Pragmatic Utopia #30

Diego Rivera mural of autoworkers at the Detroit Institute of Art. Historians debate whether the United Auto Workers should be blamed for undercutting campaigns for expanded Social Security and health insurance in signing their own generous contracts with the Big Three car manufacturers in the 1950 “Treaty of Detroit.”

I’ve been learning a bit about pensions and Social Security lately, and I find it can be hard to keep some facts about the respective retirement programs straight. For a while I figured it was just my ignorance not being able to tell them apart. And while that may be true, I think it makes sense to speak about pensions and Social Security (and 401(k)s) in the same breath. Their histories are intertwined. In her book For All These Rights: Business, Labor, and the Shaping of America’s Public-Private Welfare State, Jennifer Klein investigates why we have a divided retirement savings system–why the public system needs a private, employer-based supplement.

You may recognize a familiar ring to this question from other books I’ve mentioned lately: the age-old question of why we can’t have nice things they have in Europe. Sometimes people answer this question with appeals to American values–faith in individualism, distrust of government, etc. I find such arguments a bit unsatisfying on their own; I want to know exactly who stood up for which values in which battles. In Klein’s book, the insurance industry emerges as the big culprit. It makes sense. As single-payer advocates will tell you, the government is a natural insurance company and a nation is the largest possible risk pool, ideal from a social perspective if not an actuarial perspective oriented toward maximum profit. So insurance companies have long been on edge about the prospect of the government stealing their business.

Before getting to shady insurance practices, I should mention two key pieces of conventional wisdom that Klein is trying to disprove. First, historians often talk about how the 1920s were the age of “welfare capitalism,” where big companies paternalistically looked after their workers (think free meals, on-site housing, health clinics, etc.) in order to forestall confrontational labor disputes. But then the conventional idea is that thanks to the New Deal and World War II, we moved past welfare capitalism and instituted a public welfare state.Klein is saying there is actually more continuity than change–the reliance on employer-based pensions and health insurance in the postwar decades means we’re basically still living in the welfare capitalist world.

Second, even among people who agree with Klein on that point, the conventional wisdom is that the large industrial unions (like the United Auto Workers) were culpable for undercutting the New Deal push for a public welfare state by scooping up generous contracts for themselves and then losing interest in the broader fight. This story centers on the 1950 “Treaty of Detroit,” where the auto workers signed the most generous contracts (e.g. health, unemployment, and pension benefits) in American labor history with Ford, GM, and Chrysler.

Klein convincingly shows that the unions had a strong preference for either a government-run insurance system or union-controlled insurance funds and group medical plans, fought hard for those things over decades, and only settled for employer-based insurance after losing political fights to the insurance companies and their own bosses. For example, some unions wanted to start their own medical plans. But under heavy lobbying from the American Medical Association, many states passed laws in the 1940s requiring any would-be medical plan to get approval from the state’s medical society (i.e. the incumbent doctors). Not going to happen.

Ok, on to the insurance companies. They weren’t all bad; in fact it’s their ambivalent commitment to worker-friendly policies that makes them so interesting. During the Progressive Era, there was a healthy competitive dynamic between academic reformers who called for public old age insurance and insurance companies (Equitable Life, Metropolitan Life) who took those ideas, watered them down, and sold policies to private employers. Yes, this undercut the public movement, but at the end of the day more people (only steadily employed white men) won old age insurance.

You might expect the insurance companies to have opposed the Social Security Act, and some did at first, but they quickly came around to support it, recognizing that it was the perfect advertisement for their business model and that they could sell more extensive plans on top of it. But they insisted that Social Security be limited in particular ways. They stressed that public aid should flow only to elderly or disabled people, not able-bodied workers. They modified private pension plans to count Social Security payments toward the originally promised payouts, making the plans cheaper for employers. And they lobbied to make Social Security a pay-as-you-go system rather than allowing it to build up a substantial trust fund.

The private welfare state is a relationship between workers and insurance companies.Employers, of course, sit awkwardly in the middle of that dynamic. Whose side are they on?According to economists, employers want to buy their employees the best possible benefits package for the price or risk losing out to competitors.

