Ethics

Suppose that a freak Atlantic storm pummels the city of Boston, leaving it flooded for days and cut off from services by land and air—trucks cannot reach it and planes cannot land. But a Canadian transport ship happens to be passing by, loaded with fruits and bottled water, en route from Florida to its home port in Halifax.

What should the ship do?

(a) It should divert from its course and deliver emergency supplies to Boston.

(b) It should do nothing and continue its original trajectory.   

The correct answer is: (b) Nothing. 

In 1920 the United States adopted the Jones Act, requiring that any cargo carried between two US ports be (a) carried only on US-built ships or barges that are (b) mostly manned by US citizens, and (c) that the vessels be owned by US individuals or companies.

Predictably, this regulation has increased shipping costs, raised prices for consumers, and decreased the competitiveness of US shipbuilding companies. It has also led to bizarrely expensive and wasteful but common transport occurrences.

For example:

* Shipping oil from the Gulf Coast to Canada costs $2 per barrel on international ships, but shipping from the Gulf Coast to the US East Coast costs $5-6 on American Jones Act ships.

* After a winter storm, New Jersey faced a rock salt shortage. Officials found 40 tons of rock salt for sale in Maine and a ship available to transport it all in two days. But the ship was flying a Marshall Islands flag, so it couldn't be used. The only US-flagged ship available was a barge that could carry only 9.5 tons per trip. So transporting the salt took 5 trips over 1 month and cost an extra $700,000.

* To get its lumber to Seattle, an Alaskan company found it cheaper to ship from Juneau to Seattle via Tokyo, Japan on international ships rather than directly from Juneau to Seattle on American ships.

The Jones Act was passed shortly after World War I when national security was strongly in everyone's mind. Yet the Jones Act is a classic Bootleggers and Baptists phenomenon, with crony businesses able to profit while other supporters fly the flag of national security needs. Yet while no significant national security needs have been met or materialized from the Act, plenty of connected shipbuilding and shipping companies have blocked competition and collected semi-monopoly rents. Industry incumbents make significant campaign contributions to politicians, and those politicians won't touch the Jones Act.

Geographically remote states such as Hawaii are especially hard hit, as businesses there cannot use competitive international shipping to transport goods between the mainland and Hawaii. (For more information, check out the Hawaii Shippers Council site on the Jones Act and the Grassroot Institute's primer on the Jones Act and its negative impacts on Hawaiian consumers.)

The Jones Act obstructs also emergency aid after natural or manmade disasters, when foreign ships in the area are often prevented by law from offering assistance.

* When the Deepwater Horizon oil rig exploded in 2010, killing eleven people and spilling tens of thousands of barrels of oil per day into US territorial waters in the Gulf of Mexico, foreign ships were prevented from helping with clean-up efforts.

* Hurricane Sandy hit land on October 29, 2012 affecting 24 states along the US eastern seaboard. On November 2—three days later—President Barack Obama issued an exemption. During that three-day gap, no foreign ship could help any of those 24 states by moving supplies or people from one US port to another. Further note that it took a presidential order for emergency help to be allowed. Morally-challenged regulation, indeed.

(A related point about perverse regulatory consequences concerns US state-level licensing requirements: out-of-state plumbers, electricians, and other skilled professionals are forbidden from helping out with disaster relief.)

Wise politicians, however, can and do grant Jones-Act exemptions. A special act of the US Senate was passed to allow a sailboat race. In arguing for the exemption, Senator Dianne Feinstein noted the economic benefits to Americans from allowing the race. But if the benefits of a boat race are obvious, why not allow those economic benefits to be realized more generally?

The year 2020 will be the 100^th anniversary of the Jones Act. Will a century of unintended bad consequences lead to its repeal?

Clever humans can be endlessly inventive in corrupting government powers: bribes, kickbacks, nepotism, insider tips, selective enforcement of rules, threats … the list is long.

Cronyism is the practice of using government power to benefit those with special connections—usually politicians and special interests in business, unions, environmental groups, friends, and family members.

