute or a fraction of a second later. Those who bought (or sold, as the case may be) first have captured and locked in most of the available gains. Since gains are concentrated among the early winners, and the closeness of the runner-ups doesn’t so much matter for income distribution, asset-market trading thus encourages the ongoing concentration of wealth. Many investors make lots of mistakes and lose their money, but each year brings a new bunch of projects that can turn the early investors and traders into very wealthy individuals.

These two features of the problem—“going short on volatility” and “getting there first”—are related. Let’s say that Goldman Sachs regularly secures a lot of the best and quickest trades, whether because of its quality analysis, inside connections or high-frequency trading apparatus (it has all three). It builds up a treasure chest of profits and continues to hire very sharp traders and to receive valuable information. Those profits allow it to make “short on volatility” bets faster than anyone else, because if it messes up, it still has a large enough buffer to pad losses. This increases the odds that Goldman will repeatedly pull in spectacular profits.

Still, every now and then Goldman will go bust, or would go bust if not for government bailouts. But the odds are in any given year that it won’t because of the advantages it and other big banks have. It’s as if the major banks have tapped a hole in the social till and they are drinking from it with a straw. In any given year, this practice may seem tolerable—didn’t the bank earn the money fair and square by a series of fairly normal looking trades? Yet over time this situation will corrode productivity, because what the banks do bears almost no resemblance to a process of getting capital into the hands of those who can make most efficient use of it. And it leads to periodic financial explosions. That, in short, is the real problem of income inequality we face today. It’s what causes the inequality at the very top of the earning pyramid that has dangerous implications for the economy as a whole.

What about controlling bank risk-taking directly with tight government oversight? That is not practical. There are more ways for banks to take risks than even knowledgeable regulators can possibly control; it just isn’t that easy to oversee a balance sheet with hundreds of billions of dollars on it, especially when short-term positions are wound down before quarterly inspections. It’s also not clear how well regulators can identify risky assets. Some of the worst excesses of the financial crisis were grounded in mortgage-backed assets—a very traditional function of banks—not exotic derivatives trading strategies. Virtually any asset position can be used to bet long odds, one way or another. It is naive to think that underpaid, undertrained regulators can keep up with financial traders, especially when the latter stand to earn billions by circumventing the intent of regulations while remaining within the letter of the law.

For the time being, we need to accept the possibility that the financial sector has learned how to game the American (and UK-based) system of state capitalism. It’s no longer obvious that the system is stable at a macro level, and extreme income inequality at the top has been one result of that imbalance. Income inequality is a symptom, however, rather than a cause of the real problem. The root cause of income inequality, viewed in the most general terms, is extreme human ingenuity, albeit of a perverse kind. That is why it is so hard to control.

Another root cause of growing inequality is that the modern world, by so limiting our downside risk, makes extreme risk-taking all too comfortable and easy. More risk-taking will mean more inequality, sooner or later, because winners always emerge from risk-taking. Yet bankers who take bad risks (provided those risks are legal) simply do not end up with bad outcomes in any absolute sense. They still have millions in the bank, lots of human capital and plenty of social status. We’re not going to bring back torture, trial by ordeal or debtors’ prisons, nor should we. Yet the threat of impoverishment and disgrace no longer looms the way it once did, so we no longer can constrain excess financial risk-taking. It’s too soft and cushy a world.

Why don’t we simply eliminate the safety net for clueless or unlucky risk-takers so that losses equal gains overall? That’s a good idea in principle, but it is hard to put into practice. Once a financial crisis arrives, politicians will seek to limit the damage, and that means they will bail out major financial institutions. Had we not passed TARP and related policies, the United States probably would have faced unemployment rates of 25 percent of higher, as in the Great Depression. The political consequences would not have been pretty. Bank bailouts may sound quite interventionist, and indeed they are, but in relative terms they probably were the most libertarian policy we had on tap. It meant big one-time expenses, but, for the most part, it kept government out of the real economy (the General Motors bailout aside).

We probably don’t have any solution to the hazards created by our financial sector, not because plutocrats are preventing our political system from adopting appropriate remedies, but because we don’t know what those remedies are. Yet neither is another crisis immediately upon us. The underlying dynamic favors excess risk-taking, but banks at the current moment fear the scrutiny of regulators and the public and so are playing it fairly safe. They are sitting on money rather than lending it out. The biggest risk today is how few parties will take risks, and, in part, the caution of banks is driving our current protracted economic slowdown. According to this view, the long run will bring another financial crisis once moods pick up and external scrutiny weakens, but that day of reckoning is still some ways off.

