Can we see some numbers, please?

Say an individual, Bob, is concerned about a public good, like the environment. He decides to make a new year’s resolution to do something about it. Over a two to three year period, he activates others in his industry to legislate a testing requirement that costs the consumers, say, $200 on average per transaction. Note that this organizing and petitioning and writing communications and attending meetings was all done outside of the pay-check sphere of life.

One of the objectors to the added commission-for-the-public-good points out that, other than providing information, the testing will not give rise to any tangible reductions in green house emissions. Bob and his cohorts respond that doing something is better than doing nothing. Is he right?

Now let’s say that instead of doing the testing one could give the $200 to the client to not use their personal vehicle for a month, or to not take an airplane trip. In both scenarios there would be a measurable and immediate impact on green house emissions. Given these choices, it’s fair to say that there are other ways to spend $200 which would result in a greater impact on the goal to reduce global warming.

Numbers must be run so the public has a means of comparison. While everyone is working on (lobbying for, debating in favor of) one idea, other more valuable ideas are neglected, omitted from the realm of public consideration. Even though no one received payment for their time, the capacity of a community to engage and respond was tapped. So despite Bob’s sincere interest in climate change, doing nothing is, in fact, better than advocating for an unsubstantiated claim.

Now let’s say Bob was particularly talented at organizing and galvanizing folks around a cause. And due to this success he continued to seek approval and status through this type of work. The impetus for action transforms to status seeking, increasing Bob’s private persona, versus the stated tangible impact to any group concern. Now, in an error of commission, a form of corruption, starts to germinate.

The answer is not to stop the Bobs of the world. Hardly. The intent of this blog is to encourage the meaningful enumeration of choices; to clarify the resources used as inputs and record the increases in public capacity and capital; the intent is to provide the information necessary to steer Bob’s ambitions to the most productive choices.

Systemic

The word systemic keeps getting worked into the conversation these days. Like when kale was in fashion. Some healthy new food that all of a sudden is made part of every dish but you’re not really sure what you think about it. Systemic–it’s put out there in a more or less free standing sort of way without any follow-up examples or stories to prop-up exactly what the speaker means by it. What we are dished up is a description of a (negative) social outcome, one that occurred due to systemic issues.

Dictionary.com offers this: [səˈstemik] ADJECTIVE. 1. relating to a system, especially as opposed to a particular part. It seems we need to understand more about systems. A system is not the sum of its parts. Here is what Lebanese born author Nassim Taleb offers from his book Skin in the Game:

The main idea behind complex systems is that the ensemble behaves in way not predicted by the components. The interactions matter more than the nature of the units. Studying individual ants will never (one can safely say never for most such situations), never give us an idea on how the ant colony operates. For that, one needs to understand an ant colony as an ant colony, no less, no more, not a collection of ants. This is called an “emergent” property of the whole, by which parts and whole differ because what matters is the interactions between such parts.

from Skin in the Game

So this Thing, that is socially detrimental, happens across a system. But what exactly? What happens that lies beyond the responsibility of one individual, and that echoes within a larger group of activity, that culminates into whatever it is being voiced as systemic? The gist is the Thing is a series of inter-related activities erupting into the highly objectional scenario at hand.

But why settle for gists and innuendo? Why not name this Thing? Why not fully flush out what it is that stair steps its way through households and into communities, through vendors and corporations, through bureaucracies and governments?

Take the Enron Corporation story for example.

At the end of 2001, it was revealed that Enron’s reported financial condition was sustained by an institutionalized, systemic and creatively planned accounting fraud, known since as the Enron scandal. Enron has since become a well-known example of willful corporate fraud and corruption. The scandal also brought into question the accounting practices and activities of many corporations in the United States and was a factor in the enactment of the Sarbanes–Oxley Act of 2002. The scandal also affected the greater business world by causing the dissolution of the Arthur Andersen accounting firm, which had been Enron’s main auditor for years.[2]

There’s that word systemic again. At this (formally) worldwide energy company, accountants at all levels could have called out questionable practices but did not. Through failure to act the organization was complicit at all levels of covering up fraudulent accounting practices.

