Re: Mixed economy??? - Was: Gintis:TINA

[Trond Andresen <Trond.Andresen@xxxxxxxxxxx>]

> 	The voters are the ones making the 'march to the right' the
> only viable option for any party that wants to stay in power, Trond!

Well I don't know so much about the USA, but in Norway the DNA (social
democratic) party leadership has for years been marching faster to the
right than their voters.  This is also measurable through opinion polls
and through election results. The DNA has lost voters to left-wing and
anti-EU-membership parties, but gained voters from openly conservative
parties, which has shrunk correspondingly.

> Moreover, social democracy is practically a thing of the past, Trond.
> We may mourn its passing if we want, but we gotta move on!

I am not mourning the death of SD parties. I am just pointing out that
those talking about mixed economies in the Scandinavian sense are not a
jour with developments here for the last 15 years.

I proposed:

> >-	Employee ownership/control of plants and businesses (the Mondragon
> >	model?). Cooperative agreements between businesses encouraged, large
> >	scale corporations discouraged. Small is beautiful.
>

Herb replies

> 	There are severe technical problems,

Now what about the "technical problems" of traditional capitalism. Are
they "severe" enough?

>	having to do with risk-bearing
> 	and the institutions that allocate capital, with employee owner-
> 	ship. Sam Bowles and I have been working on this for several years
> 	now, as have Bob Rowthorth, Hugo Pagano, Louis Putterman, Avner
> 	Ben-Ner, and others. The viability of worker ownership depends on
> 	the capital intensity of the industry.

Have worker owbership really gotten a chance to prove itself on a large
scale?

>	We need MANY COMPETENT
> 	ECONOMISTS working in this area to help work out these problems,
> 	and we need popular movements dedicated to implementing
> 	small-scale alternatives.

Popular movements gaining experience are more important.

(me:)
> >-	Direct democracy to a large extent (here we have something to learn
> >	from the Swiss). Extensive use of computer networks here. Education
> >	for active participation in society paramount.
> >	
Herb:
> 	I think there are terrible flaws in direct democracy, the most
> 	important being the inability to form reasonable coalitions of
> 	groups with diverse needs, and the lack of expertize of voters
> 	(all voters--you and me included).

Here we really disagree! A much better society for the majority (which
should be a target that even a "plumber" ought to accept as not too
utopian, will DEMAND large-scale participation from the population, and
a corresponding drastic reduction in today's political apathy. To get
people to participate, you have to give them some real power, and more
often than every fourth year. And maybe an even more important point:
Giving people real power also makes them responsible for decisions that
are implemented. When such decisions are wrong, they will at least be
very useful in educating the decision-makers. Of course these arguments
presupposes a fairly democrsatic public discourse, which brings me to
the next point where we really disagree:

(I want:)
> >-	Non-commercial mass media, controlled by the public, not by the
> >	advertisers.
>

(Herb answers:)
> 	Could you tell me why you would like this? I am certain people
> 	would never vote for it.

The simple reason is this: Mass media should in principle be controlled
by the readers/listeners/viewers. In Norway to
an increasing degree (and surely much more in the U.S.) the media are
controlled by the advertisers. Commercial broadcasting is 100%
dependent upon advertising, large newspapers 70 - 80%, with a
corresponding 30 - 20% revenue from street sale and subscriptions. now
you don't need a theoretical background in microeconomics and game
theory to understand that there may be conflicting interests between
what is the advertiser's interest and what is the public interest.

I have 12 years practical experience with FM radio, as editor in a
local station. My first observation is that advertisers do not behave
rationally, in the sense that they will just as willingly place their
commercials in a station having 10% of the population listening, if
another station with a more commercial profile and 20% listeners, EVEN
if the first station offers spots for substantially under half the
price that the larger does, i.e. the price per listener is lower in the
first station.  The advertisers run like a flock of sheep to the larger
station anyhow, through a bandwagon effect which of course the larger
station does its best to hype up.

The second and most important point is that since adverisers are mostly
counting the number of listeners, and do not care very much about
contents (as long as it is not too critical of themselves and their
values that is), it is quite OK with them if a radio station is a 24
hour disco radio, just a glorified juke box with a slick and brain dead
human talking machine between the CD cuts. This is the cheapest way to
make radio and still having a lot of listeners, again giving
advertising revenue. The other way of making radio: investigating,
editing and reporting demands expertise and a lot of manpower, and even
if it may have the same number of listeners, and thus theoretically the
same revenue, the expenses are way out compared with the human juke box
type of radio. So what is the result: The jungle of identical idiot
radio stations that you have in the U.S. and that we are getting
increasingly more of in Norway too.

>	Controlled by the public? How?

No problem. Let me again use radio as an example. Establish a public
agency which monitors listener support. Pool all radio commercials
through a common office. Place the radio spots in
all radios so that the advertisers reach the contracted  number of
listeners for the price paid. This means that radios having fairly few
listeners get proportionally less revenue per spot. Through this system
the advertsers reach as many listeners for a given price as before, but
they do not any more have the possibility to decide which station they
want to survive. Now what is most important: That competing stations
have a fair chance to earn revenue in proportion to their listener
support, or that advertisers shall still be the prime decision makers
re the structure and character of media in a society? You can't have
it both.

>	I could conceive of an alternative to advertizing
> 	(I don't know what it is), but not of competition on the basis
> 	of viewer/listener support.

The proposal above is just that.

I reiterate that direct democracy will not work if the mass media are in
main controlled by advertising interests.


>	I think we need a better
> 	system of electoral accountability--I am working on this issue
> 	now, at least a little bit (since I have to give a paper on the
> 	subject in January...).

This is really too much. Do you have to be an academic in the social
sciences not too see the forest because of the trees? I can't for the
life of me see of you can have a representative democracy when
representaives have to spend millions of dollars on TV commercials etc.
for the chance to be elected. In Norway political commercials are
(still, but just wait..) prohibited in TV and radio, and thank God for
that.

>

(me:)
> >-	Where direct democracy is not practicable, privileges and high wages to
> >	representatives should be banned.
>
(herb:)
> 	This is the opposite of the case, I believe. Representatives
> 	should be rewarded for doing well and punished (by losing
> 	office) for doing poorly. This means paying them well with the
> 	threat of nonrenewal (we call this 'labor market discipline through
> 	contingent renewal).

Yes, and here we again have the conflict beteen the fine academic
theories for the classless theoretical world on one side, and the real
world on the other. There was one lesson we learned in my country
during the 80s: Do not listen to the arguments about high wages to
politicians to get the "talented" ones and they will not be tempted by
bribes, or about the need for high wages and bonuses to managers,
also to get the most talented ones. What we discovered was that this
was just excuses for chummies in the politico-economic elite playing a
game of "you do me a favour, and I will do you one later". And when
they didn't deliver in politics or in business, they gave each other
golden parachutes while employess were sacked and the health budget
cut..

So the theory of "hihgh rewards to get talent" is a laughing stock in
Norway in 1994. But maybe still not in business schools and at some
economic institutes?

Seriously: there is no trouble, for each "talented" manager or
politician who only want to contribute if the rewards are large enough,
to find an equally talented person who want the job regardless of
material incentives, because the job is a reward in itself. Such
talented pople are what we really should fill all places of power with,
and then the egoists can have ordinary jobs. Self-seekers should in
fact be quarantined from places of power.



> 	So in short, Trond, I suspect that we have few substantive
> 	disagreements, despite the whirlwind of words....

Surely, but at least we are discussing today's most important issues.
>
> Herb gintis@xxxxxxxxxxxxxxx
>

Trond

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