Archive | December, 2016

Changing Shape of US Income Distribution

20 Dec

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King Trump Assembles His Court

13 Dec

I was struck by a passage in a NYTimes editorial for 12.12.16, “Flawed Choices for the State Department”. It was primarily about the choice of Exxon Mobile CEO for secretary of state (and secondarily about John Bolton as deputy), noting that he “knows scores of world leaders”. I was particularly struck by this paragraph:

Steve Coll, author of “Private Empire: ExxonMobil and American Power,” wrote in The New Yorker that in nominating Mr. Tillerson, Mr. Trump would be “handing the State Department to a man who has worked his whole life running a parallel quasi state, for the benefit of shareholders, fashioning relationships with foreign leaders that may or may not conform to the interests of the United States government.” He added that “the goal of Exxon Mobil’s independent foreign policy has been to promote a world that is good for oil and gas production.”

I was particularly struck by the phrases “parallel quasi state” and “Exxon Mobil’s independent foreign policy”, for they reminded me of the concept of virtual feudalism that my friend and colleague Abbe Mowshowitz developed back in the 1990s.

He wrote a book about it, Virtual Organization: Toward a Theory of Societal Transformation Stimulated by Information Technology (PDF); here’s a passage from the publisher’s blurb:

Computers mediate between individuals by providing channels of communication in the form of messaging systems; they act as brokers in matching buyers and sellers, employees and employers, resources and work processes, and so on. The social significance of computers as mediators and brokers has tremendous political and economic consequences. For managers, these consequences manifest themselves most clearly in the virtual organization, which is founded on the separation of requirements, for example, inputs such as components, from the ways in which requirements are met, or satisfiers, for example, suppliers and distribution networks. Separating these elements allows managers to switch easily from one way of meeting a requirement to another. Used systematically, switching brings huge increases in productivity but it also weakens traditional loyalties. Absent a sense of loyalty to persons or places, virtual organizations distance themselves from the regions and countries in which they operate. This process is undermining the nation-state, which cannot continue indefinitely to control virtual organizations. A new feudal system is in the making, in which power and authority are vested in private hands but which is based on globally distributed resources rather than on the possession of land. The evolution of this new political economy will determine how we do business in the future.

The result, Abbe argued, is that the world will evolve to a condition where nation-states are gravely weakened relative to the power of large transnational corporations. The result will be a neo-feudal world ruled by a global oligarchy of business elites and their government cronies at the expense of an immiseration global peasantry, many of whom are desperately trying to cling to illusions of middle class life.

Is President-Elect Donald Trump now in the process of using cabinet appointments as a ruse to assemble the Lords and Ladies to the court His Royal Highness, King Donald, First Emperor of the World?

While other rich men have been elected President (e.g. Franklin D. Roosevelt) none have had the wealth or worldwide business interests that Trump has. How will he separate his foreign policy from his business interests? As a preface to an enumeration of these business interests, Libby Nelson of Vox notes:

The most positive outcome of these entanglements could be that Trump pursues win-win deals that enrich both the country and himself. But these same relationships could lead him to act and react in ways that distort the economy, tilting it in favor of his own interests, and changing the United States’ foreign policy to benefit him rather than the country. It could also distort the economy, rewarding allies at the expense of other companies, stifling growth.

Even if the worst-case scenario doesn’t come true, Trump has clearly demonstrated he has little interest in meaningfully separating his businesses from his presidency. Because many Trump businesses bear the Trump name, the president-elect will be aware of where his interests are even if he hands the reins of the business to his adult children, as he’s said he will do.

Has he in effect chosen Tillerson as his Baron of Oil and Fossil Fuels? His cabinet is fast filling up with business executives and business-friendly politicians. In addition to Tillerson we’ve got the following executives:

  • Andrew F. Puzder, CKE Restaurants, Sec. Labor
  • Linda McMahon, World Wrestling Entertainment, Small Business Administration
  • Steven Mnuchin, Goldman Sachs, Treasury Secretary
  • Wilbur Ross, WL Ross & Co., Commerce Secretary
  • Betsy DeVos, Windquest Group, Secretary of Education

How will these people address one another in meetings of the Cabinet Court? Lord Andrew? Dame Linda? Sir Steven? Your Highness?

Who is going to be Court Jester?

* * * * *

Before Abbe wrote his book he asked me to ghostwrite an article about virtual feudalism. He was unable to find a publisher for it, so I’ve reprinted it at New Savanna. I organize it around capsule accounts of the lives of three people and accompanying commentary, Molly Mckenna: The Corporate Lord and the Impoverished State, Robert Wong: New Loyalties and Citizen Action, and Jarvis Roosevelt: Whither Liberty and Justice for All?