But in surveying pension plan politics in the postwar decades, Klein shows how insurance companies collude with their corporate clients to skimp on benefits. At the end of each year, insurers kick back a portion of their surplus to management as a dividend, even when workers had paid a portion of the premium in the first place. Unions struggle to contest this because information on the true cost of their benefits is shared only with management. Next, since insurance companies are actually financial companies, they often double as lenders to the same corporations who buy their benefits packages. Klein suggests that this dynamic gives employers little incentive to negotiate on pension plan costs.

An attractive takeaway from Klein’s book is that private insurance markets are inferior to public ones, both because fewer people end up included and because corporations and insurers have an interest in skimping on benefits (I haven’t even mentioned the companies who just refuse to pay the promised pensions). There’s a different way to say this, which involves the semantic point that health benefits and old age benefits aren’t really insurance.A more restrictive definition says it’s only insurance if you hope you’ll never need to receive the benefits. Flood insurance, fire insurance, and renter’s insurance all fit this bill. Needing the payout is bad news.

But healthcare and old age income support are different–we all get old, we all get sick, and when you sign up for the policy you expect to use it. In this light, you can see that Social Security (and Medicaid and Medicare) aren’t really insurance policies; they’re just social transfers (the Supreme Court agreed with this reasoning in Fleming v. Nestor (1960)). At times this has been a conservative argument: only by privatizing Social Security, they say, can we establish property rights on our future Social Security payments like you have on a private annuity. But I think the logic goes exactly the other way. Health and old age benefits don’t work in an insurance framework, so we should just get over our fetish for “contributory” programs and provide basic economic security as a right of citizenship.

1. Fair but unequal?
Interesting piece of research (h/t Thomas Smyth) from psychologists arguing that even though we’ve started framing lots of issues around inequality, people don’t care about inequality–they care about fairness. So then the question is: what do people think is fair? The authors suggest that people are pretty comfortable with income inequality, which they perceive as the outcome of fair competition in the labor market. But I suspect (hope) that people are less comfortable with inequality from capital income, i.e. how hard do I really work for my capital gains?

2. Hooray for do-nothing executives?
I really enjoyed this story (h/t Jessica Cole) about two law professors who  tried to mimic activist hedge funds by investing their savings in a struggling public company and trying to shake up management. The big surprising lesson they learn is that the executives at the public company actually feel less pressure from investors than they had when working at private companies. This is because so many shares are held by passive mutual funds who don’t bother to intervene in a “tiny” $500 million company’s management. The result is that the executives get to sit around, pay themselves huge salaries, and not do much of anything. Funny enough, in this case I’m quite happy to see them not doing anything because “doing something” would involve developing pristine ranchland between Los Padres National Forest and Bakersfield, extending Southern Californian sprawl deeper into the Central Valley.

3. Parents can be dependents too
I was excited to see the news that Starbucks is extending health coverage to the parents of its Chinese employees. Based on my comments on the American case, you might think I’d say something like “It would be better if they just had Medicare for the elderly.” But I have no idea how difficult it would be to perform such an aggressive cross-cultural transplant, and I’m trying to respect national differences in institutions and norms. Here’s some more info on the state of healthcare for the elderly in China. Given the value they put on caring for one’s parents, it might make more sense to deliver elderly care through children’s insurance than we do here. Whether that insurance itself should be tied to the workplace is another matter. In the short term, it’s nice to see that this is the way Starbucks is trying to make a beachhead in China (as opposed to paying off regulators or the like).    

Pragmatic Utopia #29

I find the postwar decades (like 1945-1972) in American history really fascinating. It’s the time when we locked in the suburbanization and residential segregation that became so fundamental to our political geography.  It was the “Great Exception,” as Jefferson Cowie and Thomas Piketty both argue, when we reaped the benefits of the New Deal and became more equal, all while sowing the seeds for the backlash of Nixon and Reagan. It was the time of the last great anti-modernist mass movement and several of the last great rights-based movements as well. And it was the childhood of my parents and the rest of their generation–one that has had outsized influence, for better or worse, in shaping the modern world.

People standing outside the home of the Myers family, the first black family to move into Levittown, PA. 

This week I read two books about the postwar decades. Lizabeth Cohen’s A Consumers’ Republic is a broad survey from the 1930s to 1970s. Her organizing move is to say that America became a “consumer society” during that period and to trace the influences of mass consumption on geography, stratification, politics, and culture.

