Networks and Hierarchies

This is a review of British historian Niall Ferguson’s new book titled The Square and the Tower: Networks, Hierarchies and the Struggle for Global Power. It’s interesting to take the long arc of history into account in this day and age of global communication networks, which might seem to herald the permanent dominance of networks over hierarchies. That history cautions us otherwise.

Ferguson notes two predominant ages of networks: the advent of the printing press in 1452 that led to an explosion of networks across the world until around 1800. This was the Enlightenment period that helped transform economics, politics, and social relations.

Today, the second age of networks consumes us, starting at about 1970 with microchip technology and continuing forward to the present. It is the age of telecommunications, digital technology, and global networks. Ours is an age where it seems “everything is connected.”

Ferguson notes that, beginning with the invention of written language,  all that has happened is that new technologies have facilitated our innate, ancient urge to network – in other words, to connect. This seems to affirm Aristotle’s observation that “man is a social animal,” as well as a large library of psychological behavioral studies over the past century. He also notes that most networks may reflect a power law distribution and be scale-free. In other words, large networks grow larger and become more valuable as they do so. This means the rich get richer and most social networks are profoundly inegalitarian. This implies that the GoogleAmazonFacebookApple (GAFA) oligarchy may be taking over the world, leaving the rest of us as powerless as feudal serfs.

But there is a fatal weakness inherent to this futuristic scenario, in that complex networks create interdependent relationships that can lead to catastrophic cascades, such as the global financial crisis of 2008. Or an explosion of “fake news” and misinformation spewed out by global gossip networks.

We are also seeing a gradual deconstruction of networks that compete with the power of nation-state sovereignty. This is reflected in the rise of nationalistic politics in democracies and authoritarian monopoly control over information in autocracies.

However, from the angle of hierarchical control, Ferguson notes that failures of democratic governance through the administrative state “represents the last iteration of political hierarchy: a system that spews out rules, generates complexity, and undermines both prosperity and stability.”

These historical paths imply that the conflict between distributed networks and concentrated hierarchies is likely a natural tension in search of an uneasy equilibrium.

Ferguson notes “if Facebook initially satisfied the human need to gossip, it was Twitter – founded in March 2006 – that satisfied the more specific need to exchange news, often (though not always) political.” But when I read Twitter feeds I’m thinking Twitter may be more of a tool for disruption rather than constructive dialogue. In other words, we can use these networking technologies to tear things down, but not so much to build them back up again.

As a Twitter co-founder confesses:

‘I thought once everybody could speak freely and exchange information and ideas, the world is automatically going to be a better place,’ said Evan Williams, one of the co-founders of Twitter in May 2017. ‘I was wrong about that.’

Rather, as Ferguson asserts, “The lesson of history is that trusting in networks to run the world is a recipe for anarchy: at best, power ends up in the hands of the Illuminati, but more likely it ends up in the hands of the Jacobins.”

Ferguson is quite pessimistic about today’s dominance of networks, with one slim ray of hope. As he writes,

“…how can an urbanized, technologically advanced society avoid disaster when its social consequences are profoundly inegalitarian?

“To put the question more simply: can a networked world have order? As we have seen, some say that it can. In the light of historical experience, I very much doubt it.”

That slim ray of hope? Blockchain technology!

A thought-provoking book.














Pondering National Governance

This is a recent article published in the NY Times. To make any sense of our answers to this question requires some ideological and historical clarity. [Blog comments]

Is the United States Too Big to Govern?

By Neil Gross

May 11, 2018

Last month the Pew Research Center released a poll showing that Americans are losing faith in their system of government. Only one-fifth of adults surveyed believe democracy is working “very well” in the United States, while two-thirds say “significant changes” are needed to governmental “design and structure.” [Because nobody really knows what these words mean, or they don’t agree among the many meanings, polling results are questionable indicators.]

The 2016 election is one explanation for these findings. Something is not right in a country where Donald Trump is able to win the presidency. [Well, that’s a selective value judgment – one could easily substitute in the names Hillary Clinton or Bernie Sanders. The point of a democratic society is that the people get to make those decisions and the people agree to abide by them or revolt. Are the people revolting against themselves or against their political representatives?]  

But here’s another possibility: What if trust in American democracy is eroding because the nation has become too big to be effectively governed through traditional means? With a population of more than 325 million and an enormously complex society, perhaps this country has passed a point where — no matter whom we elect — it risks becoming permanently dissatisfied with legislative and governmental performance. [There’s an implicit assumption here that the original intent of the founders is that some central authority should “govern” the affairs of the population and manage the national interest (“traditional means”?). This is probably half true in that a national interest must be represented as the sum of its many parts. We have a Federal government. What was not intended was an all-powerful Federal government.]

Political thinkers, worried about the problem of size, have long advocated small republics. Plato and Aristotle admired the city-state because they thought reason and virtue could prevail only when a polis was small enough that citizens could be acquaintances. Montesquieu, the 18th-century French political philosopher, picked up where the ancient Greeks left off, arguing for the benefits of small territories. “In a large republic,” he wrote, “the common good is sacrificed to a thousand considerations,” whereas in a smaller one the common good “is more strongly felt, better known, and closer to each citizen.” [I suspect Dunbar’s number is at work here.]

The framers of the United States Constitution were keenly aware of these arguments. As the political scientists Robert Dahl and Edward Tufte noted in their 1973 book, “Size and Democracy,” the framers embraced federalism partly because they thought that states were closer in scale to the classical ideal. Ultimately, however, a counterargument advanced by James Madison won the day: Larger republics better protected democracy, he claimed, because their natural political diversity made it difficult for any supersized faction to form and dominate. [With Federalism and the separation of powers and overlapping jurisdictions, I think the founders split the difference here.]

Two and a half centuries later, the accumulated social science suggests that Madison’s optimism was misplaced. Smaller, it seems, is better. [This is a false and impossible choice. When complex networks grow too large, they break-up into smaller, more manageable pieces, but these smaller entities are vulnerable to competitive pressures. This is true in industrial organization, economic and financial markets, and digital and social networks. It also applies to social choice and governance. The founders’ idea was to create a coordinated network of states, counties, and municipalities to manage affairs at the appropriate jurisdictional level. National issues are the sole responsibility of a Federal government balanced by parochial interests. This would secure the strongest union to guarantee citizens’ rights and freedoms. As that task grows in complexity, the need for decentralization and coordination reasserts itself.] 

There are clear economic and military advantages to being a large country. But when it comes to democracy, the benefits of largeness — defined by population or geographic area — are hard to find. Examining data on the world’s nations from the 19th century until today, the political scientists John Gerring and Wouter Veenendaal recently discovered that although size is correlated with electoral competition (in line with the Madisonian argument), there is no association between size and many other standard measures of democratic functioning, such as limits on executive power or the provision of human rights. [Another question raised here is what exactly we mean by democracy. Strictly democracy means government by the people, but popular democracy is a narrow offshoot of that definition. IT also begs the question of what a government by the people is trying to accomplish. Our founders made it clear they thought it was life, liberty, and the pursuit of happiness.  Note: the pursuit of happiness, not its guarantee.]