Is the overall picture a shame? Yes. Is it distorting resource distribution and productivity in the meantime? Yes. Will it again bring our economy to its knees? Probably. Maybe that’s simply the price of modern society. Income inequality will likely continue to rise and we will search in vain for the appropriate political remedies for our underlying problems.

Doctors and other health-care workers can provide patients and families with probabilities for improvement or recovery, but statistics are hardly what is wanted. Even after profound injury or the diagnosis of an illness that statistically is nearly certain to be fatal, what people hear is the word nearly. How do we not allow the death of someone who might be saved? How do we avoid the equally intolerable salvation of a clinically dead person?

Injecting political agendas into these end-of-life complexities only confuses the problem without providing a solution.

The questions are how, when, and on whose terms we depart. It is curious that people might be convinced to avoid confronting death while they are healthy, and that society tolerates ad hominem arguments that obstruct rational debate over an authentic problem of ethics in an uncertain world.

Any seriously ill older person who winds up in a modern CCU immediately yields his autonomy. Even if the doctors, nurses, and staff caring for him are intelligent, properly educated, humanistically motivated, and correct in the diagnosis, they are manipulated not only by the tyranny of technology but also by the rules established in their hospital. In addition, regulations of local and state licensing agencies and the federal government dictate the parameters of what the hospital workers do and how they do it, and every action taken is heavily influenced by legal experts committed to their client’s best interest—values frequently different from the patient’s. Once an acutely ill patient finds himself in this situation, everything possible will be done to save him; he is in no position to offer an opinion.

Eventually, after hours or days (depending on the illness and who is involved in the care), the wisdom of continuing treatment may come into question. But by then the patient will likely have been intubated and placed on a ventilator, a feeding tube may have been inserted, a catheter placed in the bladder, IVs started in peripheral veins or threaded through a major blood vessel near the heart, and monitors attached to record an EKG, arterial blood pressure, temperature, respirations, oxygen saturation, even pressure inside the skull. Sequential pressure devices will have been wrapped around the legs. All the digital marvels have alarms, so if one isn’t working properly, an annoying beep, like the sound of a backing truck, will fill the patient’s room. Vigilant nurses will add drugs by the dozens to the IV or push them into ports. Families will hover uncertainly. Meanwhile, tens and perhaps hundreds of thousands of dollars will have been transferred from one large corporation—an insurer of some kind—to another large corporation—a health care delivery system of some kind.

While the expense of the drugs, manpower, and technology required to make a diagnosis and deliver therapy does sop up resources and thereby deny treatment that might be more fruitful for others, including the 46.3 million Americans who, according to the Census Bureau, have no health insurance, that isn’t the real dilemma of the critical care unit.

the problem isn’t getting into or out of a CCU; the predicament is in knowing who should be there in the first place.

Before we become ill, we tend to assume that everything can be treated and treated successfully. The prelate in Willa Cather’s Death Comes for the Archbishop was wiser. Approaching the end, he said to a younger priest, “I shall not die of a cold, my son. I shall die of having lived.”

best way to avoid unwanted admission to a critical care unit at or near the end of life is to write an advance directive (a living will or durable power of attorney for health care) when healthy.

, not many people do this and, more regrettably, often the document is not included in the patient’s chart or it goes unnoticed.

Since we are sure to die of having lived, we should prepare for death before the last minute. Entire corporations are dedicated to teaching people how to retire well. All of their written materials, Web sites, and seminars begin with the same advice: start planning early. Shouldn’t we at least occasionally think about how we want to leave our lives?

Flannery O’Connor, who died young of systemic lupus, wrote, “Sickness before death is a very appropriate thing and I think those who don’t have it miss one of God’s mercies.”

Because we understand the metaphor of conflict so well, we are easily sold on the idea that we must resolutely fight against our afflictions (although there was once an article in The Onion titled “Man Loses Cowardly Battle With Cancer”). And there is a place to contest an abnormal metabolism, a mutation, a trauma, or an infection. But there is also a place to surrender. When the organs have failed, when the mind has dissolved, when the body that has faithfully housed us for our lifetime has abandoned us, what’s wrong with giving up?

