Review of Ralph Nader: "Only the Super-Rich Can Save Us Now"

Synopsis

In his latest book, Ralph Nader tries his hand at fiction and describes an interesting idea: a handful of disillusioned, elderly billionaires pool their resources to find remedies to not only the problems facing the world, but to the corruption in the political system itself. It begins in 2003 with a fictionalized Warren Buffett who views the disastrous aftermath of Katrina and becomes convinced that the U.S. government has failed its constituents on a fundamental level, and is incapable of ensuring basic rights, not to mention its inability to respond to escalating worldwide problems.

Mr. Buffett decides to tackle this issue head on. He gathers 17 like-minded billionaires (e.g. Bill Cosby, Ted Turner, Yoko Ono, and Leonard Riggio, CEO of Barnes & Noble) and they form a 2-year plan to fix government corruption, make the media more impartial, and address social issues such as healthcare and pollution. They build an infrastructure of consumer watchdog groups, assemble their own media outlet, and recruit spokesmen and demonstrators across the nation. As this is a Ralph Nader-styled utopia, the end result involves many nationalized industries and substantial unionization, but to each his own…

Neoclassical economics claims that a large group of varied individuals acting out of self interest can actually lead to a situation that is better than the sum of its component participants: each market player utilizes unique talents and inputs through specialization, and by acting selfishly each player inadvertently benefits others as well. Many college students emerge from Economics 101 believing that the Invisible Hand rocks the American cradle, but never stop to examine the costs of unbridled selfish behavior.

There is a glaring problem in a system that runs on rampant self-interest — you have every reason to lie, cheat, and steal, and little incentive to produce real solutions to the world’s problems. There are entire markets built on bait-and-switch tactics: businesses and agencies advertise solutions to problems, but deliver the minimum value for the maximum profit possible. In economic terms, we are a society of rent-seekers.

This theory of non-satiation may not actually be true. Some social scientists claim that many individuals have an ideal lifestyle in mind, and seek to minimize the cost of getting and staying there (for many people, it may not even be an expensive lifestyle.) A corporate analog to this could be a nonprofit entity that aims to change something in the world. It may seek to eliminate war, or just make a better hammer -- the important point is that the organization (1) provides its members reasonable compensation for their contributions, and (2) seeks to make the world a better place. The shifting of focus from profit-maximization to maximized effectiveness eliminates some significant moral hazards, and if our social scientists are correct, this type of organization may fit more harmoniously within our instinctual social preferences.

While opinions on Mr. Nader’s politics, or even motives, may differ widely, I think the concept introduced in this book is powerful, and should be examined by all individuals and the organizations they compose. We can follow the path of profit maximization at all costs; or we can take the time to envision the world we want to live in, and then use our talents and resources to make lasting, beneficial changes to it.

Congressional Earmarks: What Are They?

The process of Congressional earmarking has received heavy news coverage in recent months, as U.S. citizens evaluate the effectiveness of government spending projects. Situations like the “Bridge to Nowhere” in Alaska and Senator Mitch McConnell’s personal charity appropriations have drawn attention to the lack of transparency and potential moral hazards that accompany the earmarking process. The following brief document provides an explanation and history of earmarking, along with a summary of the more significant criticisms of the practice.

Definition

Earmarking is the process by which members of Congress allocate budgeted money toward a specific program or project. They can be added to the Congressional Appropriations Budget or inserted into any bill as line items. Proponents of earmarks claim that they enable members of Congress to intelligently direct funds where they are most needed among their constituents, instead of deferring to the Executive Branch to allocate expenditures in potentially wasteful ways. The process of logrolling, or the inclusion of reciprocal earmarks, allows the sponsor of a bill to solicit support from other members of Congress; in effect “purchasing” a vote in exchange for an earmark.

History

While earmarking occurred as early as 1817, the practice was not widely seen until the 1980’s. The chart to the right shows that between 1996 and 2008, annual earmarks grew from 958 to 14,093. Incidentally, the total annual spending by lobbyists rose from $1.44 billion in 1998 to $3.30 billion in 2008.

Since the 110^th Congress, the earmark process has been more tightly regulated: members must post their earmarks on a website and declare that they have no personal interest in the request. In addition, the OMB and private groups such as WashingtonWatch.com are expanding efforts to catalog and monitor earmarking behavior. The additional transparency and accountability from these efforts

Criticisms

While earmarks total only two percent of the Federal budget, critics argue that earmarks pose a significant moral hazard to the legislative process: lobbyists often give large donations to the campaign funds of members of Congress in order to secure earmarks. Since until recently, earmarks were usually inserted anonymously into legislation, they were also a convenient way to secretly award loyalty or punish enemies.

Since a member of Congress may insert a budget earmark for projects outside his/her geographical jurisdiction, lobbyists who are rejected by officials from one state are often able to secure funding from members in a different state. For example, Congressman Dan Young from Alaska earmarked $10 million to fund the construction of a highway interchange in Florida. Further research revealed that Congressman Young received a $40,000 campaign donation from the developer of the property. Behaviors such as this will hopefully be reduced by recent and future reforms.