In fact, large nations turn out to have what the political scientist Pippa Norris has called “democratic deficits”: They don’t fully satisfy their citizens’ demands for democracy. [Again, what is that demand? Is it coherent?] For one thing, citizens in large nations are generally less involved in politics and feel they have less of a voice. [Are they unable to secure life, liberty and pursue happiness or do they just not like the results?] Voter turnout is lower. [Low voter turnout could mean that voters are happy with the status quo, or don’t believe voting matters to their individual fates.] According to the political scientist Karen Remmer, smaller-scale political entities encourage voting in ways large ones can’t by “creating a sense of community” and “enforcing norms of citizenship responsibility.” [Perhaps because they enjoy more intrinsic rewards to participation. This would suggest more localized control over politics.] In addition, small countries promote political involvement by leaning heavily on forms of direct democracy, like referendums or citizen assemblies. [This is a feature of scale. Direct democracy on a large scale can empower the tyranny of the popular majority because the effects are so far removed from that majority.]

A second problem is political responsiveness: The policies of large nations can be slow to change, even if change is needed and desired. In a book published last year, the sociologists John Campbell and John Hall compared the reactions to the 2007-2008 financial crisis in Denmark, Ireland, and Switzerland. These three small countries didn’t cause the crisis; a homegrown Irish housing bubble notwithstanding, the shock wave they dealt with came from America. But though the countries were economically vulnerable, Mr. Campbell and Mr. Hall observed, this vulnerability fostered unexpected resilience and creativity, generating in each nation “a sense of solidarity or ‘we-ness’” that brought together politicians, regulators, and bankers eager to do whatever was necessary to calm markets. [Again, a sense of “we-ness” is one of scale. Cultural homogeneity helps.] 

With the United States lacking the same sense of shared fate and vulnerability, American policymakers could organize only a tepid response, which helps explain why the recovery here was so slow. This theory sheds light as well on developments in environmental and social welfare policy, where it is increasingly common to find a complacent America lagging behind its smaller, more innovative peers. [Complexity plus centralization leads to sclerosis, which is why centralizing authority in a large, diverse, pluralist society make be unworkable.] 

Finally, largeness can take a toll on citizen trust. The presence of a wide variety of social groups and cultures is the primary reason for this. Nearly all scholars who study country size recognize, as Madison did, that large nations are more socially heterogeneous, whether because they represent an amalgamation of different regions, each with its own ethnolinguistic, religious or cultural heritage; or because their economic vitality encourages immigration; or because population size and geographic spread promote the growth of distinctive subcultures; or because they have more differentiated class structures. [Agreed, which is why encouraging a large diverse population of the virtues of multiculturalism may actually be a detriment. I believe the original idea, or at least the one that prevailed in past influxes of cultural groups, was the melting pot of gradual, voluntary assimilation.]

It isn’t inevitable that a large amount of social variation would undermine trust. Well-governed societies like Canada address the issue by stitching diversity and multiculturalism into their national identities. Yet in the absence of cultural and institutional supports, heterogeneity and trust are frequently in tension, as different ways of life give rise to suspicion and animosity. Without at least a veneer of trust among diverse social groups, politics spirals downward. [This characterization of Canada seems counter-intuitive. Stitching ethnic diversity and multiculturalism into a national identity means that national identity must be based not on ethnicity, race, or diverse cultures but in a national identity based on universal principles and social contracts. In other words, on something called patriotism and fealty to the larger community, subsuming ethnic, racial, and cultural differences.]

The challenges of American largeness are here to stay. The task now is for individuals, civic organizations and institutions to commit themselves to building stronger communities and a renewed sense of shared responsibility and trust among different groups. Within the constraints of our nation’s size, we can create conditions for as much democracy as possible. [So, we converge on the idea that it is inevitable we decentralize power and assume the responsibility of self-governance? What then is the real political conflict of interest?]

Neil Gross is a professor of sociology at Colby College.

How the Enlightenment Ends

The Asset Divide

Below is a recent article explaining the growing wealth inequality based on asset ownership and control. This shouldn’t even be phrased as a question as our easy credit policies, massive RE debt leverage, and favored housing policy has created an almost insurmountable wealth divide between the asset-rich and the asset-poor. Who and what policies do we think those left behind are going to be voting for? Non-gender bathrooms? See also Thomas Edsall’s article in the NYT.

Is Housing Inequality the Main Driver of Economic Inequality?

Richard Florida

A growing body of research suggests that inequality in the value of Americans’ homes is a major factor—perhaps the key factor—in the country’s economic divides.

Economic inequality is one of the most significant issues facing cities and entire nations today. But a mounting body of research suggests that housing inequality may well be the biggest contributor to our economic divides.

Thomas Piketty’s influential book, Capital in the Twenty-First Century, put economic inequality—and specifically, wealth inequality—front and center in the global conversation. But research by Matthew Rognlie found that housing inequality (that is, how much more expensive some houses are than others) is the key factor in rising wealth.

Rognlie’s research documented that the share of wealth or capital income derived from housing has grown significantly since around 1950, and substantially more than for other forms of capital. In other words, those uber-expensive penthouses, luxury townhomes, and other real estate holdings in superstar cities like London and New York amount to a “physical manifestation” of Piketty’s insights into wealth inequality, as Felix Salmon so aptly puts it.

More recent research on this topic by urban economists David Albouy and Mike Zabek documents the surge in housing inequality in the United States. Their study, published as a National Bureau of Economic Research working paper, charts the rise in housing inequality across the U.S. from the onset of the Great Depression in 1930 through the great suburban boom of the 1950s, 1960s, and 1970s, to the more recent back-to-the-city movement, the 2008 economic crash, and the subsequent recovery, up to 2012. They use data from the U.S. Census on both homeowners and renters.

Over the period studied, the share of owner-occupied housing rose from less than half (45 percent) to nearly two-thirds (65 percent), although it has leveled off somewhat since then. The median cost of a home tripled in real dollar terms, according to their analysis. Housing now represents a huge share of America’s total consumption, comprising roughly 40 percent of the U.S. total capital stock, and two-thirds of the wealth held by the middle class.

What Albouy and Zabek find is a clear U-shaped pattern in housing inequality (measured in terms of housing values) over this 80-year period. Housing inequality was high in 1930 at the onset of the Depression. It then declined, alongside income inequality, during the Great Compression and suburban boom of the 1950s and 1960s. It started to creep back up again after the 1970s. There was a huge spike by the 1990s, followed by a leveling off in 2000, and then another significant spike by 2012, in the wake of the recovery from the economic crisis of 2008 and the accelerating back-to-the-city movement.

By 2012, the level of housing inequality in the U.S. looked much the same as it did in the ’30s. Now as then, the most expensive 20 percent of owner-occupied homes account for more than half of total U.S. housing value.

Data by Albouy et al. Design by Madison McVeigh/CityLab

Rents show a different pattern. Rent inequality—or the gap between the cost of rent for some relative than others—was high in the 1930s, then declined dramatically until around 1960. Starting in about 1980, it began to increase gradually, but much less than housing inequality (based on owner-occupied homes) or income inequality. And much of this small rise in rental inequality seems to stem from expensive rental units in very expensive cities.

The study suggests this less severe pattern of rent inequality may be the result of measures like rent control and other affordable housing programs to assist lower-income renters, especially in expensive cities such as New York and San Francisco.

That said, there also is an additional and potentially large wealth gap between owners and renters. Homeowners are able to basically lock in their housing costs after purchasing their home, and benefit from the appreciation of their properties thereafter. Renters, on the other hand, see rents increase in line with the market, and sometimes faster. This threatens their ability to maintain shelter, while they accumulate no equity in the place where they live.