For example, the nephew of a politician will receive a subsidy for his business, or two politicians will trade favors that enrich both, the head of an opera association will give free tickets to an opera-loving regulator to induce a tax-exemption, the head of an environmental organization with a lovely home will induce a regulator to declare a neighboring parcel of land off limits to development.  

Everyone officially condemns those practices, yet our success at preventing them is limited. That’s because we typically get the source of the problem wrong.

The most common blame-label is “crony capitalism.” Note that label assumes the corruption occurs within capitalism. When the abuses occur under socialism—as in Cuba, Venezuela, or North Korea—we call them “crony socialism.”

But our system is neither capitalist nor socialist, so we need a better label.  

Free-market capitalism on principle separates government and the economy as much as possible—for the same reasons that religious freedom requires separating the government from religion as much as possible.

Socialism, by contrast subsumes the economy under the government as much as possible—for the same reasons that it makes all human activities, religion included, matters of government control.

Our system, by contrast, tries to split the difference and deliberately integrates the government and the economy—but without nationalizing most property as socialist systems do.

We use various labels for the unwieldy hybrid: Interventionism, the Administrative State, the Mixed Economy, or the Third-Way, which was the preferred label of President Bill Clinton and Prime Minister Tony Blair in the 1990s, General Electric CEO Jeff Immelt in the 2000s, and current British Prime Minister Theresa May in the 2010s. What they all have in common is urging that business power and government power work hand in hand.

Simple logic predicts that cronyism will increase in the Third-Way systems. Give politicians control over more of the economy, and of course more businesses will try to influence those politicians and of course more politicians will use their power to benefit themselves and their friends. The system incentivizes corruption from both sides.

When former President Obama’s administration put $700 billion of TARP funds on the table for distribution, it caused a feeding frenzy.  In that ensuing feeding frenzy, how many of those billions went to the connected and the unscrupulous and how many went to businesses that had a genuine economic case to make? President Trump arrived in the government’s chief executive office as a billionaire businessman. How many of the administration’s decisions will be made exclusively on the basis of what’s best for American interests and how much will be influenced by personal business interests?

The point is that crony capitalism is a misnomer. We currently have an economy characterized by zones of semi-free markets within a giant regulatory system. And, not coincidentally, we have a lot of corruption. So when we are investigating corruptions it should at the outset be an open question whether a particular corruption emanated from the business side or the government side. Businesses can offer bribes, and government officers can demand bribes—and in a mixed economy they are expected to be working together, so both sides have further opportunities to work out mutually beneficial but corrupt arrangements.

International data also bear out the correlation between amount of corruption and amount of government control over the economy. US companies investing in foreign countries are found guilty of bribery at a rate that more-or-less matches the degree of the various foreign government’s economic management. 

In the relatively free-markets, by contrast, where politicians have less control over economic decision-making, cronyism is much less and necessarily has to go underground.

So let’s just call it cronyism, and recognize that further empowering government control over the economy is a devil’s bargain.

In his final days in office, President Obama commuted the prison sentence of Chelsea Manning. While in the employ of the US Army, Manning had downloaded tens of thousands of government documents and passed them on to Wikileaks.

Among the leaked documents were many State Department cables, reports on incidents during the wars in Iraq and Afghanistan, as well as on the treatment of prisoners at Guantanamo Bay. Some documents revealed information that put US diplomacy into disadvantaged negotiating positions and exposed personnel to increased military risk. Some of the more controversial documents were about arbitrary arrests, the use of torture and the training of torturers, and 2007 video footage showing an Apache helicopter killing civilians in Baghdad, Iraq.

So: Is Manning a traitor who illegally exposed sensitive government secrets -- or a whistleblower exposing corrupt and illegal government activities? Or both?

In the business world, ethicists encourage whistleblowers to set aside the ordinary expectation of confidentiality and loyalty to expose illegalities within their organizations. The US Department of Labor has extensive protections in place for whistleblowers. The employers that whistleblowers expose are prohibited by law from taking adverse actions such as firing, threatening, or reducing the whistle-blowing employee's compensation.