In this New York Times’ article, “Teachers Wonder, Why the scorn?“, the writer notes the often scathing comments from counter-demonstrators – “Oh you pathetic teachers, read the online comments and placards of counterdemonstrators. You are glorified baby sitters who leave work at 3 p.m. You deserve minimum wage.” What had begun as an ostensibly ‘economic reform’ targeted at teachers’ unions has gradually transmogrified into a kind of “character attack” to this section of American society – teachers are people who wage violent protests (thanks to borrowed footage from the West Coast) and they are undeserving of their economic benefits, and indeed treat these privileges as ‘rights’. The ‘war’ is waged on multiple fronts, economic, political, social, psychological even — or at least one gets this sort of picture from reading these articles.

as Singaporeans with a uniquely Singaporean work ethic, we may perceive functioning ‘trade unions’ as those institutions in the so-called “West” where they amass lots of membership, then hold the government ‘hostage’ in order to negotiate higher wages and benefits. Think of trade unions in the Singaporean context, and I think of SIA pilots. And of LKY’s various firm and stern comments on those issues. Think of trade unions and I think of strikes in France, in South Korea, when I was younger, and of my mum saying, “How irresponsible!” before flipping the TV channel.

The reason why I think the teachers’ protests should not be seen solely as an issue about trade-unions, and evaluated myopically and naively in terms of whether trade unions are ‘good’ or ‘bad’ is because the protests feature in a larger political context with the billionaire Koch brothers at the helm, financing and directing much of what has transpired in recent weeks. Or at least according to certain articles which I present here.

In this NYT article entitled “Billionaire Brothers’ Money Plays Role in Wisconsin Dispute“, the writer noted that Koch Industries had been “one of the biggest contributors to the election campaign of Gov. Scott Walker of Wisconsin, a Republican who has championed the proposed cuts.” Further, the president of Americans for Prosperity, a nonprofit group financed by the Koch brothers, had reportedly addressed counter-demonstrators last Saturday saying that “the cuts were not only necessary, but they also represented the start of a much-needed nationwide move to slash public-sector union benefits.” and in his own words -“ ‘We are going to bring fiscal sanity back to this great nation’ ”. All this rhetoric would be more convincing to me if they weren’t funded by the same two billionaires who financially enabled Walker’s governorship.

I now refer you to a long piece by Jane Mayer for The New Yorker titled, “Covert Operations: The billionaire brothers who are waging a war against Obama“. According to her, “The Kochs are longtime libertarians who believe in drastically lower personal and corporate taxes, minimal social services for the needy, and much less oversight of industry—especially environmental regulation. These views dovetail with the brothers’ corporate interests.”

Their libertarian modus operandi involves great expenses in lobbying, in political contributions and in setting up think tanks. From 2006-2010, Koch Industries have led energy companies in political contributions; “[i]n the second quarter of 2010, David Koch was the biggest individual contributor to the Republican Governors Association, with a million-dollar donation.” More statistics, or at least those of the non-anonymous donation records, can be found on page 5 of Mayer’s piece.

Naturally, the Democrats also have their billionaire donors, most notably in the form of George Soros. Mayer writes that he has made ‘generous private contributions to various Democratic campaigns, including Obama’s.” Yet what distinguishes him from the Koch brothers here is, as Michael Vachon, his spokesman, argued, ‘that Soros’s giving is transparent, and that “none of his contributions are in the service of his own economic interests.” ‘ Of course, this must be taken with a healthy dose of salt, but I will note here that in Charles Ferguson’s documentary Inside Job, which was about the 2008 financial crisis, George Soros was one of those interviewed who was not portrayed negatively. (My review of it is here.)

Of the Koch brothers’ political investments, what interested me more was the US’ “first libertarian thinktank”, the Cato Institute. Mayer writes, ‘When President Obama, in a 2008 speech, described the science on global warming as “beyond dispute,” the Cato Institute took out a full-page ad in the Times to contradict him. Cato’s resident scholars have relentlessly criticized political attempts to stop global warming as expensive, ineffective, and unnecessary. Ed Crane, the Cato Institute’s founder and president, told [Mayer] that “global-warming theories give the government more control of the economy.” ‘

K Street refers to a major street in Washington, D.C. where major think tanks, lobbyists and advocacy groups are located.

with recent developments as the Citizens United case where corporations are now ‘persons’ and have no caps in political contributions, the Koch brothers are ever better-positioned to take down their perceived big, bad government and carry out their ideological agenda as sketched in Mayer’s piece

with much important news around the world jostling for our attention – earthquake in Japan, Middle East revolutions – the passing of an anti-union bill (which finally happened today, for better or for worse) in an American state is unlikely to make a headline able to compete with natural disasters and revolutions. Then, to quote Wisconsin Governor Scott Walker during that prank call conversation, “Sooner or later the media stops finding it [the teacher protests] interesting.”

What remains more puzzling for me is why the American public seems to buy into the Koch-funded libertarian rhetoric. Mayer writes, ‘ “Income inequality in America is greater than it has been since the nineteen-twenties, and since the seventies the tax rates of the wealthiest have fallen more than those of the middle class. Yet the brothers’ message has evidently resonated with voters: a recent poll found that fifty-five per cent of Americans agreed that Obama is a socialist.” I suppose that not knowing who is funding the political rhetoric makes it easier for the public to imbibe it.