But what lies behind this surge in housing inequality? Does it stem from the large housing-price differences between superstar cities and the rest, or does it stem from inequality within cities and metro areas—for instance, high-priced urban areas and suburban areas compared to less advantaged neighborhoods?

The Albouy and Zabek study considers three possible explanations: The change over time from smaller to larger housing units; geographic or spatial inequality between cities and metro areas; and economic segregation between rich and poor within metro areas.

Even as houses have grown bigger and bigger, with McMansions replacing bungalows and Cape Cods in many cities and suburbs since the 1930s (as the size of households shrunk), the study says that, at best, 30 percent of the rise in housing inequality can be pegged to changes in the size of houses themselves.

Ultimately, the study concludes that the rise in both housing wealth and housing inequality stems mainly from the increase in the value of land. In other research, Albouy found that the value of America’s urban land was $25 trillion in 2010, roughly double the nation’s 2016 GDP.

But here’s the kicker: The main catalyst of housing inequality, according to the study, comes from the growing gap within cities and metro areas, not between them. The graph below shows the differences in housing inequality between “commuting zones”—geographic areas that share a labor market—over time. In it, you can see that inequality varies sharply within commuting zones (marked “CZ”) while it remains more or less constant between them.

In other words, the spatial inequality within metros is what drives housing inequality. Factors like safety, schools, and access to employment and local amenities lead individual actors to value one neighborhood over the next.

Data by Albouy et al. Design by Madison McVeigh/CityLab

All this forms a fundamental contradiction in the housing market. Housing is at once a basic mode of shelter and a form of investment. As this basic necessity has been transformed over time into a financial instrument and source of wealth, not only has housing inequality increased, but housing inequality has become a major contributor to—if not the major overall factor in—wealth inequality. When you consider the fact that what is a necessity for everyone has been turned into a financial instrument for a select few, this is no surprise.

The rise in housing inequality brings us face to face with a central paradox of today’s increasingly urbanized form of capitalism. The clustering of talent, industry, investment, and other economic assets in small parts of cities and metropolitan areas is at once the main engine of economic growth and the biggest driver of inequality. The ability to buy and own housing, much more than income or any other source of wealth, is a significant factor in the growing divides between the economy’s winners and losers.


A Financial Crisis Is Coming?

A provocative article in USNWR. We’ve been warning about unsustainable asset prices built on unsustainable debt leverage for the past 8 years (which only means we were waaaaay too early, but not necessarily wrong!) For all this time we’ve been focused on growing total debt to GDP ratios, which means we’re not getting much bang for all that cheap credit, trying to borrow and spend our way to prosperity.

The PE ratios of equities and housing reflect a disconnect with fundamental values based on decades of market data. For example, one cannot really pay 8-10x income on residential housing for long, or pay near to 50% of income on rents, as many are doing in our most pricey cities.

Nose-bleed asset prices on everything from yachts to vacation homes to art and collectibles to technology stocks and cryptocurrencies are indicative of excessive global liquidity. Soaking up that liquidity to return to long-term trend lines will be a long, jarring process. Nobody really knows whence comes the reckoning since we have perfected a particularly successful strategy of kicking the can down the road.

A Crisis Is Coming

All the ingredients are in place for a catastrophic economic and financial market crisis.

By Desmond Lachman Opinion Contributor USNWR, Feb. 14, 2018, at 7:00 a.m.

MY LONG CAREER AS A macro-economist both at the IMF and on Wall Street has taught me that it is very well to make bold macroeconomic calls as long as you do not specify a time period within which those calls will occur. However, there are occasions, such as today, when the overwhelming evidence suggests that a major economic event will occur within a relatively short time period. On those occasions, it is very difficult to resist making a time-sensitive bold economic call.


So here goes. By this time next year, we will have had another 2008-2009 style global economic and financial market crisis. And we will do so despite Janet Yellen’s recent reassurances that we would not have another such crisis within her lifetime.


There are two basic reasons to fear another full-blown global economic crisis soon: The first is that we have in place all the ingredients for such a crisis. The second is that due to major economic policy mistakes by both the Federal Reserve and the U.S. administration, the U.S. economy is in danger of soon overheating, which will bring inflation in its wake. That in turn is all too likely to lead to rising interest rates, which could very well be the trigger that bursts the all too many asset price bubbles around the world.

A key ingredient for a global economic crisis is asset price bubbles and credit risk mispricing. On that score, today’s financial market situation would appear to be very much more concerning than that on the eve of the September 2008 Lehman-bankruptcy. Whereas then, asset price bubbles were largely confined to the U.S. housing and credit markets, today, asset price bubbles are more pervasive being all too much in evidence around the globe.


It is not simply that global equity valuations today are at lofty levels experienced only three times in the last one hundred years. It is also that we have a global government bond market bubble, the serious mispricing of credit risk in the world’s high yield and emerging market corporate-bond markets and troublesome housing bubbles in major economies like Canada, China, and the United Kingdom.


Another key ingredient for a global economic crisis is a very high debt level. Here too today’s situation has to be very concerning. According to IMF estimates, today the global debt-to-GDP level is significantly higher than it was in 2008. Particularly concerning has to be the fact that far from declining, over the past few years Italy’s public debt has risen now to 135 percent of GDP. That has to raise the real risk that we could have yet another round of the Eurozone debt crisis in the event that we were to have another global economic recession.


Today’s asset price bubbles have been created by many years of unusually easy global monetary policy. The persistence of those bubbles can only be rationalized on the assumption that interest rates will remain indefinitely at their currently very low levels. Sadly, there is every reason to believe that at least in the United States, the period of low interest rates is about to end abruptly due to an overheated economy.

The reason for fearing that the U.S. economy will soon overheat is not simply that it is currently at or very close to full employment and growing at a healthy clip. It is rather that it is also now getting an extraordinary degree of monetary and fiscal policy stimulus at this very late stage of the cycle.

Today, U.S. financial conditions are at their most expansionary levels in the past 40 years due to the combination of very low interest rates, inflated equity prices and a weak dollar. Compounding matters is the fact that the U.S. economy is now receiving a significant pro-cyclical boost from the unfunded Trump tax cut and from last week’s two-year congressional spending pact aimed at boosting military and disaster-relief spending.


Today, in the face of an overheated U.S. economy, the Federal Reserve has an unenviable choice. It can either raise its interest rate and risk bursting the global asset price bubble, or it can delay its interests rate decision and risk incurring the wrath of the bond vigilantes who might sense that the Federal Reserve is not serious about inflation risk. In that event, interest rates are apt to rise in a disorderly fashion, which could lead to the more abrupt deflating of the global asset bubble.


This time next year, it could very well turn out that today’s asset price bubbles will not have burst and we will not have been thrown into another global economic recession. In which event, I will admit that I was wrong in having been too pessimistic about the global economic outlook. However, I will fall back on the defense that all of the clues were pointing in the opposite direction.

The Death of Text?


The following short essay was published in the NY Times feature called The Fate of the Internet. Frankly, it’s difficult to take these arguments too seriously, despite the transformative effects of technology.

Welcome to the Post-Text Future

by Farhad Manjoo, NY Times

I’ll make this short: The thing you’re doing now, reading prose on a screen, is going out of fashion. [Which means what? It’s popularity is fading as a communication channel?]