Does anything change when the employer is the government itself? And does it matter that very recent public perceptions are of a government with an increasing number of high officials who lie prodigiously, use power arbitrarily, and then use information-classification procedures to cover-up their misdeeds? Our government officials are constitutionally bound, and they are ultimately responsible to us, the citizens.

Executive Order 13526 says:

“In no case shall information be classified … in order to: conceal violations of law, inefficiency, or administrative error; prevent embarrassment to a person, organization, or agency … or prevent or delay the release of information that does not require protection in the interest of the national security.” (Sec. 1.7, Classification Prohibitions and Limitations)

Yet we should also consider the standard procedures whistleblowers should follow.

The first consideration is to whom the problem should be reported. Normally, problems can be reported to a superior officer. But if the superior is the problem, then it can be communicated to the superior's superior. If that is bureaucratically impossible or the illegality is coming from on high, then the whistleblower can appropriately seek an ombudsman or an independent regulatory or judicial office with the authority to investigate.

A second consideration is how much information to release. Whistleblowers should not release information indiscriminately, but rather only information directly relevant to the infraction(s).

So relevant to evaluating Chelsea Manning's actions is whether she respected those two considerations.

Did she discuss her concerns with her superiors? Or if she rightly judged that would be ineffective, did she seek out the Army's or other appropriate watchdog or judicial units, e.g., the FBI? Or did she simply and directly go public to Wikileaks?

And did she review the information she downloaded and release only those documents relevant to her legitimate concerns? Or did she indiscriminately release any documents she was able to acquire?

Illegal activities and cover-ups by high government officials are dangerous to our republic -- but so is the flouting of the rule of law and its specified procedures.

By diversity I mean the intellectual kind. Numerous surveys (e.g., here and here) show that university faculties lean left, often far left in humanities departments.

A purely democratic argument says Yes, politicians should force diversity. Government-funded universities are paid for with tax monies, and in a democracy politicians are responsible to their constituents to ensure that their funds are spent appropriately. But biased faculties cannot deliver quality education, especially on important controversial issues about which students need to hear and weigh all sides of the arguments. Therefore, it is democratically appropriate that politicians either withdraw government funding or intervene to mandate intellectual diversity and balanced presentation.

The other side of the argument says No, even state universities should be self-governing institutions free of political pressure. The ideal of liberal education holds that knowledge seeking and transfer require intellectual freedom to pursue politically unpopular lines of thought in research, publication, and in the classroom. But governments are institutions of compulsion, and any thought policing by politicians must be rejected vigorously in the name of academic freedom. So government-funded universities should not be seen in purely democratic terms but—true to their medieval roots—more in feudal terms, as part of an overall political structure but with special privileges and rights not necessarily granted to other sectors.

But what if the universities—or significant portions of them—become captured by professors, administrators, and/or student groups actively opposed to liberal education? That is, what if they willfully engage in biased teaching or even indoctrination? What if they suppress the academic freedom of those they disagree with? What if they tolerate the use of physical threats or engage in acts of compulsion against dissenters and intellectual minorities? If the case for academic freedom is part of the ideal of liberal education, but a university rejects or subverts liberal education, then the politicians who fund the government universities face a dilemma.

Politicians must then choose either (1) to fail in their responsibilities to taxpayers by continuing to spend their money on educationally irresponsible institutions, or (2) to use their political power to interfere with or override the self-governance of universities. The dilemma is worsened by the government's being an institution of compulsion: it either uses compulsion to get people to pay their taxes to fund the universities, or it uses compulsion to force the universities to reform (or it does both).

The tension between liberal education on compulsory funding thus becomes explicit.

If politicians choose the route of imposing reforms on the state universities, they have a number of sub-options:

* Eliminate tenure in order to speed up the process of replacing faculty.
* In the hiring of new faculty, require a kind of affirmative action for under-represented perspectives.
* Threaten to or actually withdraw funds unless specific politically-decided reform targets are met.
* Tie political funding to demonstrated educational responsibility, including ideological balance, but leave it up to the universities how they will achieve that.

