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Archive for September 2012

Blogging my thoughts about the Government’s Role in the Economy

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Blogging my thoughts about the Government’s Role in the Economy:

My economics professor, D’Anghel N. Rugina (1913-2008), taught us students about economic models.[1] He called a free economy that affirmed private property and had a government of limited powers, Model alpha (Mα) and a completely controlled and planned economy that prohibited private property, whose government had unlimited powers, Model omega (Mω). He sometimes applied his models to the government, society, and the economy, which, according to him, are in an organic relationship. He noted that in France the society could be described as Mα 95% and ω 5%, the economy as Mα 45% and ω 55%, and the government as Mα 30% and ω 70%. (Because their models did not match there was friction. In the long run, the models of the government, economy, and society have to come close.) Narrowing the focus to the economy, however, a purely free one was theoretically 100% Mα and 0% Mω and Rugina described our mixed economy as more or less 50% Mα and 50% Mω. (To fix the historical time period, I took his course in economics in Northeastern University fifty years ago in the early sixties.)

Coming from a horrible experience with communism in Romania, Rugina identified that system or model with slavery and the Mα economy with freedom. In any case, he argued that the Mα economy sat on the base of a stable triangle, while that economy, which was completely centralized, planned, and controlled, i.e. Mω, sat on the point of the triangle making it completely unstable.

Mα Mω

In Mα the people had the freedom of choice, could take initiative to start a business, and participate in the competition of the market place. In Mω the government had centralized and unlimited control over a planned economy.

Meanwhile it is important that the percentage of the Mα increase and that of the Mω decrease. Rugina noted that before World War I, no classical economist used the term capitalist for a free society that championed the free markets with limited government. When the term “capitalism” was first used it was pejorative connoting depression and over-production.

Today with as mixed an economy as ever, it is still necessary to champion the gradual increase of the Mα percentage and the decrease of the ω percentage. In the words of Rugina, to have full and natural stability, we must bring the system closer to Mα. But that can only proceed by greater approximations and not by giant disruptive steps, e.g., going back to the gold standard for money as Ron Paul would have us do. It is important that the government not interfere in our economy, but then we must also realize that if we devise policies as if we have Mα 100% and ω 0%, then we are being completely ideological. Rugina did not consider the anti-trust laws government interference, because as he says in an important essay in the Economist, capitalism has to be regulated with all the instruments, dials, and gauges like in the cock-pit of an airplane for it to fly.[2]

Because Rugina was a classical economist, he considered John Maynard Keynes (1883-1946) a Marxist masquerading as a liberal economist, but he felt that Keynes’ theories applied to economies that were in a slump, which could describe ours right now. He noted, however, that despite Keynsian economic policies, there were still nine to ten million workers unemployed when World War II broke out, and it was the war and not the administration of F.D.R. that finally solved the unemployment problem.

Importantly, Rugina noted that the government had a legitimate role in defense and justice, as well as doing what the private sector could not provide for the people.

Thus it is necessary to see that ideological policies, whether from the right or the left, are not helpful in the reality of our mixed economy. It follows that when the government determines that it is unjust to have 45 million of its citizens uncovered by health insurance, while an insurer strikes 5 million from its rolls to become more profitable, then it is legitimate for the government to provide that service. We might call that socialism, but it takes place where the free markets could not find a profitable way to cover a basic need of the citizens of our society.[3]

While clear and right answers for a pure model of an economy are possible, such clear policies are not possible in our 50% Mα and 50% Mω economy. I believe that in our society, which has a government of limited powers, there are places where a limited socialism is appropriate and should not be avoided, because there are places where capitalism is inappropriate. If body organs for transplants were for sale under the law of supply and demand, the rich would live and the poor would die. The important thing is to distinguish where capitalism is appropriate and where it is not.[4]

Rugina notes that “the power of a private monopoly in a capitalistic society is limited.” He further said, “Pure monopoly in a mixed economy cannot be equated with Mω. It does not have that same absolute power. Mω qualified is a centrally controlled and planned economy.”[5] This insight should make those who oppose the Affordable Health Care Act less anxious. Even though it represents the government entering a sector of our economy, it is not one that the private sector has dealt with adequately and justly. First of all, attaching health care insurance to employment with good benefits fails to cover people in times of high unemployment. Secondly, there is the progressive unwillingness of employers to provide such an expensive “fringe” benefit. When the supply of labor is so much greater than the demand, employers can hire cheap labor. What ground does a worker have to stand on when three others are standing in line for his or her job?

