Tuesday Morning Links

This and that for your Tuesday reading.

- Frank Vibert writes that our democratic system includes more than just electoral politics, while recognizing that we all too often neglect the distinct role of regulatory bodies:

When one looks more closely at regulation and the interdependencies between systems the more apparent it becomes that regulation now needs to be viewed as a basic means of coordination in modern democratic societies. For example it corrects for the inadequacies of the law in dealing with evidence from the natural and social sciences – an area where lawyers, judges and juries have special difficulties. Far from demotivating people to act responsibly, regulation provides society with a basic means of addressing a key weakness that all democratic societies face. The weakness is that people have conflicting motivations that impair their willingness to observe  the underlying norms of behavior that are necessary for all systems to work. For example markets depend on honesty and trust in contracting. Market incentives may motivate people towards making false representations. At the same time the efforts of democratic societies to socialize norms through education also yield very imperfect results. Regulators step in to underpin norms and to educate.

The most important sense in which regulation is basic to modern societies is that it provides an adjustment mechanism, smoothing and facilitating the constantly changing mix between the different systems in a democratic society. Thus, if governments look towards markets to fund and manage services that were previously within government, such a move will be accompanied by regulatory structures in order to minimize the ‘creative destruction’ associated with markets. Conversely, if governments look to intervene in markets, as in the case of Obamacare, they will also accompany such moves with a regulatory structure in order to try to ensure that the end users benefit from the new insurance arrangements. Regulation has unique properties as an adjustment mechanism and is of fundamental importance in modern democratic systems both for functional and normative reasons.
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(R)egulation addresses what has been termed ‘adaptive bias’ in systems. The term means that there is a tendency for social institutions to be backward looking and to favor the status quo. For example the law is famously rooted in citing precedent. The horizon of politicians is forward looking to an extent – but only as far as the next election. The market is forward looking, but it often projects past relationships and conveys its information in the form of prices – prices that contain a mixture of signals and noise. Regulators are engaged in forecasting and horizon scanning for professional reasons. They convey their information in policy relevant terms. For example an outbreak of an internationally disseminated infection such as swine fever or avian flu will likely be reflected in market prices. But public policy will pay more attention to the indicators of morbidity and mortality estimated by health sector professionals.

- Ted Strickland highlights the need to focus on poverty and inequality in our political choices - and to facilitate collective action in the process:

The excuse we hear too often from political leaders who don’t talk about poverty is that budgets are too tight and you can only do so much.  But there is a reason budgets are tight—we have cut taxes!  If we had a progressive tax system that was anywhere near the levels it was before Ronald Reagan became President, we would have the resources we need.

This is one area where I think we can do a much better job—talking about the link between tax policy, decreasing revenues, and cuts in programs that people need to have a fair shot at the American Dream.

We also have to do a better job talking about work and shared prosperity.  It’s un-American, frankly, that you can work and work and work and not get out of poverty.  And I think something that is sometimes missing from progressive consciousness—and something that certainly benefited my family—is an awareness of the importance of organized labor.  We became as egalitarian as we did as a nation because working people gained power and influence by banding together and bargaining for better wages and benefits and safety conditions.  And as economic disparities have increased over these last few decades, the influence of organized labor has decreased.

So whether it’s the same paradigm or not, we’ve got to find some way for people to act collectively in their self-interest.  And that’s a challenge that I think is facing organized labor but also all of us who care about giving everyone a fair shot and a fair chance.

- Patrick Wintour points out UK Labour's proposal for a minimum wage set at a reasonable percentage of the country's median hourly earnings - which on the upside would mean a significant increase for now, but on the downside could give employers an incentive to further suppress wages across the board. Meanwhile, in the category of policy changes with a far less ambiguous effect, Corey Robin discusses the Republicans' moves to encourage wage theft by employers.

- John Quiggin takes a look at Delaware's role as one of the globe's most notorious corporate tax havens.

- Finally, Michael Harris sees the Cons' highly selective sanctions as further evidence that they'll put oil interests above any sense of morality given the choice.