We’re taking stock of the internet right now, with writers [Hmm, what’s a writer without a reader?] who cover the digital world cataloging some of the most consequential currents shaping it. If you probe those currents and look ahead to the coming year online, one truth becomes clear. The defining narrative of our online moment concerns the decline of text, and the exploding reach and power of audio and video. [Yes, but where does real “power” really reside? In cat videos and selfies? Those behind the curtain are really smiling.]

This multimedia internet has been gaining on the text-based internet for years. But last year, the story accelerated sharply, and now audio and video are unstoppable. The most influential communicators online once worked on web pages and blogs. They’re now making podcasts, Netflix shows, propaganda memes, Instagram and YouTube channels, and apps like HQ Trivia.

Consider the most compelling digital innovations now emerging: the talking assistants that were the hit of the holidays, Apple’s face-reading phone, artificial intelligence to search photos or translate spoken language, and augmented reality — which inserts any digital image into a live view of your surroundings.

These advances are all about cameras, microphones, your voice, your ears and your eyes.

Together, they’re all sending us the same message: Welcome to the post-text future. [No, they are welcoming us to the distractions of circuses. That’s what entertainment is.]

It’s not that text is going away altogether. Nothing online ever really dies, and text still has its hits — from Susan Fowler’s whistle-blowing blog post last year about harassment at Uber to #MeToo, text was at the center of the most significant recent American social movement.

Still, we have only just begun to glimpse the deeper, more kinetic possibilities of an online culture in which text recedes to the background, and sounds and images become the universal language.

The internet was born in text because text was once the only format computers understood. Then we started giving machines eyes and ears — that is, smartphones were invented — and now we’ve provided them brains to decipher and manipulate multimedia. [Yes, but civilization was not born with the ASCII computer language. Computers are becoming clever tvs, but they still deliver a lot of trivia as content and video formats probably amplify that. Perhaps we are seeing the trivialization of popular culture? Has it ever not been trivial?]

My reading of this trend toward video as a substitute for text applies to certain types of media and content. Certain commentators have adapted readily to YouTube channels to transmit knowledge and ideas and the educational potential is just being tapped. But true power in the world of ideas is controlled by those who know how to manipulate text to understand abstract intellectual ideas that govern our world.

The question is, is technology turning us into sheep or shepherds? Because for sure, there are wolves out there.

As John Maynard Keynes wrote,

The ideas of economists and political philosophers, both when they are right and when they are wrong are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back…


Order vs. Chaos: How We Choose

(The Towers of San Gimignano)

Below is a thought-provoking essay by historian Niall Ferguson examining the fluid structure of societies that swing from hierarchies to decentralized networks.

Anyway, this is a subject dear to my heart, as it is the overriding theme of several of my fiction books. See interjections below…

In Praise of Hierarchy – The Wall Street Journal (paywall)

The Saturday Essay
Established, traditional order is under assault from freewheeling, networked disrupters as never before. But society craves centralized leadership, too.

It is a truth universally acknowledged that we now live in a networked world, where everyone and everything are connected. The corollary is that traditional hierarchical structures—not only states, but also churches, parties, and corporations—are in various states of crisis and decline. Disruption, disintermediation, and decentralization are the orders of the day. Hierarchy is at a discount, if not despised.

Networks rule not only in the realm of business. In politics, too, party establishments and their machines have been displaced by crowdfunded campaigns and viral messaging. Money, once a monopoly of the state, is being challenged by Bitcoin and other cryptocurrencies, which require no central banks to manage them, only consensus algorithms.

But is all this wise? In all the excitement of the age of hyper-connection, have we perhaps forgotten why hierarchies came into existence in the first place? Do we perhaps overestimate what can be achieved by ungoverned networks—and underestimate the perils of a world without any legitimate hierarchical structure?

True, few dare shed tears for yesterday’s hierarchies. Some Anglophile viewers of “The Crown” may thrill at the quaint stratification of Elizabeth II’s England, but the nearest approximations to royalty in America have lately been shorn of their gilt and glamour. Political dynasties of the recent past have been effaced, if not humiliated, by the upstart Donald Trump, while Hollywood’s elite of exploitative men is in disarray. The spirit of the age is revolutionary; the networked crowd yearns to “smack down” or “shame” each and every authority figure.

Nevertheless, recent events have called into question the notion that all will be for the best in the most networked of all possible worlds. “I thought once everybody could speak freely and exchange information and ideas, the world is automatically going to be a better place,” Evan Williams, a co-founder of Twitter, told the New York Times last May. “I was wrong about that.”

Far from being a utopia in which we all become equally empowered “netizens,” free to tweet truth to power, cyberspace has mutated into a nightmare realm of ideological polarization, extreme views and fake news. The year 2016 was the annus horribilis of the liberal internet, the year when the network platforms built in Silicon Valley were used not only by Donald Trump’s election campaign but also by the proponents of “Brexit” in the United Kingdom to ends that appalled their creators. In 2017, research (including some by Facebook itself) revealed the psychological harm inflicted by social media on young people, who become addicted to the network platforms’ incessant, targeted stimuli.

Most alarming was the morphing of cyberspace into Cyberia, not to mention the Cyber-caliphate: a dark and lawless realm where malevolent actors ranging from Russian trolls to pro-ISIS Twitter users could work with impunity to subvert the institutional foundations of democracy. As Henry Kissinger has rightly observed, the internet has re-created the human state of nature depicted by 17th-century English philosopher Thomas Hobbes, where there rages a war “of every man against every man” and life (like so many political tweets) is “nasty, brutish, and short.”

We should not be surprised. Neither history nor science predicted that everything would be awesome in a world of giant, online networks—quite the contrary. And now that it becomes clear that a networked world may be an anarchic world, we begin to see—as previous generations saw—the benefits of hierarchy.

The word hierarchy derives from ancient Greek (hierarchia, literally the “rule of a high priest”) and was first used to describe the heavenly orders of angels and, more generally, to characterize a stratified order of spiritual or temporal governance. Up until the 16th century, by contrast, the word “network” signified nothing more than a woven mesh made of interlaced thread.

For most of history, hierarchies dominated social networks, a relationship exemplified by the looming Gothic tower that overshadows the Tuscan town of Siena’s central piazza.


Siena’s torre

This is roughly how most people think about hierarchies: as vertically structured organizations characterized by centralized and top-down command, control and communication. Historically, they began with family-based clans and tribes, out of which more complicated and stratified institutions evolved: states, churches, corporations, empires.

The crucial incentive that favored hierarchical order was that it made the exercise of power more efficient. Centralizing control in the hands of the “big man” eliminated or at least reduced time-consuming arguments about what to do, which might at any time escalate into internecine conflict. The obvious defect of hierarchy—in the mid-19th century words of Lord Acton, “power corrupts, and absolute power corrupts absolutely”—was not by itself sufficient to turn humanity away from the rule of “big men.”

There have been only two eras of enhanced connectedness, when new technology helped social networks gain the upper hand. The second is our own age. The first began almost exactly half a millennium ago, in 1517, and lasted for the better part of three centuries.

COM2014-tiny FB cover

The epic story of chaos vs. order during the Savonarola-Machiavelli era, foreshadowing Martin Luther.

