Political Economy as sharing opportunity and risk

A New book, The Great Risk Shift, by Jacob Hacker, analyzes changes in people's expectations in America over the past quarter century or so that result in their acceptance of more risk at the urging of government and major institutions of finance and business; from employers who reduce their security and benefits, to insurance and government programs who reduce services and raise rates. What people are told is economic necessity is often an inducement for them to accept more risk, to accept the risk that they thought was going to be reduced by them paying taxes, paying insurance premiums, going to the doctor, supporting the institutions of the legal system, law enforcement, and government and being loyal to companies who in the past provided some measure of job security and career path.

Most of those expectations have been gradually reduced and with little fanfare as doing so often enhances the bottom line of entities who now have interests that conflict with the people whom they are asking for loyality. That includes now, many of the largest employers in the nation, the health care system, the government, both local and national, and the leaders of these institutions. Viewing public policy, political economy, creation of opportunity along with the foisting of risk off onto the individual, the little guy, by big and powerful institutions is electrifying. It provides a way to cut through the economic mumbo-jumbo and partisin rhetoric which has poisned the well of public discourse, and it opens the possibility that people will finally get mad as hell at being conned.

Much of this reflects the role of complexity in law as a tool of the wealthy and powerful against individuals and the disadvantaged. Even though nominally, legislation and equal protection under law is supposed to treat large and small, rich and poor alike, the very complexity of legisaltion favors the big and wealthy because only they have the resources, time.money, and staff to navigate through the morass of details. So, people see changes that happen gradually as influiencial groups reset expectations as somehow neutral, when in fact they represent the taking of advantage and cleaver denying of a choice that people had all along.

Surely, if you felt that your doctor, the medical group he is part of, the insurance company that pays for your medical coverage, the drug company, and all up and down the healthcare foodhain was systematically withholding information that you could use at no cost to improve and maintain a healthy life, you would be mad as hell. You would be even more angry if you relaized that the amount of time the doctor spends with you is directly traded off against preventative care and telling you things you could do yourself. That the expensive tests he ordered were not because you had a high probability of having that rare condition, but because he was libel if he didn't test for it. He is passng his risk to you and you are paying for it directly.

The same is true of drug costs and the way drugs are tested and approved in ths country. What the major drug companies say is that they wouldn't be able to develop drugs without having to charge the high rates they charge. But they are really passing the risks of research onto us and are not accountable to us that their profits reflect fair overhead and return on investment. We have no way of knowing that they are not gouging us.

Presumably we pay taxes to have the government do things that are too risky for private sector businesses to do, yet as soon as some new technology is proven we give it away to private companies who market it to us at huge margins. Nearly all of the technology for computers and the Internet was developed, concept proved, put into more than working prototype under government contract. Microsoft, for example, has ony added sizzle to this steak. What do we get by paying for the huge profits this company has made? Do we pay for the risks of them doing business? And why?

This was all made clear to me years ago when as small lab I was working in was made into a "cost center". This is a way to make an operation accountable and would seem innocuous, but in fact it is a political act, as many seemingly neutral economic acts really are. The manager of the larger group wanted to eliminate this lab, so he broke out its cost as a line item in his budget. When people want to subsidize something they hide its budget within some other operation. This is the real meaning of Privatization. This is code language for "You are visible and on the chopping block, out of favor." Notice how local governments use creation of cost centers to target those services they want to cut back or eliminate, such as public transit, and how they hide certian others. This is an example of how risk is passed on as accounting and organization change. It is political, which means that the advantage of one group of people is enhanced at the expense of another.

And of course George W. Bush's so-called War on Terror is also about the assumption of risk nationwide and if we look at it and its satellite issues such as the Patriot Act, the ability of the Congress NOT to do its job for US, the porragatives given to the police and userped by the President himself, we are at even greater risk, we assume more risk as individual citizens, then before 9-11, not of jets falling out of the sky, but due to the imcompetance and abuse of power by our own leaders, for trading off a half-hearted attempt to get Bin-Ladin, an ineffectual, badily planned war in Iraq, based on a pack of lies, for a politics of fear, puts us at at far greater risk at home than any band of Islamic extremists could have hoped for. Much of this bungeling from the FEMA messup to Rumsfeld's incompetance has to do with the way risk is handled in corporate culture.


Military men know about risk first hand, and they have to deal with it when it confronts them at a moment's notice. Ths is a far cry from the way risk is delt with in a business setting, and this is why we have such a screw-up. Risk is usually handed in business by trying to pass it on to the next person down the line. Just today I heard of an opportunity to do web site design via Internet. I came to find out that this is a classic case of passing on risk. The guy running the service was just a middleman, the agents who implemented sites really were salesmen on commissions and so he could sit fat and pretty while his agents, whom he misrepresented as technical people, assumed all the risk. So Bush and Rumsfeld thought that they could pass on the risk and lie their way into political and economic control of Mid-East Oil under the guise of fighting terrorism. All they have succcedded in doing is sowing dragon's theeth among people who might have thought highly of us and imported terrorism and hatred as fear.

The trick is to push back on people trying to foist of their risk onto you. Certaintly upping the risk for incompetant leaders at the ballot box is one way, but others are not to support expensive foodchains whose cost is rising because of the way they make you assume their risk of doing business. If the fares on the local commuter train went up because the management said if we spend half a billion of leveling the tracks and run bulet trains we will get more people who will pay a higher fare to ride faster, don't take the train. Increase the risk to those managers for making a bad decision. If the helthcare system is too expensive, resist your doctor to prescribe expensive tests and drugs. Don't see him if he doesn't advise on preventative medicine. If you don't like the price of gas, don't drive, or drive less. Think about how being lazy or convenience feeds the status quo. The system is designed to make it easy to exploit your weaknesses and lazyness. Don't let it. Think about every purchase, every economic decision as if it were truely a political decision, and view economics as opportunity, yes, but be aware that someone is also trying to pass on their risk to you.