It is difficult to say if the "failure" of the academics was due to an unstinting belief in free markets or conflicts of interest. Parts of the movie did appear to be trying too hard to prove the point. However, the threat posed by academics earning consulting fees that dwarf their academic compensation, and which might therefore impair their independence, is a real one.

One of the worst was the Ivy League university economics professor engaged by the Icelandic Chamber of Commerce to co-author a report on the Icelandic financial system. He concluded that the system was sound even though there were numerous warning signs. When he was asked how he arrived at his conclusions, he said he had talked to people and were misled by them. One wonders how much of his conclusions were actually based on rigorous analysis.

it is troubling if academics merely become mouthpieces for vested interests. The impression one gets from watching the movie certainly does not fit with the high level of trust in academics shown by the Edelman Trust Barometer.

As an academic, I have often been told that I can be independent and objective - that I should have no axe to grind and no wheels to grease. However, I worry about an erosion of trust in academics. This may be especially true in certain disciplines like business (which is mine, incidentally).

too many business school professors were serving on US corporate boards and have lost their willingness to be critical about unethical business practices. In corporate scandals such as Enron and Satyam, academics from top business schools have not particularly covered themselves in glory.

It is more and more common for universities - in the US and here - to invite business people to serve on their boards.

universities and academics may lose their independence and objectivity in commenting on business issues critically, for fear of offending those who ultimately have an oversight role over the varsity's senior management.

Universities might also have business leaders serving on boards as potential donors, which would also confuse the role of board members and lead to conflicts of interest. In the Satyam scandal in India, the founder of Satyam sat on the board of the Indian School of Business, while the Dean of the Indian School of Business sat on Satyam's board. Satyam also made a significant donation to the Indian School of Business.

Universities are increasingly dependent on funding from industry and wealthy individuals as well as other sources, sometimes even dubious ones. The recent scandal at the London School of Economics involving its affiliation with Libya is an example.

It is important for universities to have robust gift policies as part of the risk management to protect their reputation, which can be easily tainted if a donation comes from a questionable source. It is especially important that donations do not cause universities to be captured by vested interests.

From time to time, people in industry ask me if I have been pressured by the university to tone down on my outspokenness on corporate governance issues. Thankfully, while there have been instances where varsity colleagues and friends in industry have conveyed messages from others to "tone down", I have felt relatively free to express my views. Of course, were I trying to earn more money from external consulting, I guess I would be less vocal.

I do worry about the loss of independence and, therefore, trust in academics and academic institutions if we are not careful about it.

thanks to Wikileaks, the world has been enlightened to the fact that the Obama administration not only refused to prosecute these individuals itself, it also exerted pressure on the governments of Germany and Spain not to prosecute, or even indict, any of the torturers or war criminals from the Bush dictatorship.

we see many right-wing commentators demanding that Assange be hunted down, with some even calling for his murder, on the grounds that he may have endangered lives by releasing confidential government documents. Yet, for the right-wing, this apparently was not a concern when the late columnist Robert Novak "outed" CIA agent Valerie Plame after her husband Joseph Wilson authored an OP-ED piece in The New York Times criticizing the motivations for waging war against Iraq. Even though there was evidence of involvement within the highest echelons of the Bush dictatorship, only one person, Lewis "Scooter" Libby, was indicted and convicted of "outing" Plame to Novak. And, despite the fact that this "outing" potentially endangered the lives of Plame's overseas contacts, Bush commuted Libby's thirty-month prison sentence, calling it "excessive."

Why the disparity? The answer is simple: The Plame "outing" served the interests of the military-industrial complex and helped to conceal the Bush dictatorship's lies, tortures and war crimes, while Wikileaks not only exposed such evils, but also revealed how Obama's administration, and Obama himself, are little more than "snake oil" merchants pontificating about government accountability while undermining it at every turn.

When the United States Constitution was being created, a conflict emerged between delegates who wanted a strong federal government (the Federalists) and those who wanted a weak federal government (the anti-Federalists). Although the Federalists won the day, one of the most distinguished anti-Federalists, George Mason, refused to sign the new Constitution, sacrificing in the process, some historians say, a revered place amongst America's founding fathers. Two of Mason's concerns were that the Constitution did not contain a Bill of Rights, and that the presidential pardon powers would allow corrupt presidents to pardon people who had committed crimes on presidential orders.

Mason's concerns about the abuse of the pardon powers were eventually proven right when Gerald Ford pardoned Richard Nixon, when Ronald Reagan pardoned FBI agents convicted of authorizing illegal break-ins, and when George H.W. Bush pardoned six individuals involved in the Iran-Contra Affair.

