Wednesday, July 27, 2011

Letter to Gerald Celente

Gerald Celente just e-mailed his summer issue of Trends Research Journal. It is full of valuable information that offers an imaginative alternative to the legacy media, and I highly recommend it. In this issue Celente advocates direct democracy, a policy that would be a serious error. I respond in the following e-mail:

Thanks for your recent issue. I agree with much of it but not  with your claim that direct democracy will  end America’s economic and political decline.  Your Swiss example is intriguing, especially with respect to Switzerland’s decentralization, but direct democracy is inapplicable to America because the size, culture, community, and  incentives differ.  You note that a Swiss canton can be as small as 14,000, but the average American congressional district is  about 735,000.  Switzerland’s population is less than New York City’s.   

Today’s problems result from pathological incentives--privileged groups’ benefits from lobbying outweigh their costs.  Included in lobbying are the same groups’ control of information, their ownership of the mass media, and their influence in the education system.  Direct democracy won’t change the incentive structure that benefits special interests and inhibits the public’s ability to think rationally about events. Your own subscription fee of hundreds of dollars, which is beyond most people’s ability to pay, evidences the inability of the public to obtain good information. 

Thus, in a direct democracy special interests will continue to influence politicians; the information needed for the public to make intelligent decisions about complex issues will be bounded by bad and ideologically driven education and Wall Street-influenced media; and, added to the mix will be the gullibility of the public that is easily brought to  an emotional frenzy and lacks information not controlled by the state.  As Madison put it in the Federalist Number 10:

…a pure democracy, by which I mean a society consisting of a small number of citizens, who assemble and administer the government in person, can admit of no cure for the mischiefs of faction. A common passion or interest will, in almost every case, be felt by a majority of the whole; a communication and concert result from the form of government itself; and there is nothing to check the inducements to sacrifice the weaker party or an obnoxious individual. Hence it is that such democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights of property; and have in general been as short in their lives as they have been violent in their deaths. Theoretic politicians, who have patronized this species of government, have erroneously supposed that by reducing mankind to a perfect equality in their political rights, they would, at the same time, be perfectly equalized and assimilated in their possessions, their opinions, and their passions.

The current decline in America’s economic and political system began more than a century ago with Progressivism, which introduced the referendum and the recall as part of an overall thrust toward (a) democratization coupled with (b) the installation of expert management of the economy, including the Federal Trade Commission and the Federal Reserve Bank.  Regulation reflected the Progressive belief that experts would be free of political pressure while, in areas experts designate,  enhanced democracy would enable the public to express its interests given the structure and options that the experts delineate. The Progressive system has failed—special interests capture experts and mislead the public. The public is not capable of understanding underlying issues, even fairly simple ones like monetary policy.  Environmental issues are complex and I have not met anyone who can explain the details of, for instance, the Waxman-Markey cap and trade bill.  Are you certain that it would not have had perverse effects such as forced evictions of honest home owners?  Hence, policies that harm the average American, such as Keynesian and monetarist economic theories, can be sold through the propaganda of supposed experts that convinces even the most intelligent voters.  Orwell was right about language—freedom is easily painted as slavery and the public cannot figure it out.

Direct democracy will be subject  to greater manipulation than the current system. Rather, a reinvention of republicanism, the less obvious solution that Hamilton and Madison proposed, and a sharp Jeffersonian  limitation of government power across the board are needed. Democracy has failed. Its enhancement will be worse.  

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