For Cohen, consumption can be a political identity in addition to an economic one. For example, consumer boycotts were the oldest tool in the civil rights movement playbook, from boycotts of Harlem retailers that didn’t hire any black clerks in the 1930s to the more famous sit-ins thirty years later. During World War II, “housewives’ battalions” went store to store enforcing price controls.

Some of the most interesting parts of the book are the extended treatments of the women’s rights and civil rights movements, which Cohen frames largely through this lens of consumer politics. It’s fascinating and infuriating to learn how single women with good credit history would watch it go down the drain upon getting married, because retailers only counted the husband’s credit toward a joint account. At the same time, reducing these movements to their consumer aspects is a bit of a stretch, like when Cohen discusses the 1968 urban riots as responses to predatory lending and exploitative retail prices (hence why so many shop windows were smashed). That story is true, but crime, unemployment, and the murder of Martin Luther King, Jr. were pretty important too.

In contrast to these examples of collective consumer politics, Cohen  argues that the mainstream (i.e. white, middle class) consumer politics that emerged in the period was an individualistic one. Here Cohen’s tells the familiar story about suburbanization, white flight, the rise of “property value” as the most important political issue, and other consequences of suburban home ownership. This story is essential and I don’t mind it being re-told, but I don’t think the consumerism frame much helps tell it. Instead, Cohen’s unique contribution is a deep dive into the political history of suburbanization in…New Jersey!

New Jersey doesn’t get much love in history or elsewhere. But this is the perfect topic to devote a case study to it; New Jersey is the quintessential Baby Boom suburban state (Tyler Cowen on the benefits of growing up in North Jersey). Here’s a crazy fact: New Jersey’s population increased by 2 million people from 1940-1960, but not a single one of its cities gained population! Cohen presents the greatest hits of New Jersey suburban history: the lowest state taxes in the country and massive inequality via property taxes, suburban legal independence and the absence of regional planning, the class action suits against Mount Laurel Township for exclusionary zoning, the Abbott v. Burke lawsuits on equitable school funding, and the privatization of public space in shopping mall after shopping mall. If you’re looking for suburbs giving the finger to cities, New Jersey has got it all.

Cohen’s student Louis Hyman zeroes in on what he sees as the most important institutional enabler of postwar affluence: cheap credit. His book Debtor Nation is a history of the most important consumer lending practices from the 1920s to the present: from loan sharks to legalized small loans to independent installment financing to amortization of FHA and VA-backed mortgage loans to revolving credit to credit cards to home equity loans. If you have a vague sense of what those words mean, as I did in some cases, this is a great book to nail down the nitty gritty of how consumer lending has worked.

Hyman’s gift at getting inside the heads of borrowers and lenders is both the book’s greatest strength and possible weakness. He is really good–better than most financial journalists–at explaining the logic of any given lending scheme.

Like why 1920s furniture retailers would lend to customers they knew couldn’t afford it–they were happy to collect a few installment payments and then repossess the furniture–whereas an independent finance company, upon buying the debt from the store, would rather the customer be able to pay so as not to deal with repossession.

Or how 1960s department store credit managers came to realize that it’s possible for your customers to have too low a default rate. Prior to revolving credit, department store credit was purely a convenience to help people afford their purchases. But managers came to realize that it could also be a source of profit. Revolving credit allows customers to extend the repayment period and rack up larger outstanding balances, and thus pay more interest over a longer period of time. Who knew there were bitter inter-department-store turf battles in the 1960s between managers who wanted to spend on inventory and those who wanted to spend on advancing credit to customers? The latter service eventually became unnecessary to perform in-house when Bank of America launched the Bank Americard (later Visa).

I say this explanatory strength may also be a weakness because Hyman comes to identify too closely with the credit managers he is studying.  He holds up as possible only what they saw as profitable. The central argument of the book is that capital goes where it is most profitable, and so policies that help capital find new productive outlets work while policies that give capital no profitable options fall flat.

In this vein, Hyman writes approvingly of the FHA mortgage insurance program. There were regulatory aspects—interest rates were capped at 5%–but these were more than outweighed by attractive propositions for lenders, who were freed from diligence responsibilities. Similarly, Hyman approves of Fannie Mae, Ginnie Mae, and Freddie Mac, which pooled mortgages and created secondary markets for mortgage-backed securities, attracting much larger streams of capital (especially from pension funds) to the housing industry. These were successful acts of market creation, Hyman suggests, because they were fundamentally good deals for capital. Due to rising wages, borrowers rarely defaulted. If they did, government entities covered the losses.