A contrarian might say, is that really fair? The employee’s contract is to fulfill their job description for a bi-weekly check. Today, in the bright of day, the deceit is clear. But in the rush of the workday was it muddled? When did the private contract between employer and employee take on a public obligation? If an employee calls out their supervisor, the writing is on the wall and the pink slip is in their in-box.

The systemic promoters are talking about failure within an entire organization. They’re saying that a weighting of choices throughout an energy company, or a government agency, or a group of neighbors, have social implications. That the cascading of choices of each ant in the system can allow for a horrific result. That each actor has a varying degree of control, of an ability to say no, of the choice to turn on the group and change its course.

So let’s name that little portion of something that could be done to stop a social ill, let’s call it work. The employee enters into a private contract for employment but carries a public obligation to disrupt actions which are contrary to established social compacts. The portion of obligation is tied to the level of ability to have an impact (you can’t really do much as a first year junior accountant). This is also work–it is work in the pubic sphere.

These systemic issues not only occur within private work life, but also the time we devote to our families and communities. When insufficient attention is paid to the elderly, we hear of abuses in nursing homes. When insufficient resources are paid to depression, there are suicides. These too are due to a piece-by-piece failure within the entirety to respond. These too are systemic.

The Thing is work, or housework if you prefer. Not the type of inflammatory action that the cancel culture takes to achieve their thoughts on their social need du jour. The work of stopping over and taking your depression prone niece out for a daily bout of fresh air; the work of maintaining the ballfields for the little leaguers; the work of staying late one day to scrutinize the accounting that seemed awry but you had to really take a few minutes to double check for inconsistencies. It’s the small bits of work by hundreds (of millions) of employees and community members to maintain a certain standard of established norms.

It’s fine to start the conversation with, “All these xyz bad things happened and it’s Systemic!” But we can’t exactly tackle the correcting measures without understanding where and how in the system work can be done to achieve a better future.

The Judge vs. Embrace

Alex Tabarrok recognized the passing of WV Judge Richard Neely on his blog site today. He credits the judge’s candor with getting his first paper published in 2003 in a good journal. His paper, written with Eric Helland, argued:

We argue that partisan elected judges have an incentive to redistribute wealth from out‐of‐state defendants (nonvoters) to in‐state plaintiffs (voters). We first test the hypothesis by using cross‐state data. We find a significant partisan effect after controlling for differences in injuries, state incomes, poverty levels, selection effects, and other factors. One difference that appears difficult to control for is that each state has its own tort law. In cases involving citizens of different states, federal judges decide disputes by using state law. Using these diversity‐of‐citizenship cases, we conclude that differences in awards are caused by differences in electoral systems, not by differences in state law.

But it is the judge’s very own words that confirm his economic motivation in his rulings.

As long as I am allowed to redistribute wealth from out-of-state companies to injured in-state plaintiffs, I shall continue to do so. Not only is my sleep enhanced when I give someone’s else money away, but so is my job security, because the in-state plaintiffs, their families, and their friends will reelect me. (Neely 1988, p. 4).

So what does this have to do with a post I recently wrote about Embrace, a women’s shelter in Wisconsin? The shelter’s director set up a GoFundMe page after she alienated local police by prominently advertising BLM signs around the facility. The goal was to replace $25K in funding that was pulled by the county. As of this morning the kitty is over $100K with a stated goal of $112K. I’m not sure how she picked that number, if there has been some sort of marketing strategy, to keep ratcheting up the goal as long as donors respond.

What I want people to see is the structure of the groups and the motivations for the economic activity between them. (It’s all about the group) In both cases there is a greater federal group. In both cases there is a smaller group; for judge Neely it was comprised of the citizens of WV, for the shelter it is the community which is within their service area. Both the judge and the director are extracting money from the larger group. One is unabashedly leveraging the law for the benefit of his constituents.

I question whether the other is providing full disclosure about the economic transaction that is still underway. Is there an assumption on the part of the greater public that their dollars are supporting an organization which serves a public effected by the concerns of BLM (whereas only a fifteenth of one percent of the population in this county is African American)? Or does the greater group understand they are funding a director who simply shares a similar ideology but has no power to actively contribute to the welfare of BLM?

In order to detect deceit or inefficiencies one must delineate the groups. One must also acknowledge the public nature of the motivations which drives the activity within the group–that anyone within the group receives access to the benefit. The judge, for example, rules in this way for all his constituents who found themselves in a similar conflict. That the services of the shelter are open to anyone within its service area.