But history shows that politicians' controlling education is a worse outcome. In politically authoritarian societies, uniformity and fear replace independent thinking and debate. And in politically democratic societies, political control means that education becomes a football kicked back and forth across the field depending on who won the last election.

Preserving the autonomy of universities should therefore be the priority. And that means that the needed diversity reforms have to be effected by other interest groups that care about education—students, administrators, boards of trustees, donors, accrediting agencies, media, and, perhaps most importantly, those faculty who are genuinely committed to liberal education.

Despite the worrying current trends, there is also encouraging evidence that the pushback against intellectual intolerance has momentum:

* Students marching with their feet to avoid the most politicized universities, e.g, the significantly declining enrollment at University of Missouri in response to out-of-control events the previous year.
* Donors who withhold their much-needed funds when educational bias increases, as the examples of Amherst, Yale, and other institutions show.
* Reporting by widely-read publications such as The Chronicle of Higher Education and Inside Higher Education to highlight the seriousness of the problems.
* National and international groups of professors joining with other professors to reinvigorate the ideal of genuine knowledge-seeking and liberal education.

There's no obvious answer to the question of which side will prevail—liberalism versus authoritarianism is an age-old, multi-front battle. But when there is still hope that the universities can heal themselves, precedence should be given to the principle of keeping separate the spheres of intellectual freedom and political compulsion.

Donald Trump’s astonishing election victory was in part a backlash against increasingly corrupt American politics.

Transparency International publishes an annual Corruption Perceptions Index, ranking all nations from most to least clean in their political conduct. The United States entered the twenty-first century by falling out of the top ten. Scandinavian nations such as Finland, Denmark, and Sweden along with Commonwealth nations such as New Zealand, Canada, and the United Kingdom dominated the top spots, while the USA was ranked fourteenth.

Since then the USA has declined further in the Index's rankings.

Both corruption and the perception of corruption increased during the tenures of Bill and Hillary Clinton, George W. Bush, and Barack Obama. Examples included the use of the IRS to bully political enemies, government bailout funds going to politically-connected crony businesses, the use of high office to enrich one’s private foundation, and presidents and their appointees to regulatory bodies using their discretionary power indiscriminately.

Given this, one therefore understands the joke that the wildly-popular television show House of Cards is really a documentary.

Yet there is a danger in that joke. While corruption occurs in all governments, there a huge difference between cultures in which corruption is normalized and implicitly tolerated and those in which corruption is condemned, vigilantly monitored, and forced to go underground.

So Trump’s astonishing election victory may be a healthy reaction against the increasing corruption -- and therefore even more astonishing because his own character seems imbued with significant elements of personal and business-political corruption -- and because the combination of his presidency with his personal financial holdings is fraught with conflicts of interest (as this Wall Street Journal graphic shows). Yet since conflict-of-interest rules apply differently to the president and vice-president, according to 18 U.S. Code § 208, it is unclear how many conflicts will actually be avoided.

Of course some Trump supporters argue that it takes a beast to fight a beast, but what we really need is a political culture that does not lend itself to amoral animal metaphors.

Political leadership is a human endeavor, and effective human leadership in the free and open democratic republic we aspire to be requires both integrity and the widespread perception of integrity. We are a rich country economically, so we can recover from billions of dollars of loss. But the erosion of character among our leadership is much more expensive. It encourages cynicism among the citizenry. It imposes demoralization and disengagement costs upon them. It discourages the morally principled from seeking political office. And it attracts the even-more-corrupt to the corridors of power. No democratic republic can survive that downward cycle for long.

So while I did not vote for Trump, I am encouraged that his administration is following up on at least one of his campaign promises to for example, a five-year ban on lobbying for all transition and administration officials. We can debate the morality and likely effectiveness of that particular anti-corruption policy, but as a post-election statement of intent its seriousness is evident and positive.