Contrast these efforts with what Hyman sees as failed efforts to regulate and channel lending. In response to the 1968 urban riots, Senator William Proxmire led a series of hearings seeking to address black city-dwellers’ grievances with the credit system. Some banks took up Proxmire’s call to provide more small business financing to the inner cities while the Office of Economic Opportunity set up credit unions. Both initiatives discovered that income and capital accumulation were just too low among the poor to support meaningful loans. Hyman’s conclusion is that regulation of credit markets always fails unless it gives the financial industry a profitable opportunity.

I think this conclusion makes sense only if you are unwilling to commit the full force of the state to a policy priority. The government could have insured loans to urban residents in the 1960s as it did for suburban borrowers in the 1940s and 1950s. Various tax advantages might have been offered to lenders in exchange for seeking out credit-starved communities. There could have been unconditional cash grants or child allowances to held build up urban wealth and close the historical racial wealth gap. Unequal access to credit and to capital is a fundamental element of our economic history, but I resist any tendency to think of it as natural or inevitable. It has been a political choice.

1. The cheating-death tax
Talking about some of the royal families of American politics this week, Josh R. said something about how we need a higher estate tax. That got me wondering whether the ultra-rich actually pay the estate tax. This excellent, detailed Bloomberg article confirmed my fears. It’s a deep dive into the Walton family’s estate tax maneuvering, but it introduced me to the techniques anyone can use.

The most important one is the Charitable Lead Trust, also known as a Jackie O. Trust. You put your money in an ostensibly charitable trust before you die. It gives a predetermined amount to charity each year. And then after 20-30 years, it liquidates, and sends the remainder to a beneficiary–like your heirs–entirely tax-free. How is this ok???

2. Against Uber…but less so than usual

You may have seen this NYT feature about how Uber uses lots of nudges and game elements to keep its drivers working longer hours. I’m going to resist my natural urge to say something about how this is the sign of a creepy dystopian future. Partly this is because I’ve seen ex-Uber drivers commenting that of all the things they don’t like about Uber, these nudges are near the bottom of the list. It’s also because I’m aware that gamifying work is not new.

Probably the most famous book in the last 50 years of industrial sociology is Berkeley sociologist Michael Burawoy’s Manufacturing Consent, which examines how a machine tool factory in the 1970s convinced its employees to work hard. The answer involved an extended metaphor about games, wherein management encouraged employees to compete with one another to produce the most pieces while also capping production to prevent perverse incentives to skimp on quality. So, it’s probably not new and dystopian, but it’s definitely a key piece of the Marxist perspective on how managers keep employees distracted from their collective interests.

3. Matt Bruenig’s favorite Supreme Court case
An interesting Supreme Court case popped up twice for me this week: both in A Consumers’ Republic and in Matt and Elizabeth Bruenig’s talk at Harvard Law (video here). The case is Shelley v. Kraemer (1948). It’s known as the “restrictive covenants” case because it’s about a black family who bought a house in St. Louis which, unbeknownst to them, had a restrictive covenant attached to the property barring it from being sold to black people. A neighbor sued, and the Missouri courts agreed that the covenant was enforceable because it was a purely private contract.

The Supreme Court agreed with those courts that racially exclusionary contracts are not prohibited by the Fourteenth Amendment (so private parties can choose to abide by them), but stressed that a court can’t enforce such a contract, because enforcement would constitute a state action and bring the Fourteenth Amendment back into play. Matt Bruenig says this is his favorite case ever because, for a brief moment, the Supreme Court recognized that there is no real difference between public and private activity; everything is public because everything is eventually enforced by courts and police power. This belief that state action doctrine is incoherent is a signature position of critical legal studies.

4. Manager fees are a scam, part 9,142,394
I’m doing some research involving pension funds and social wealth funds, so was pleased to see this news story about the newly elected North Carolina Treasurer who aims to crack down on the fees money managers suck out of the state’s $90 billion employee pension fund. Costs as a share of assets have gone up 7x for the fund since 2000, largely due to long-term contracts his predecessors signed with expensive hedge funds and private equity firms. The pension fund pays 80% of its fees on 20% of its assets–that is NOT the 80/20 rule anyone has ever recommended. Are the fancy managers worth it? “If North Carolina had owned a vanilla stock-and-bond index portfolio instead of shifting into alternative assets, it would have earned an additional $20 billion over the seven years through June 2016, estimates Ron Elmer, an accountant and indexing advocate.”