Neither the judge nor the director evaluate whether the taking of resources from the greater group harm or diminishes services in some way to other members of the greater group. Their pursuit for funds is fulfilled under the nature of a private transaction, no different than how a corporation pursues funds for their services. This mode of competitive behavior happened recently when states bid against each other for PPE’s in the early days of the covid-19 crisis. Although they work as agents for a public, their obligation for such is only to the inner group.

Judge Neely was one of those confident individuals who scoffed at the traditional method of holding group norms behind a cloak of anonymity. For this we can be thankful, as his words confirm this social economic group structure and the motivation that drives its behavior.

The work of it

The question of the day is what is the nature of work. Not work for which you receive a salary, but the work necessary for public production. Bill Green, professor of history at Augsburg College ponders this question in an interview with Cathy Wurzer of MPR. Here, the topic at hand is the toppling of a statue of Christopher Columbus. But it is his inquiry into determining whether such activity counts as work or whether there is some other commitment which is required to, in this case, neutralize the negative historical impact on minorities, which is interesting.

Without a definition, the wild west of interpretation has been unleashed. The loudest claimants promote their version: You must march on Washington! You must forego your police force! You must forego your career (as in the case of senator Al Franken). But did any of these three events materially contribute to the advancement of a single minority or woman? Or could we equate them more readily to exposing, hence a marketing of sorts, of the issues.

Why even does it matter whether we give work some shape, outline its boundaries? Let’s take the Women’s march on Washington in early 2017. It is reported that 470,000 people showed up in our nation’s capital. Many more across all the states. But we can assume that say 400,000 in Washington traveled to get there. So let’s say the whole weekend took 48 hours of their lives. Now say the median hourly wage in the US is $18.5/hour. So for two days of work these folks contributed the equivalent of $296 x 400,000=$118.4million. Use your own numbers, but it is a lot of cash.

The women marching in the photos don’t look destitute or oppressed. They are not themselves in need. They are there on behalf of others. And I believe their intentions were sincere. They undoubtedly felt this was work towards their cause. It just seems like they could have better used the $118.4 million to secure housing for a single mom and her elementary school child, for instance. Or part of that $118.4M could have guaranteed vocational training and mentorship for girls coming out of a foster home setting. There are so many gaps in the chain of needs.

It reminds me of the foreign aid packages from years gone by. They were intended to feed the poor, but the poor rarely saw a trace of it. The work done in a public sphere requires the parties to touch, to interact, to engage in a transaction of a public nature. All this cancelling and marching and firing is just drumming up a bunch of grandstanding.

Follow the money

For those who follow the blog you know that I’ve been harping on the distinction between public and private, club and common goods, here, here and here. In my view goods are not sorted in this manner. A hammer is a hammer. If it is used to fix my deck it is in service to me privately, if it is used build a Habitat for Humanity house it is providing a public service to house the unsheltered.

The reason it is necessary to resort this understanding is because it is how we can see corruption. Corruption is not just up to politicians. A system can be corrupt and individuals, small groups and so on. When a set of rules are put into play, but then through cloaking and shading people (or groups of people) pursue other objectives, there is corruption.

Take the case of Embrace, a domestic violence shelter, that’s been in the news. The local police in Barron’s County Wisconsin objected to the posting of BLM posters around their building. And felt this posting calling out police violence, discredited their service. As a result public funding for the shelter was revoked. Here are the Huffington Post, Wisconsin Public Radio and the Washington Post articles.

Embrace states their core mission

To end violence, inspire hope and provide unwavering support to all people affected by domestic and sexual violence by engaging our community in safety, equality and partnership.

Now remember domestic violence persists when the normal social catches fail. When there are no close family members to pull their daughter, son or elderly parent out of an abusive situation. When there are no neighbors who notice excessive bruising and quietly offer the victim a way out. Domestic violence requires a formal force intervention because no other means of social exchange has worked or been available. And from what I understand, these types of calls are frequent and precarious for the police.

Given the necessity of the police to intervene in order to get the abused to their doorstep, you would think the shelter would consider this public agency as a core part of their workplan. As to why the shelter declined to remove their signs, Katie Bement the shelter’s executive director told the Huff Post:

“We were approaching it from an accessibility standpoint,” she told HuffPost over Zoom on Thursday. “We needed to show that we’re safe for those communities of color.”