Mason was also proven right after the Federalists realized that the States would not ratify the Constitution unless a Bill of Rights was added. But this was done begrudgingly, as demonstrated by America's second president, Federalist John Adams, who essentially destroyed the right to freedom of speech via the Alien and Sedition Acts, which made it a crime to say, write or publish anything critical of the United States government.

Most criminals break laws that others have created, and people who assist in exposing or apprehending them are usually lauded as heroes. But with the "espionage" acts, the criminals themselves have actually created laws to conceal their crimes, and exploit these laws to penalize people who expose them.

The problem with America's system of government is that it has become too easy, and too convenient, to simply stamp "classified" on documents that reveal acts of government corruption, cover-up, mendacity and malfeasance, or to withhold them "in the interest of national security." Given this web of secrecy, is it any wonder why so many Americans are still skeptical about the "official" versions of the John F. Kennedy or Martin Luther King Jr. assassinations, or the events surrounding the attacks of September 11, 2001?

I want to believe that the Wikileaks documents will change America for the better. But what undoubtedly will happen is a repetition of the past: those who expose government crimes and cover-ups will be prosecuted or branded as criminals; new laws will be passed to silence dissent; new Liebermans will arise to intimidate the corporate-controlled media; and new ways will be found to conceal the truth.

What Wikileaks has done is make people understand why so many Americans are politically apathetic and content to lose themselves in one or more of the addictions American culture offers, be it drugs, alcohol, the Internet, video games, celebrity gossip, text-messaging-in essence anything that serves to divert attention from the harshness of reality.

the evils committed by those in power can be suffocating, and the sense of powerlessness that erupts from being aware of these evils can be paralyzing, especially when accentuated by the knowledge that government evildoers almost always get away with their crimes

But even when the perfect liver became available a few days after she was put on the list, doctors could not operate. What made Nataline different from most transplant patients, and what eventually brought her case to the attention of much of the country, was that her survival did not depend on the availability of an organ or her clinicians or even the quality of care she received. It rested on her health insurance company.

Cigna had denied the initial request to cover the costs of the liver transplant. And the insurer persisted in its refusal, claiming that the treatment was “experimental” and unproven, and despite numerous pleas from Nataline’s physicians to the contrary.

But as relatives and friends organized campaigns to draw public attention to Nataline’s plight, the insurance conglomerate found itself embroiled in a public relations nightmare, one that could jeopardize its very existence. The company reversed its decision. But the change came too late. Nataline died just a few hours after Cigna authorized the transplant.

Mr. Potter was the head of corporate communications at two major insurers, first at Humana and then at Cigna. Now Mr. Potter has written a fascinating book that details the methods he and his colleagues used to manipulate public opinion

Mr. Potter goes on to describe the myth-making he did, interspersing descriptions of front groups, paid spies and jiggered studies with a deft retelling of the convoluted (and usually eye-glazing) history of health care insurance policies.

We learn that executives at Cigna worried that Nataline’s situation would only add fire to the growing public discontent with a health care system anchored by private insurance. As the case drew more national attention, the threat of a legislative overhaul that would ban for-profit insurers became real, and Mr. Potter found himself working on the biggest P.R. campaign of his career.

Cigna hired a large international law firm and a P.R. firm already well known to them from previous work aimed at discrediting Michael Moore and his film “Sicko.” Together with Cigna, these outside firms waged a campaign that would eventually include the aggressive placement of articles with friendly “third party” reporters, editors and producers who would “disabuse the media, politicians and the public of the notion that Nataline would have gotten the transplant if she had lived in Canada or France or England or any other developed country.” A “spy” was dispatched to Nataline’s funeral; and when the Sarkisyan family filed a lawsuit against the insurer, a team of lawyers was assigned to keep track of actions and comments by the family’s lawyer.

In the end, however, Nataline’s death proved to be the final straw for Mr. Potter. “It became clearer to me than ever that I was part of an industry that would do whatever it took to perpetuate its extraordinarily profitable existence,” he writes. “I had sold my soul.” He left corporate public relations for good less than six months after her death.

“I don’t mean to imply that all people who work for health insurance companies are greedier or more evil than other Americans,” he writes. “In fact, many of them feel — and justifiably so — that they are helping millions of people get they care they need.” The real problem, he says, lies in the fact that the United States “has entrusted one of the most important societal functions, providing health care, to private health insurance companies.” Therefore, the top executives of these companies become beholden not to the patients they have pledged to cover, but to the shareholders who hold them responsible for the bottom line.