5. And now for something completely different
The secret logic of the political compass has finally revealed itself. Three cheers for gluttony amid days of wrath.

Pragmatic Utopia #28

You’ve probably seen or heard Tyler Cowen promoting his new book The Complacent Class over the past two weeks. The book argues that American life has lost its dynamism in matters economic, political, geographical, cultural, and personal. The accusation of “complacency” proves a powerful, if unwieldy, concept because it applies equally to individuals, groups, and civilizations. The title is somewhat misleading in this way–although affluent Americans tend to lead the vanguard of complacency, the argument describes not so much a particular class as an entropic force which drives us toward stasis. If the thermodynamic equilibrium of a universe is heat death, the equilibrium of a rich society may be complacency.

After sharing what I found interesting about Complacent Class, I’d like to introduce one of my favorite newly discovered social theorists, Roberto Unger. Everything about Unger’s political philosophy is oriented toward disrupting complacency and entrenchment. While Cowen proposes several visions of a less complacent future, we can’t magically wish them into existence except by hoping for technology as deus ex machina. Here I find Unger’s thinking on the relationship between ideology and institutions much more helpful.

Teams and companies move around the country (like the Raiders to Las Vegas), but people no longer do

Complacent Class is is the third entry in Cowen’s trilogy of books about the challenges America has faced since the end of the mid-century golden age (see my post on the “Great Exception”). The first two books were creative takes on mainstream economic questions: The Great Stagnation was about “the new normal” of slow economic growth and Average is Overaddressed the future of inequality. Complacent Class is a more unusual book; you can think of it as addressing the social and cultural backdrop of the stagnation.

You can get a sense of what Cowen means by complacency through his primary examples, each of which gets a chapter of interesting factoids. First, Americans have stopped movingto different towns and states compared to historical rates.

Second, segregation is by some measures at its all-time worst, especially if you include not just racial segregation (which has gotten worse in schooling and housing since the 80s) but also segregation by income and education.

Third, the rate of entrepreneurship and new business creation is down–even in the San Francisco Bay Area!–famous exceptions notwithstanding.

Fourth, both violent crime and physically disruptive political protest have declined,although this may be changing, and America’s current drugs of choice are mostly sedatives rather than stimulants.

Finally, although many people hoped (and Cowen still does) that the digital revolution would prove disruptive, it hasn’t yet. Instead, the most important digital technology has beenmatching, which reduces search and transaction costs and helps us find things and people we already know we’ll like. 

The amazing thing about Complacent Class is it presents Cowen (affiliated with George Mason; a friend of the Austrian School) at his most liberal. I advance this claim hesitantly, especially given the delight Cowen takes in hiding his real meaning and practicing hermeneutics on others. Check out his best-ever “Straussian” reading, when he argued convincingly that the Snow White movie “Mirror, Mirror” starring Julia Roberts was actually allegory for the Indira Gandhi assassination.

Fittingly, you can find people arguing that Complacent Class represents a neoreactionary worldview:  “The task for an innovator of the next twenty years is to construct a quasi-governmental organization capable of maintaining segregated, high-trust, eucivic networks and use it to escape democratic pathology for good in a Great Reset.” But they had to read the chapters in reverse to conclude that, so whatever. 

I am saying this is a newly liberal Tyler Cowen because most of his diagnoses of complacency can be reframed as problems of entrenched power and rent-seeking. Where Cowen sees complacency, I see power disparity: typically, someone who benefits from the status quo alongside someone who does not, one with no interest in change and the other with no leverage.

Cowen nearly admits as much in his discussion of new business formation, when he observes that startups gain less traction in part because incumbents–especially in the healthcare, banking, telecommunications, and retail sectors–rarely fail.  He even includes a sub-heading on monopoly power and corporate concentration! Is this the same Tyler Cowen who wasdismissive of Lina Khan’s Amazon antitrust article on Twitter?