When the printing press empowered Martin Luther’s heresy, a network was born. Luther’s dream was of a “priesthood of all believers.” The actual result of the Reformation he inspired was not harmony, but 130 years of polarization and conflict. But it proved impossible to kill Protestant networks, even with mass executions. Hierarchy had to be restored in the form of the princely states whose power the Peace of Westphalia affirmed, but this restoration was fleeting.

Like the Reformation, the 18th-century Enlightenment was a network-driven phenomenon that challenged established authority. The amazing thing was how much further the tendrils of the Enlightenment extended: as far afield as Voltaire’s global network of correspondents, and into the depths of Bavaria, where the secret network known as the Illuminati was founded in 1776.

In Britain’s American colonies, Freemasonry was a key network that connected many of the Founding Fathers, including George Washington and the crucial “node” in the New England revolutionary network, Paul Revere.

IGWT Cover12 6x9 large 2017

Freemasons in today’s Washington, D.C.?

At the same time, the American revolutionaries—Franklin, Jefferson, Lafayette—had all kinds of connections to France, land of the philosophes. The problem in France was that the ideas that went viral were not just “liberty, equality and fraternity,” but also the principle that terror was justifiable against enemies of the people. The result was a descent into bloody anarchy.


Those who lived through the wars of the 1790s and early 1800s learned an important lesson that we would do well to relearn: unless one wishes to reap one revolutionary whirlwind after another, it is better to impose some kind of hierarchical order on the world and to give it some legitimacy. At the Congress of Vienna, the five great powers who defeated Napoleon agreed to establish such an order, and the “pentarchy” they formed provided a remarkable stability over the century that followed.

Just over 200 years later, we confront a similar dilemma. Those who favor a revolutionary world run by networks will end up not with the interconnected utopia of their dreams but with Hobbes’s state of nature, in which malign actors exploit opportunities to spread virus-like memes and mendacities. Worse, they may end up entrenching a new but unaccountable hierarchy. For here is a truth that is too often glossed over by the proponents of networked governance: Many networks are hierarchically structured.

Nothing illustrates this better than the way the internet has evolved from being an authentically distributed, decentralized network into one dominated by a few giant technology companies: Facebook, Amazon, Netflix and Alphabet’s Google—the so-called FANGs. This new hierarchy is motivated primarily by the desire to sell—above all, to sell the data that their users provide. Dominance of online advertising by Alphabet and Facebook, coupled with immunity from civil liability under legislation dating back to the 1990s, have create an extraordinary state of affairs. The biggest content publishers in history are regulated as if they are mere technology startups; they are a new hierarchy extracting rent from the network.

The effects are pernicious. According to the Pew Research Center, close to half of Americans now get their news from Facebook, whose incentive is to promote news that holds the attention of users, regardless of whether it is true or false, researched by professional journalists or cooked up by Russian trolls. Established publishers—and parties—were too powerful for too long, but is it really a better world if there are no authorities to separate real news from fake, or decent political candidates from rogues? The old public sphere had its defects, but the new one has no effective gatekeepers, so the advantage now lies not with leaders but with misleaders.

The alternative is that another pentarchy of great powers recognizes their common interest in resisting the threat posed by Cyberia, where jihadism and criminality flourish alongside cyberwarfare, to say nothing of nuclear proliferation. Conveniently, the architects of the post-1945 order created the institutional basis for such a new pentarchy in the form of the permanent members of the United Nations Security Council, an institution that retains the all-important ingredient of legitimacy, despite its gridlocked condition throughout the Cold War.

It is easy to be dismissive of the UNSC. Nevertheless, whether or not these five great powers can make common cause once again, as their predecessors did in the 19th century, is a great geopolitical question of our time. The hierarchical Chinese leader Xi Jinping likes to talk about a “new model of great power relations,” and it may be that the North Korean missile crisis will bring forth this new model. But the crucial point is that the North Korean threat cannot be removed by the action of networks. A Facebook group can no more solve it than a tweet storm or a hashtag.

Our age may venerate online networks, to the extent of making a company such as Facebook one of the most valuable in the world. Yet there is a reason why armies have commanding officers. There is a reason why orchestras have conductors. There is a reason why, at great universities, the lecturers are not howled down by social justice warriors. And there is a reason why the last great experiment in networked organization—the one that began with the Reformation—ended, eventually, with a restoration of hierarchy.

There is hope for hierarchies yet. “The Crown” is not mere fiction; the hierarchy of the monarchy has continued to elevate the head of the British state above party politics. In a similar way, the papacy remains an object of authority and veneration, despite the tribulations of the Roman Catholic Church. Revolutions repeatedly sweep the countries of the Middle East, yet the monarchies of the region have been the most stable regimes.

Even in the U.S., ground zero for disruptive networks, there still is respect for hierarchical institutions. True, just 32% of Americans still have “a great deal” or “quite a lot” of confidence in the presidency and 12% feel that way about Congress. But for the military the equivalent percentage is 72% (up from 50% in 1981), for the police it is 57%, for churches 41%, and for the Supreme Court 40%. By comparison, just 16% of Americans have confidence in news on the internet.

We humans have been designed by evolution to network—man is a social animal, of course—but history has taught us to revere hierarchy as preferable to anarchy, and to prefer time-honored hierarchs to upstart usurpers.

Mr. Ferguson’s new book, “The Square and the Tower: Networks and Power, from the Freemasons to Facebook,” will be published by Penguin Press on Jan. 16.


Policies vs. Values

It’s difficult to make sense of American politics these days, though not for lack of trying! The following article published in Yahoo News presents some evidence that is more widely confirmed but also introduces some interpretations that are contradicted by that evidence (see blog comments). Most of the mainstream reporting seems to be suffering from these contradictions.

To begin, American voters are not divided so much by policy issues, as the head of the survey institute proclaims. Empirical evidence of voting patterns shows that most of the voting preferences are explained by urban vs. rural and suburban policy interests and household formation, with married voters contrasted against singles, with children or not.

The remainder (about 1/3, but growing) is probably explained by the moral values/ideological divide on which Jon Haidt has done so much research (see my The Righteous Mind review). People who lean left or right in ideology seems to have different value priorities that are reflected in how they view politics. Haidt classifies six moral values with their opposites as 1) care/harm; 2) liberty/oppression; 3) fairness/cheating; 4) loyalty/betrayal; 5) authority/subversion; 6) sanctity/degradation.

He goes on to show that liberals value the first three only and suspect the last three so that they focus on care and fairness as the foundation of a free society more than loyalty, authority and sanctity. Conservatives employ all six in designing their moral foundations. Haidt readily recognized this advantage for conservatives but suggests it is more a tactical advantage rather than a fuller understanding of a sound moral society.

Identity politics seems to have turned differences in moral value priorities into tribalism. So we have a Left tribe, referring to themselves as Progressives, and a Right tribe, calling themselves conservatives and libertarians. These tribes have developed two different cultures that appear incompatible. This cultural divide is far more distinct than race, ethnicity, or gender, despite what the media might proclaim. (MAGA is a cultural clarion call, not a racial or ethnic dog whistle.)