Nations always have a choice. A century ago Argentina was among the top ten most prosperous and clean nations in the world, but it has declined precipitously and is now relatively much poorer and ranked in the bottom half of nations for bribery and related corruptions. South Africa was only moderately corrupt a generation ago and has also declined sadly.

Yet some countries have cleaned up their corruption impressively. Botswana improved dramatically in one generation, as did Chile -- both overcoming the widespread stereotype of irredeemable business-as-usual-corruption in African and Latin American politics.

A banana-republic destiny is avoidable for the USA. President Trump’s character -- with its odd mix of obviousness and unpredictability -- will be decisive, as will the vigilance of the rest of us and our commitment to putting the animals back in their cages and cleaning up their messes.

“Everyone is entitled to his own opinion, but not to his own facts” (Senator Daniel Patrick Moynihan)

A protester was shot at the University of Washington during a clash between rival factions — one faction physically blocking an audience from hearing a speech, the other faction seeking to hear a rabble-rousing orator.

The orator was Milo Yiannopoulos, a leading spokesman for the alt-right movement, a revitalized and muscularized version of nationalist and populist politics long submerged in American politics.

Outside the auditorium, blocs of red-wearing Trump supporters and black-wearing anarchists and others faced each other  (unconsciously updating Stendhal's novel The Red and the Black.) The man who was shot was apparently a peacemaker, placing himself in the middle of the verbally-abusing and pushing-and-shoving factions.

The victim's positioning was unfortunate, as there is little "middle" left in our polarized political times.

And it is symbolic that the shooting took place at a university, because it was precisely at universities where the battle for civility has been lost.

A generation ago in universities we had vigorous debates about truth, justice, freedom, and equality. The governing premises was that through argument rational people could fine-tune their grasp of the facts and test the logic of their theories. The process would often be contentious. Yet with professors and students committed to a baseline civility, it would be cognitively progressive.

But the leading professors of the new era — Michel Foucault, Jacques Derrida, and Richard Rorty among them -- undercut that entire process. Facts, they argued, are merely subjective constructs and masks for hidden power agendas. Over the next generation the words "truth," "justice," "freedom," and "equality" began to appear exclusively in ironic scare quotes.

"Everything," declared post-modern professor Fredric Jameson, "is political." And absent facts, argued post-modernist Frank Lentricchia, the professor's task is transformed from truth-seeker to political activist: in the classroom he should "exercise power for the purpose of social change."

We live in the resulting postmodern intellectual culture, with an entire generation (mis-)educated to see politics not as a cooperative quest to solve economic problems and protect human rights — but as a ceaseless clash of adversarial groups each committed to its own subjectivist values. Feminist groups versus racial groups versus wealth groups versus ethic groups versus sexuality groups versus an open-ended number of increasingly hostile and Balkanized subdivisions.

Thus we have a generation populated with biologically mature people who lack the psychological maturity to handle debate and occasional political loss — at the same time convinced of the absolute subjective necessity of asserting their goals in a hostile, victimizing social reality.

As reasonable discussion declined in universities, physicalist tactics quickly replaced them. Arguments about principles were replaced with routine ad hominem attacks. Letters of invitation to guest lecturers prompted threats of violence. The heckling of speakers turned to shouting them down. Picketing protests became intentional obstruction.

And now we get the inevitable backlash as other, rival factions learn the new rules and steel themselves for engagement.

Yiannopoulos himself is a product of post-modern culture, as it was he who exultingly coined the phrase "post-fact era" to describe how politics now works. He is proving himself to be an effective player of that brand of political activism.

Yet the governing ethic of our political culture is not a lost cause, as large swathes of the American populace are still committed to the core democrat-republican civic virtues of intellectually honest debate, free speech, tolerance — and of being both a good loser and a good winner. A fractious election brought out many of the worst among us. But journalistic headlines aside, our choice is not only between the tactics of post-modern political correctness and those of alt-right populism. Our leading intellectuals, especially those within universities who are nurturing the next generation of leaders, must also teach the genuinely liberal-education alternative.