social contract | waroftheworldblog

Question: How does a democratic society operate in a modern world characterized by highly complex systems. Examples of such systems include the Economy, Science, Medicine, Transportation, International Relations and National Defense.

Answer: It functions through delegation. Initially, such delegation took the form of elected representatives and through federalism. Bit by bit over the last century, the important problems raised by increasing complexity, the “Seventy-Five Years War,” and the desire for truly national policies have expanded the delegation to subject-area Experts. Some of this “Expertise” is housed within the federal departments and agencies, some of it in semi-independent organizations, some in colleges and universities, and some of it in private bodies. Experts act as Stewards of these complex systems for the common good.

Question: What do the Experts get in exchange for operating their Stewardship?

Answer: “Honor, Power, Riches, Fame, and the Love of Women.”[1] All in moderation or, at least, the appearance of moderation. This is a version of the “Social Contract.”

Question: What happens if one party violates the “contract”?

Answer: The contract ceases to be enforceable on the other party.[2]

Question: Have the “Experts” violated the contract? It seems to me that they have and repeatedly and egregiously. There is a partial list of examples.[3]

Question: Has the mass of ordinary people violated the contract?

Answer: Maybe or Arguably, they have. I’ve thought about the “Experts.” They make an inviting target. I haven’t thought as much about ordinary people. I should. Off the top of my head—or my grievance pile—there are the following observations:

No one—regardless of social class or gender or sexual orientation, or ethnicity–wants to pay taxes, or serve in the military,[4] or serve on a jury.

Nobody seems to care about massive national debt that will lead to default.

We have an economy driven by the consumption of immense quantities of cheap garbage from Walmart, Amazon, and Apple.

The swelling numbers of people afflicted by obesity and Type II diabetes. These are afflictions of choice, even if that choice is manipulated by Big Food.

The educational decline manifested in falling standardized test scores.

The fascination with celebrities, athletes, musicians, and other louts.

Today’s “common man” as a far cry from the “common man” of Aaron Copland’s day.[5]

Yes, I know: Curmudgeon yelling at the rain. Doesn’t make me wrong.

[1] Sigmund Freud, quoted by Ward Just in the story of the same title in Ward Just, Twenty-One Selected Stories (1990).

[2] See: The Declaration of Independence.

[3] What Should You Read? | waroftheworldblog

[4] Well, since the creation of the “All Volunteer Force” at the end of the Vietnam War, about one percent of Americans have been willing to serve in the military. These were not the dregs of society the common imagination. Most often, they have been people from the South and West and often with some kind of family link to military service.

[5] Fanfare for the Common Man – Aaron Copland

Every–bored-to-tears–schoolboy knows who propounded the idea of a “social contract”: Thomas Hobbes and John Locke. The idea of a social contract on the distribution of income has formed one of the pillars of “neo-capitalism” since 1945. However, that basic idea has witnessed several successive versions. From 1945 to the Reagan Administration in the 1980s, the US combined high tax rates on the wealthy with the channeling of the gains in productivity to employees. Eventually, business people pushed back against what they saw an an unfair deal. A new social contract emerged in which much higher incomes for the wealthy were accepted so long as the real incomes for the middle class continued to rise. (All this is just my opinion. In all likelihood, many of my historian friends would rain-down good-humored abuse on this interpretation.) The financial crisis and the “Great Recession” then ruptured this second version of the social contract.

In 2007-2008 we had the financial crisis and the “Great Recession.” In 2009 we started back up the road to prosperity. American Gross Domestic Product (GDP, OK, cue Mort Sahl here) is up 6.7% over 2007. Per-capita disposable income rose 4.2% between June 2009 and June 2014. Well, some of us started back toward prosperity, but not all of us did. In June 2009 the median family income was $55,589; in June 2014 it was $53,891 (in inflation-adjusted dollars). That’s a 3.1% decline.

How can that be? Well, the stock market is doing very well. If you’re the kind of person who puts their savings into Vanguard accounts, then your the kind of person who probably has profited from the recovery. (On the other hand, you’re also the kind of person who took a bath in the recession. Not that the people at the New York Times give a rip about your experience.) If you’re the kind of person who depends on wages or salary and your home is your chief investment, there is good reason to feel like the “recovery” is a joke. (Like a bucket of water propped on top of a partly-open door. “Hey, can you come in here for a minute?”) Worse still, the 1999 peak in real household income was a little higher than the 2007 (pre-recession) peak in income. Five years into the “recovery” and we aren’t even back to the 2007 level and the 2007 level wasn’t as high as the 1999 level. In sum, we’ve actually had fifteen years of things not working right, rather than five or seven years of things not working right. There’s probably something in the Bible about this.

One great challenge of the day is to figure out a new version of the social contract. There has to be a way of achieving broadly-shared economic growth. There isn’t much political consensus about what to do. George W. Bush and Barack Obama, Republicans and Democrats all had or have high disapproval levels in public opinion polls. A big chunk of voters seem to have swung from supporting Obama and the Democrats in 2008 to supporting the Tea Party faction of Republicans in 2010. The 2014 mid-terms loom next month with no certain outcome.

Saying that there is no political consensus on action isn’t quite the same as saying that professional economists couldn’t come up with some solutions. It’s just that neither the right or the left seems much interested in listening to what they have to say. The flight from Keynesian solutions to the recession actually was widely shared. It is inexplicable in rational terms, especially by Democrats who were going to be left holding the bag in future elections. Yet it happened. Probably the same goes for constructive policies aimed at building a better American future.

Paul Krugman, “How to Get it Wrong,” NYT, 15 September 2014.

Neil Irwin, “A Crisis of Faith in the Global Elite,” NYT, September 2014.

Neil Irwin, “Why the Middle Class Isn’t Buying the Talk About a Strong Recovery,” NYT, 22 August 2014.