Of course, different cultures need not be antagonistic or adversarial, especially since they can evolve over time to share many of the same values, priorities, and mores. One error I see promoted by the liberal urban media and Democrats is the firm belief that their opponents are regressive and that progressivism must be proselytized. Voting results do not substantiate this belief and voting patterns show a majority of Americans embrace both traditionalism and tolerance for differences. Any friction is caused by the socio-economic disruption due to the rapid pace of change. It’s a mistake to push that pace of change merely for its own sake. Instead, we should manage it more judiciously without alacrity and judgment. People resist change instinctively and they need help adapting. That’s the role for politics and policy.

Unfortunately, truth and accuracy are the first victims of tribalism, and that seems to be the source of our present dysfunction.

Divided by symbols, Americans see a ‘serious threat’ across the aisle

Yahoo News,  Jon Ward, Senior Political Correspondent

An annual survey of American attitudes about politics and values released Tuesday found, to no one’s surprise, that the nation’s divisions are growing dangerously deep and wide.

American Values Survey

More than half the people in both the Republican and Democratic parties see the other side as a “serious threat to the country,” the American Values Survey by the Public Religion Research Institute (PRRI) found. At a panel discussion at the Brookings Institution to discuss the poll findings, Henry Olsen, a senior fellow at the Ethics and Public Policy Center, said a “pre-Spanish Civil War mentality” was taking hold among voters.

The word “war” itself was mentioned numerous times by the panelists, in reference to the way both left and right see politics now as a zero-sum fight.

The good news — or the bad, depending on how one views it — is that the divisions are mostly not about policy, but symbolism.

“When you’re at war symbols begin to matter more,” said Robert Jones, CEO of PRRI. “Confederate monuments, flags … the [border] wall is part of that.”

But, he added, “If you talk policy, Americans are pragmatic.”

He cited a finding in the latest values survey, which PRRI has conducted for eight years in a row, that around half of Republicans support a path to citizenship for undocumented immigrants. He contrasted that with the political rhetoric from President Trump about building a wall along the U.S.-Mexico border.

“It’s the symbolic issues that are animating more than the actual policy issues,” Jones said. “When you turn from symbols to policy, there’s less polarization.”

There was agreement among the panelists Tuesday, including the conservative Olsen, that Trump fuels the conflict by highlighting the most inflammatory public issues.

But the deeper question is, why are Americans so focused on symbols rather than substance when it comes to choosing and following political leaders? Is it a recent phenomenon, brought on by the age of entertainment over information that has dominated the world since the advent of television? Or is it a natural human instinct?

Joy Reid, a panelist who hosts a weekend show on MSNBC, said that the election of former President Barack Obama in 2008 and 2012 was a symbolic act for many black Americans, and that Trump voters — most of them white — engaged in counter-symbolism. [The problem with this interpretation is that the Rust Belt states flipped from Obama to Trump, indicating that symbolism was probably “trumped” by policy results.]

Trump is “almost a flip-side, bizarro-world Obama,” Reid said. “For a lot of hardcore Obama supporters, Obama was the point. It wasn’t specifically that he would do some specific economic thing,” Reid said. “It was the symbolism of having somebody who was not white, somebody who has international roots in his family, somebody who represented a changing America.” [We don’t see a problem here? Voting for someone because they are “not white,” does what for whites in a material sense? Of course, the non-white Obama could never have won an election without the support of a significant plurality of whites. Casting this history in terms of race is probably not helpful.]

Similarly, Reid said, “For a lot of Trump supporters Trump is the point. It isn’t his policies. It’s not what he’s going to do even for them.” [I would agree that it is less about Trump’s policies in a positive sense and more a reaction against Obama’s policies and divisiveness. This extends into the backlash against political correctness that Trump instigated.]

“Just having that man, who is white and very ethno-nationalist in his whitenesss … very proactive about putting forward his gender and racial identity and saying I represent this and I’ll attack the people who in your view are detriments to it … that’s kind of the point,” she said. [There it is again – ethno-nationalism and whitenesss – instead of patriotic sovereignty through Americanism that mischaracterizes the Trump opposition. This is not to say Trump did not take advantage of this mischaracterization.] 

Reid said that Democrats who want to “convert” Trump voters may be chasing a lost cause. “I’m not sure that can be done,” she said. “He has a power over at least a third of the country that I don’t think anything can break.”

But while the PRRI study found 15 percent of Trump supporters said there’s nothing he could do to lose their support, there were twice as many confirmed opponents of the president. PRRI asked those who disapprove of Trump if there was anything he could do to win them over, and 33 percent of them said there was not.

E.J. Dionne, a Washington Post columnist who was also on the panel, disagreed with Reid that no Trump voters could be won over. “To me, these numbers show that there are a substantial number of Trump voters or supporters who can be converted,” he said, citing Trump’s approval numbers, which are down to 39 percent in the average of all polls, while 56 percent disapprove.

“This is a substantial drop-off from where Trump stood on Election Day 2016,” Dionne said. A year ago, right after he was elected, Trump had a 44 percent approval rating, and a 50 percent disapproval rating. [Mr. Dionne is wrong as he views our politics from within the liberal media bubble, advocating that democratic politics is a zero-sum game: For Democrats to win, Trump has to lose. The country’s voters are not really in sync with this approach, which is why that urban media bubble is subjected to such criticism.]

Olsen’s explanations for the victory of symbolism over substance, and the rise of Trumpism, had more to do with a loss of what Jones called “cultural dominance” combined with economic vulnerability for some of the president’s supporters. [This makes far more sense.]

Trump’s voter base “feeds on fear,” Olsen said.

But he cautioned against dismissing them, saying that would only increase the risk of violence.

“If you’re educated and well-off, you tend to look at these reactions as being hopelessly naive, out of touch, racist, irrational and consequently worthy of being ignored,” Olsen said. “If that’s the response, you shouldn’t expect them to give up their arms. … If the answer is basically to build a wall around populism, what you simply do is build up tension, build up the partisanship. And then, if you go through some sort of economic decline that makes even more people despairing, you raise the possibility of a much more dangerous counterreaction.” [This is the danger that anti-Trump forces want to deny or disregard. They will not avoid blame for any future chaos that results.]


Political Autopsy

The following is the Executive Summary of a report authored by Democratic Party activists titled “Autopsy: The Democratic Party in Crisis.” On a quick read of the summary, one is left with a mishmash strategy that seems to try to be all things to all people (except for those Republicans, that is! The stated goal is “to end Republican rule and gain lasting momentum for progressive change.”)

That would be the starting point of my critique. What we’ve learned over the past 16 years is that most voters in the US are tired of partisan posturing and could care less about which party wins elections if only their elected representatives would be accountable and serve voters’ interests. Voters are far less partisan than party activists and the media. With Trump’s election, roughly half the population across 85% of the county landscape voted a pox on both their houses. So, let’s start with that inconvenient fact.

Specific comments in red below:

Executive Summary

The Party’s Base

• Aggregated data and analysis show that policies, operations and campaign priorities of the national Democratic Party undermined support and turnout from its base in the 2016 general election. Since then, the Democratic leadership has done little to indicate that it is heeding key lessons from the 2016 disaster.

• The Democratic National Committee and the party’s congressional leadership remain bent on prioritizing the chase for elusive Republican voters over the Democratic base: especially people of color, young people and working-class voters overall. [Yes, but that’s because in a country where whites comprise 70% of the electorate, identity politics based on race and ethnicity have a ceiling of support that is insufficient to win national elections. Identity politics that is based on preferences also leads to zero-sum games over who gets what.]