Cowen also points out that immigrants bring the strongest brand of anti-complacency to American life (this is a more predictable libertarian point, but still welcome). By definition, immigrants make bold geographical moves and tend to be socially and economically mobile as well. If we wanted to take a stand against complacency, celebrating immigration in our popular culture and public discourse would be one way to start

Politics is another arena where complacency may be defended or challenged. Cowen frames recent political turmoil as the result of the complacent class being unable to articulate any vision beyond marginal adjustments to the status quo, which then leaves a vacuum for demagoguery. He proposes we measure complacency in political life by the extent of the budgetary chains in which we have bound ourselves. By 2022, 90% of the federal budget will have been allocated to non-discretionary purposes, leaving relatively little available for significant changes–if we could even agree on such a thing.

Cowen says “true democracy,” on the other hand, is when you are unbound by past commitments and are free to try new things. This was truly striking to me because it is nearly exactly the language of Roberto Unger, the Brazilian philosopher.

Unger says that a “high-energy democracy” (sorry, Jeb) must meet three tests. It subjects the structures of society to effective challenge and revision. It diminishes the dependence of change on crisis. And it weakens the power of the dead over the living. The goal of such a society is to free people from “the prewritten script” provided by hierarchy, social position, and the division of labor. The purpose of such freedom is, well, freedom: to allow all people to freely recombine all opportunities and experiences. 

Cowen paints several pictures of a post-complacent future. In each, society is energized (for better or worse) by something new: more residential mobility, a wave of African immigration, the arrival of cheap clean energy, the ascent of artificial intelligence, a revolution in fertility rates and family size, or the threat of crisis and terrorism.

It seems there are two categories of things here: external “solutions” that may or may not drop from heaven without much input from most of us, and new patterns of behavior in which we’d all take part. The first category is a totally plausible source of change, but one to which we can only react. Because I am interested in democracy and self-determination, I tend to prefer thinking about the second category.

So does Unger. One of his central ideas is that institutions and ideology are intertwined. This means: what we think we want is limited by the institutions we’ve experienced (e.g. democracy, communal agriculture, military conscription, religious monasticism), and the institutions we can imagine creating are limited by what we think we want.

The recipe for change, then, is to notice the competing alternatives in our current institutions and nourish each of them, incrementally inventing new ways of living based on little hints from what we already have. “Let a hundred flowers bloom,” indeed, but the buds are already hidden in our midst.

In what I’ve read so far, Unger mentions four (relatively…) concrete institutional innovations that might help overcome complacency and the entrenched social hierarchy that I think is the real issue.

First, he would remake our system of property rights, abolishing consolidated property in favor of temporary, provisional rights to property allocated through a “rotating capital fund.”

Second, he would replace the classic bilateral executory contract with “relational contracts” that govern ongoing relationships rather than discrete deliveries of goods or services.

Third, he would create “structure-revising structures” such as a citizen’s right to disrupt and reorganize entrenched political bodies or companies.

Fourth, he would institute “plasticity-enabling endowments” like portable healthcare and/or basic income which enable individuals to take risks and participate in the much more dynamic economy presupposed by the first three innovations. Unger develops these ideas at more length in Democracy Realized: The Progressive Alternative, which I have not yet read.

Everything I’ve cited so far comes from Unger’s book on the Critical Legal Studies movement. In that book, he argues that legal theory is the most natural place to pursue these assaults on tradition and sclerotic institutions, and criticizes the various other tasks jurists have taken up instead. I’ll admit that I understand less than half of this book, perhaps because I’m not yet familiar enough with the traditions in legal thought that he is critiquing.

One useful point for thinking about complacency is his argument that society is always bound by a a particular legal order and that order–in this case the New Deal–goes through three phases: foundation, normalization, and darkening. The New Deal moment was the most recent foundation, the last American Revolution (this is what Bruce Ackerman says too).

In the normalization period–postwar through the 1970s–legal doctrine has its heyday, as jurists strive to defend the system over which they are designated custodians. In the darkening period, where we’ve been since Reagan, the order is under attack but there is no new alternative in sight (note that this theory offers a supercycle to Stephen Skowronek’s theory of presidential cycles; the Reagan cycle is still part of the longer FDR cycle).