Yet Barron county’s black population is .14% (a fifteenth of 1 percent) of all residents. I’m not sure how many of those 62 people would be drive by the shelter first before making a call for help or finding them on-line. I don’t have the statistics from police response rates or the shelter’s service records, but I suspect the demographics of those receiving aid lines up with the 97%.

As much as the shelter would like to merge the work they do in Barron County with the objectives of BLM the demographics seems to deny them this reality. The group they provide services to are overwhelmingly, if not completely unaffected by the concerns of BLM. In fact the two missions are at odds with one another as the later has diminished the abilities of police to provide security nationwide. Which is undoubtedly why the county pulled funding.

Now back to corruption.

Within a day of the Huffington post article being run, a GoFundMe page was set up for the shelter. Before dinnertime they had surpassed their $25K goal. As of this morning (screen shot included) the page is reporting a kitty of over $69K. Would the shelter have been able to raise this funding without the BLM story behind it? By accepting these donations has the shelter’s mission changed?

If you publish one set of objectives yet acquire funding for another, it seems that you are at odds with your group. It’s not that groups can’t change their rules or objectives, its just that you have to be clear about them so people know what they how their resources are being invested.

How are things going in Minneapolis?

Personal safety is a deal breaker for most residents. If they do not feel safe in their own home do to gun violence, car jackings and even break-ins, they will move.

It’s all in the comments. Here are just a few from this post.

The Ratcheting up of Regulation

The enforcement of norms is an everyday event. Whether through disapproving looks across a bin of oranges at the grocery store in response to a parent’s disciplining techniques, or the scoff of disbelief at your friend’s new beau’s use of culturally insensitive language, or showing up to work with a card and flowers for a co-worker who recently lost a spouse. The behavior of shaping, criticizing or supporting of each other is judged and metered out with eye movements, gestures, and offers to help.

Once an infraction is deemed serious, it is made a law- you shall be prosecuted if you leave your toddler in a hot car while you shop. There is a lot of ground covered, a lot of degrees of severity and risk in parental actions, between scolding a toddler over a pyramid of piled up produce and locking someone up for child endangerment. But everyone can agree that we are all better off by formally acknowledging a certain threshold of acceptable behavior and enforcing persecution against those who cross over.

We are all better off knowing we can drink tap water from the faucet and that our houses won’t crumble overhead, and we can feed our kids hotdogs from the concessions stands at the Little League games. Accepting these standards and counting on a system, comprised of a series of reportings and enforcements, will maintain the freedom to move in and between communities safely. This is a social advantage we often take for granted.

It can also be shown that at some point there are diminishing return to regulations as their burdens cause detriments that are costly. Most of these arguments set up a discord revolving around health and safety (often tied in with the environment) versus the ability to supply families with income from a job. But this source of monetary capital also affects a person’s ability to lead a healthy safe life. You end up with this big teeter-totter where on one side all the variables set to maximize production of industry are weighted, and on the other, all the variables set to maximize social concerns piled up. What we want to find is at what point where the board finds balance.

Since this topic will be the question of this century, let’s start with a wide angle view in considering the use of regulation to keep the teeter-totter level.

Regulations for commercial enterprises seem to ratchet-up more freely than to release and reevaluate. There are many indications that the systems in place which regulate commerce, (often bureaucracies like Departments of Commerce and Federal Administrations, but cities as well) are not getting the feedback necessary to properly account for all the downsides to their actions. Things at the city and county level work fairly well. Yet, I propose that in the case of big business the intended beneficiaries of the regulation are removed from the system. They do not receive an accurate evaluation of the issues nor a proper accounting. And except to become activists at times of tragedy, they fail to regularly communicate with the regulating agencies.

For purposes of contrast, first consider water quality which is administered at the city level. Complaints about the water filter up through the city council and can be voiced at open city council meetings. Elected officials respond to constituents, especially those who show up. Even city staff feel the pressure when the seats are all taken in the normally hushed city council chambers. Other than the very notable example of Flint MI (and undoubtedly a few under-reported incidents) potable water is successfully provided to 331 million people in the US.