• After suffering from a falloff of turnout among people of color in the 2016 general election, the party appears to be losing ground with its most reliable voting bloc, African-American women. “The Democratic Party has experienced an 11 percent drop in support from black women according to one survey, while the percentage of black women who said neither party represents them went from 13 percent in 2016 to 21 percent in 2017.”

• One of the large groups with a voter-turnout issue is young people, “who encounter a toxic combination of a depressed economic reality, GOP efforts at voter suppression, and anemic messaging on the part of Democrats.” [The problem with young voters is that they cynically perceive “politics as usual.” Sanders appeal seems to have transcended that, but the question is whether “socialist” policies can. The historical record is not promising.]

• “Emerging sectors of the electorate are compelling the Democratic Party to come to terms with adamant grassroots rejection of economic injustice, institutionalized racism, gender inequality, environmental destruction and corporate domination. Siding with the people who constitute the base isn’t truly possible when party leaders seem to be afraid of them.” [Politics against “injustice, racism, gender inequality, environment and corporate malfeasance, etc.” must be based on some unifying principles in order to filter out subjective grievances that merely favor narrow interests. The party has not made those tough distinctions.]  

• The DNC has refused to renounce, or commit to end, its undemocratic practices during the 2016 primary campaign that caused so much discord and distrust from many party activists and voters among core constituencies. [Yes, there is internal discord.]

• Working to defeat restrictions on voting rights is of enormous importance. Yet the Democratic National Committee failed to make such work a DNC staffing priority. [Empirical data and the appeal of voter ID laws discount this grievance strategy. Thus, deploying it is not likely to have positive effects. Better to advance GOTV efforts.]

Populism and Party Decline

• The Democratic Party’s claims of fighting for “working families” have been undermined by its refusal to directly challenge corporate power, enabling Trump to masquerade as a champion of the people. “Democrats will not win if they continue to bring a wonk knife to a populist gunfight. Nor can Democratic leaders and operatives be seen as real allies of the working class if they’re afraid to alienate big funders or to harm future job or consulting prospects.” [There’s a difficult choice for the party highlighted by the Perez-Sanders split: identity politics or class politics? The mishmash of this manifesto results from trying to pursue both. To do this the party advances an implicit assumption that ‘white’ voters are only virtuous if they are poor. This is blatantly hypocritical to middle class whites.]

• “Since Obama’s victory in 2008, the Democratic Party has lost control of both houses of Congress and more than 1,000 state legislative seats. The GOP now controls the governorship as well as the entire legislature in 26 states, while Democrats exercise such control in only six states…. Despite this Democratic decline, bold proposals with the national party’s imprint are scarce.” [So, trying to pursue a triangulation strategy while paying lip-service to identity racial and ethnic grievance groups for the past 8 years has led to defeat across the spectrum. Yet, this new party manifesto really refuses to make a choice. So, it’s more of the same: trying to appeal to white middle class voters while implying that the party is really for social justice that disfavors them because they are white. This is a losing contradictory strategy.]

• “After a decade and a half of nonstop warfare, research data from voting patterns suggest that the Clinton campaign’s hawkish stance was a political detriment in working-class communities hard-hit by American casualties from deployments in Iraq and Afghanistan.” [Yes, but they point with pride to their sacrifices for country. Disrespecting their patriotism by implying they’re dupes is not a winning strategy.]

• “Operating from a place of defensiveness and denial will not turn the party around. Neither will status quo methodology.”


Party Operations and Outreach

• The Democratic National Committee must make up for lost time by accelerating its very recent gear-up of staffing to fight against the multi-front assaults on voting rights that include voter ID laws, purges of voter rolls and intimidation tactics. [As explained above, not likely to be productive.]

• The Democratic National Committee should commit itself to scrupulously adhering to its Charter, which requires the DNC to be evenhanded in the presidential nominating process.

• Because “the superdelegate system, by its very nature, undermines the vital precept of one person, one vote,” the voting power of all superdelegates to the Democratic National Convention must end.

• “Social movements cannot be understood as tools to get Democrats elected. The ebb and flow of social movements offer a rising tide in their own right that along the way can lift Democratic Party candidates — if the party is able to embrace the broad popular sentiment that the movements embody.” [Both parties have willingly dragged their constituencies into cultural conflicts that are largely unresolvable. Thus, the parties gain by making compromise untenable: Vote for us or else!]

• “This is about more than just increasing voter turnout. It is about energizing as well as expanding the base of the party. To do this we must aggressively pursue two tracks: fighting right-wing efforts to rig the political system, and giving people who can vote a truly compelling reason to do so.” [Enthusiasm based on negative opposition (i.e., anti-Trump or anti-liberal) is not very durable.]

• “The enduring point of community outreach is to build an ongoing relationship that aims for the party to become part of the fabric of everyday life. It means acknowledging the validity and power of people-driven movements as well as recognizing and supporting authentic progressive community leaders. It means focusing on how the party can best serve communities, not the other way around. Most of all, it means persisting with such engagement on an ongoing basis, not just at election time.” [Yes, but to do so successfully requires an appeal beyond the particularistic identity of the individual. How can I be part of something bigger if it’s all about who I am?]

Party Policies and Programs

• The party should avidly promote inspiring programs such as single-payer Medicare for all, free public college tuition, economic security, infrastructure and green jobs initiatives, and tackling the climate crisis. [Here we get into the problem of the viability of socialist policies – when they fail, it discredits the bigger goal.]

• While the Democratic Party fights for an agenda to benefit all Americans [Does it? What about those Trump voters?], the party must develop new policies and strategies for more substantial engagement with people of color — directly addressing realities of their lives that include disproportionately high rates of poverty and ongoing vulnerability to a racist criminal justice system. [And then there is an immediate turn back to biological identity. This is not to deny the problems of disadvantaged communities, but merely questions the best way to empower them.]

• With its policies and programs, not just its public statements, the Democratic Party must emphasize that “in the real world, the well-being of women is indivisible from their economic circumstances and security.” To truly advance gender equality, the party needs to fight for the economic rights of all women. [Better to let the economy and the demand for labor sort this out. It works.]

• The Democratic Party should end its neglect of rural voters, a process that must include aligning the party with the interests of farming families and others who live in the countryside rather than with Big Agriculture and monopolies. [Agree. But these are not people looking for pity or hand-outs or victim status. They want to be able to take care of themselves.]

• “While the short-term prospects for meaningful federal action on climate are exceedingly bleak, state-level initiatives are important and attainable. Meanwhile, it’s crucial that the Democratic Party stop confining its climate agenda to inadequate steps that are palatable to Big Oil and mega-players on Wall Street.” [The trade-offs the majority of voters are willing to make here are not clear. It’s not a choice between clean air or the death of the planet, but clean air at what price?]

• “What must now take place includes honest self-reflection and confronting a hard truth: that many view the party as often in service to a rapacious oligarchy and increasingly out of touch with people in its own base.” The Democratic Party should disentangle itself — ideologically and financially — from Wall Street, the military-industrial complex and other corporate interests that put profits ahead of public needs. [Yes, welcome to the corruption of 21st century American party politics. Why do you think Americans of all stripes voted for Trump?]

Constitutional Crisis?

The following was a provocative essay published in the NYTimes. Since it touches on the nexus of economics and politics, I deemed it an appropriate topic for this blog.