I expect to write about Unger again here as I work slowly through his massive CV. He is hard to read and frustratingly unspecific. But one thing that really resonates is that he is a leftist thinker who values cooperation, creativity, and innovation more than almost any libertarian. He forces us to consider whether there is something a whole lot freer than the “free markets” we know. I find this very powerful.

1. One more industry you didn’t know was extorting you
On Twitter someone gave David Dayen a complimentary epitaph option: “extremely good at shining light on obscure middlemen and complex systems that are causing harm.” That he is. This week Dayen dropped this detailed look at the Pharmacy Benefit Manager (PMB) industry, which boasts three of the largest 25 companies in the Fortune 500: Express Scripts, CVS Caremark, and OptumRx, which together control 80% of the market. These companies are the middlemen between drug companies and pharmacies, and it turns out they have a lot of leverage to decide how much drugs will cost. For one, they get rebates from drug companies for including a certain drug in their network, but don’t have to inform health plans of the inflated cost. “Express Scripts’ adjusted profit per prescription has increased 500 percent since 2003.” A Republican Congressman says:  “They show no interest in playing fair, no interest in the end user. They act as monopolistic terrorists on this market.”

2. Antitrust as civil right
How about another article about monopoly. This essay reviews the connection between the civil rights movement and black-owned small business. I hadn’t thought about how small businesses were one of the few independent sources of power for black people even in the 1960s, and that many such business owners funded movement infrastructure. Moreover, they explicitly used antitrust law as a civil rights wedge: “In 1961, the owners of ten independent medical practices used the Sherman Antitrust Act against sixty-one local hospitals and medical organizations in Chicago [representing 75% of market share] that barred black Americans from the medical staff.” Thurgood Marshall, one of the last major defenders of antitrust, was the grandson of two independent grocery store owners.

I saw some people say that this article should have made a bigger deal about the double-edged sword of segregation, which guaranteed a captive customer base to black-owned businesses. I think that’s totally fair as an explanation of the past, but doesn’t refute the importance of business ownership in the present. Also, “According to a 2013 study of TARP investments, black-owned banks were ten times less likely to receive bailout money than nonminority-owned banks” (what about if you control for size? But that’s the point I guess).

3. Job guarantee vs UBI
There is a fun little inter-left policy war heating up: job guarantee vs universal basic income.Here, Jeff Spross makes the case for the job guarantee in Democracy Journal. The way it would work: local government agencies and nonprofits submit jobs they would like to have done to a central database; local administrators match job-seekers to a job based on proximity and skills; the state or federal government pays the wage at roughly $25,000/year.

Matt Bruenig (a UBI partisan), says the problem with a job guarantee is that it is supposed to be a cyclical safety net (to pick up slack during private sector recessions) but very few of the jobs Spross imagines are actually cyclical. We either need more teachers or we don’t, need to build more bridges or we don’t, so such jobs should be permanent, not cycle-stabilizing. By the way, if the answer is yes we need more of these things, why can’t expanding public sector employment be the plan irrespective of job guarantee? Anyway, Pavlina Tcherneva is a major jobs guarantee booster to follow if you’re interested in this. She argues that “low capital intensity projects are in great shortage, can vary with the mood swings of the economy, and are not make-work.” As examples she mentions jobs removing invasive species from a river and jobs helping restore historical architecture. I just have no idea how far such local short-term projects get you. 

4. Sociology vs journalism
Two UCLA sociologists read Dreamland (the book about opioids) and wondered–what’s the difference between journalism and sociology, again? Jeff Guhin concludes what most sociologists would, namely that we both tell stories, but sociologists are more interested in the theory exemplified by the story. Personally, I think this often leads to shallow storytelling stretched to make claims it can’t possibly substantiate.

Gabriel Rossman gives several nice examples of sociological concepts present in Dreamland, from competitive social display (the Mexican dealers showing off when back home in Xalisco) to social capital (why it works to pay the rookie dealers on salary rather than commission, because you know all their friends and family back home) to the obfuscation of the production of scientific claims (see Latour and Woolgar, here represented by doctors’ credulous acceptance of the idea that “only 1% of Oxy patients become addicted”).

Does it matter to know these concepts have official names when you’re reading the book? It’s certainly useful to know about these concepts because they’ll help you make sense of the next story where they pop up. But you can notice and appreciate these concepts (as my book club comrades did) without caring about their names. In this light, journalism is just about as explanatory as sociology, and much better written.