Take hot dogs at a concession stand. The county public health people have the power to decide the cleanliness of the two-windowed, wood clad concession stand with its pretzel warmer and popcorn popper and slushy machine. It is in their power to have it to meet the same standards as a science lab, of they so choose. But the regulator, who is more than likely a part of the community, knows that if the rules checklist becomes too long, making the workload too great for the already tapped, completely volunteer workforce to handle, it will shut down. No concessions, no extra money. No extra money, no new uniforms or dugouts, or pitcher mounds. Do ballfield concession stands or Rotary pancake breakfasts really need to be run at restaurant level standards of cleanliness to keep people safe? Or is there some other level that is ‘good enough’ that won’t squelch to whole endeavor?

Regulation of businesses, however, are missing the community tie-in. Commercial enterprises are regulated by bureaucracies, where people develop careers and other monetary incentives to successfully develop and implement regulations. It’s their job. The purpose of the position is to protect the consumer, where more protection always seems better.

This system removes the citizens that show up at the council meeting both in favor and against city action from the system. The bureaucrats judge and evaluate. They search for evidence to justify their position, not from the public, but from other detached experts. The consumer who can best express the complete picture of tradeoffs for their particular lot in life, has no routine forum. The next closest party to the transaction is the business person who hears and tries to comply with the requests of the consumers. Yet he/she is considered tainted by a money motive, and hence regarded with suspicion or often disregarded.

With the absence of a consumer evaluator, there is no system wide continual assessment of the costs and benefits of the regulation. There is no dynamic information being provided to determine when the regulation has gone too far and is causing too great of a burden.

So what to do? One solution is to consider how people live, by considering their revealed preferences. Testing, if you will, where the new standards are in relation to what the population expresses as their acceptable risk level. For instance, say you have a city that imposes a rental property review based on a scoring system comprised of a four page list of items. Missing smoke detector 5 points, missing receptacle plate 2 points, no furnace tune-up in the last year 5 point, ripped window screen 1 point, etc.. When the property scores 20 or more the renters must vacate the property as it is deemed inhabitual.

Now let’s say the assessment is used on the other 23 homes on the block. If 75 percent of them failed then it seems that the review checklist is too stringent. The regulator are basically saying to its own constituents that their standard of house maintenance are inadequate and they must move. (How do you think that would go over?)

Think of how this came about. The property regulators were trying to do right by the tenants, trying to get rid of the slumlords. They developed a tool that would allow them to put a handful of bad actors out of business. They get little community objection. Even very acceptable landlords are going to stay quiet when heavy handed regulation is in the mix as they are fearful of retaliation. But by setting a standard well above the average accepted living conditions, the regulators have raised the cost of providing housing. Since cost is reflected in rents, this causes undo pressure on affordable rentals.

Indexing off a general-population-standard may not be the end-all-be-all, but it would provide a starting point for the group. If analysis showed reasons for regulators to require more out of a subgroup (rental property), than at least this could be publicly discussed and agreed upon. But forcing the landlords to provide housing units at a higher standard than the average, and hence places undue costs on the provision of housing, avoids a proper accounting. This leads to endless circular discussions about the lack of affordable housing and whose to blame and whose to pay.

Furthermore when regulations don’t match the populations expectations, people resort to go-arounds until the formal rules are disregarded entirely. The highway speed limit debate that started in the early seventies left the public conversation once States set their driving limit to how fast motorists tended drive.

As a part of the system, development, implementation and enforcement of regulations need to be influenced by all actors. When a bureaucracy takes on an agency of their own, which allows them a power position which in effect rebuffs feedback from the general population. Using an indexing method for the group would at least reveal an average standard. It would provide an initial means of analysis. Ideally, even in situations of complex issues there could be a greater transparency with all the costs at hand. And in this way the average citizen could participate in a continual feedback loop while they assess their costs. Without this participation we are simply creating a power void ready to be filled by bureaucratic czars.

We’ve lost track of regulation by allowing it to jump out of the mechanics of the entire system. Lack of transparency and convoluted agency keep any meaningful accounting of the tradeoffs. In the same way that the business community’s opinion of the issues at hand are tainted by the money motive, so are the bureaucrats. They are incented to build their agencies, find new safety concerns, beat back business with zeal. So why are we surprised when they do so?