Our Constitution was not built for a country with so much wealth concentrated at the very top nor for the threats that invariably accompany it: oligarchs and populist demagogues.

No. It wasn’t.

But we can never seem to anchor our attention on the true determinants of economic power. The distribution of wealth is tilted toward those who control society’s primary productive resources. In feudal and agrarian societies it is land; in industrial and post industrial societies it is energy and finance capital; in the information society it is information data and finance capital.

The imperative for a liberal democracy is to democratize land, to democratize finance, and, especially in the 21st century, to democratize big data. There are trade-offs implied (especially the necessary democratization of investment risk), but the objective must be liberty and justice, not national wealth, because sustainable wealth is only derived from liberty and justice.

Aside from economic inequality there is a related but different plague upon the body politic these days. That is the anti-democratic ideology of identity politics and multiculturalism. These ideologies probably arose as a response to the frustration of economic inequality and power that demanded a division into victims and victimizers. The victimizers, of course, were corporate, white, and male, while the victims were all other identity groups not so defined: ethnic and racial minorities, women, LBGTs, etc.

But a constitution based on compromise through participation cannot possibly manage identity groups based on biology and genetics.  There is no compromising our biological identity, there are only zero-sum battles with winners and losers. Thus, the rule of the victimizers must be torn down, though it cannot end there. Coalitions of identity groups do not hold together after the common enemy has been vanquished, so they turn on each other until we see the complete Balkanization of democratic polities.

We will need to solve both these problems – economic inequality and identity Balkanization – in order for our democracy to restore itself and guarantee liberty and justice for all. Unfortunately this professor, and most of our political leaders in the oligarchy, don’t really have any promising ideas about how to go about that.

There are other things the Constitution wasn’t written for, of course. The founders didn’t foresee America becoming a global superpower. They didn’t plan for the internet or nuclear weapons. And they certainly couldn’t have imagined a former reality television star president. Commentators wring their hands over all of these transformations — though these days, they tend to focus on whether this country’s founding document can survive the current president.

But there is a different, and far more stubborn, risk that our country faces — and which, arguably, led to the TV star turned president in the first place. Our Constitution was not built for a country with so much wealth concentrated at the very top nor for the threats that invariably accompany it: oligarchs and populist demagogues.

From the ancient Greeks to the American founders, statesmen and political philosophers were obsessed with the problem of economic inequality. Unequal societies were subject to constant strife — even revolution. The rich would tyrannize the poor, and the poor would revolt against the rich.

The solution was to build economic class right into the structure of government. In England, for example, the structure of government balanced lords and commoners. In ancient Rome, there was the patrician Senate for the wealthy, and the Tribune of the Plebeians for everyone else. We can think of these as class-warfare constitutions: Each class has a share in governing, and a check on the other. Those checks prevent oligarchy on the one hand and a tyranny founded on populist demagogy on the other.

What is surprising about the design of our Constitution is that it isn’t a class warfare constitution. Our Constitution doesn’t mandate that only the wealthy can become senators, and we don’t have a tribune of the plebs. Our founding charter doesn’t have structural checks and balances between economic classes: not between rich and poor, and certainly not between corporate interests and ordinary workers. This was a radical change in the history of constitutional government.

And it wasn’t an oversight. The founding generation knew how to write class-warfare constitutions — they even debated such proposals during the summer of 1787. But they ultimately chose a framework for government that didn’t pit class against class. Part of the reason was practical. James Madison’s notes from the secret debates at the Philadelphia Convention show that the delegates had a hard time agreeing on how they would design such a class-based system. But part of the reason was political: They knew the American people wouldn’t agree to that kind of government.

At the time, many Americans believed the new nation would not be afflicted by the problems that accompanied economic inequality because there simply wasn’t much inequality within the political community of white men. Today we tend to emphasize how undemocratic the founding era was when judged by our values — its exclusion of women, enslavement of African-Americans, violence against Native Americans. But in doing so, we risk missing something important: Many in the founding generation believed America was exceptional because of the extraordinary degree of economic equality within the political community as they defined it.

Unlike Europe, America wasn’t bogged down by the legacy of feudalism, nor did it have a hereditary aristocracy. Noah Webster, best known for his dictionary, commented that there were “small inequalities of property,” a fact that distinguished America from Europe and the rest of the world. Equality of property, he believed, was crucial for sustaining a republic. During the Constitutional Convention, South Carolinan Charles Pinckney said America had “a greater equality than is to be found among the people of any other country.” As long as the new nation could expand west, he thought, it would be possible to have a citizenry of independent yeoman farmers. In a community with economic equality, there was simply no need for constitutional structures to manage the clash between the wealthy and everyone else.

The problem, of course, is that economic inequality has been on the rise for at least the last generation. In 1976 the richest 1 percent of Americans took home about 8.5 percent of our national income. Today they take home more than 20 percent. In major sectors of the economy — banking, airlines, agriculture, pharmaceuticals, telecommunications — economic power is increasingly concentrated in a small number of companies. [Don’t we need to discuss why before we embark on solutions?]

While much of the debate has been on the moral or economic consequences of economic inequality, the more fundamental problem is that our constitutional system might not survive in an unequal economy. Campaign contributions, lobbying, the revolving door of industry insiders working in government, interest group influence over regulators and even think tanks — all of these features of our current political system skew policy making to favor the wealthy and entrenched economic interests. “The rich will strive to establish their dominion and enslave the rest,” Gouverneur Morris observed in 1787. “They always did. They always will.” An oligarchy — not a republic — is the inevitable result.

As a republic descends into an oligarchy, the people revolt. Populist revolts are rarely anarchic; they require leadership. [See Trump AND Sanders.] Morris predicted that the rich would take advantage of the people’s “passions” and “make these the instruments for oppressing them.” The future Broadway sensation Alexander Hamilton put it more clearly: “Of those men who have overturned the liberties of republics, the greatest number have begun their career by paying an obsequious court to the people: commencing demagogues, and ending tyrants.”

Starting more than a century ago, amid the first Gilded Age, Americans confronted rising inequality, rapid industrial change, a communications and transportation revolution and the emergence of monopolies. Populists and progressives responded by pushing for reforms that would tame the great concentrations of wealth and power that were corrupting government.

On the economic side, they invented antitrust laws and public utilities regulation, established an income tax, and fought for minimum wages. On the political side, they passed campaign finance regulations and amended the Constitution so the people would get to elect senators directly. They did these things because they knew that our republican form of government could not survive in an economically unequal society. As Theodore Roosevelt wrote, “There can be no real political democracy unless there is something approaching an economic democracy.”

For all its resilience and longevity, our Constitution doesn’t have structural checks built into it to prevent oligarchy or populist demagogues. It was written on the assumption that America would remain relatively equal economically. Even the father of the Constitution understood this. Toward the end of his life, Madison worried that the number of Americans who had only the “bare necessities of life” would one day increase. When it did, he concluded, the institutions and laws of the country would need to be adapted, and that task would require “all the wisdom of the wisest patriots.”

With economic inequality rising and the middle class collapsing, the deep question we must ask today is whether our generation has wise patriots who, like the progressives a century ago, will adapt the institutions and laws of our country — and save our republic.

Ganesh Sitaraman, a professor at Vanderbilt Law School, is the author of “The Crisis of the Middle-Class Constitution: Why Economic Inequality Threatens Our Republic.”

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