Let’s look at the electric utility, which is a government regulated monopoly, and socialist in the restricted sense that it is in a capitalist society and not an Mω centrally controlled and planned economy, which robs people of their freedom. As a government monopoly it distributed electricity to everyone with monthly bills that except for the very poor were at least affordable by everyone. When the hype about deregulation of this utility took place recently, it was a veritable disaster. Big corporations placed first bids on large batches of energy, which they could purchase cheaply. For the remaining expensive electricity, ordinary individuals and households suddenly gasped as their electric bills became thousands of dollars a month. Then Texas corporations like Enron used criminal measures to bilk the citizens of California out of billions of dollars. Tactics called Death Star shut down energy plants to initiate artificial shortages and black outs designed to bring an excessive increase in the price of electricity. Enron also used the manipulation called Ricochet to export and import energy out of state and back to multiply the price again many fold. The induced energy shortages were designed to bring Enron exorbitant profits at the expense of Californians.

Those are facts. Now I will indulge in some conjecture, for which I’ve seen some evidence, but which I cannot prove. Dick Cheney’s secret energy conferences, where Ken Ley was probably present, most certainly did not only deal with oil fields in Iraq and various pipelines, but probably also with Enron’s distribution of electricity to California. Thus suddenly the democratic governor, Gray Davis was looking at a $9 billion deficit brought on by the criminal activity of Enron. As in foreign countries, where the Bush administration wanted regime change, the opposing democratic governor could also be replaced. Arnold Schwarzenegger, the republican, may have been given the green light to start his recall campaign. After Gray Davis was recalled, California was not reimbursed for the $9 billion it had been bilked, and then Schwarzenegger left California with a $26 billion deficit from which our state has not recovered. My hypothesis is that this was a conscious republican energy strategy against the democratic power-house of California. I admit that this is conjecture, but very plausible conjecture from my point of view.

Back to the deregulation of electricity: Regulation had to be quickly reintroduced with one government regulated monopoly that provided electricity in an equitable way to everyone, that is, to corporations as well as individual households at affordable prices. Thus for electricity a limited form of socialism works while capitalism does not. It is granted that this government regulated monopoly is in a capitalist society with a government that is very limited in power.

Once when Helmut Gollwitzer, a theologian in Berlin, spoke out for socialism, I asked him how he could take that position when the Sowjet Union was such a failure. He answered that what was called socialism there was really state capitalism. The premier was like the CEO of a corporation which entailed the whole economy. His Politburo was like his board of directors, who drew up the five year plans for their centrally controlled and planned economy. From this pretentious center they could not at all anticipate and meet the needs of the people. So in East Germany, one always had to stand in a long line, even for ice cream, and when you got to the window they had just run out. The whole economy, which was run as one giant and total corporation, did not work.

When the Sowjet Union began to split up and introduce capitalism in the oil sector and others, those that became their CEO’s quickly became billionaires and Putin clapped one, who dared to run for his office, in prison. The decentralization and multiplication of corporations is proceeding in the way of a crony capitalism that is likely to privatize more and more.

I’m not sure what is happening in China. They are decentralizing corporations over various energy and industrial sectors, but still having them be government owned and regulated like our electric utility, e.g., Con Edison in New York, PG&E here in our part of California. Granted that their governmentally owned corporations are doing business in a Mω economy where the government has unlimited powers and does not exist by the consent of the people.

Back to our limited form of socialism: In the communications sector, deregulating ATT worked. Now many telephone companies rival and compete with one another and through the Internet communications have even taken another giant step forward, although Comcast, Verizon, and Apple smart phones have drastically increased the previous price of the regular telephone bill. All told deregulation brought an advantage to the communications sector. Deregulation of the airlines may have brought cheaper airfares, but the decrease in services is remarkable.

In the words of Reinhold Niebuhr, there are some things that we need the courage to change and we have to have the serenity to accept the things we cannot change with the wisdom to know the difference. Similarly there are some sectors that we can deregulate and allow the market forces of capitalism free reign and some that we cannot and we need the wisdom to know the difference. Furthermore, some institutions can be privatized and some cannot and for that we also need the wisdom to know the difference. For example, privatizing the military by the use of “contractors” – working for special corporations that keep changing their names, is a case in point. The name “contractors” is designed to hide the fact that they are mercenaries operating and hired by mercenary corporations.

Let’s turn to health care. I wish this was merely a thought experiment about an extreme case, but it really happened. Several years ago, three doctors in a hospital in Redding, CA did a great number of intrusive heart tests and open heart surgeries and realized that the more tests and operations they performed the more money they made. Imagine opening a person’s chest and operating on his or her healthy heart merely for the sake of profit! This notorious little hospital made about $50 million a year while a large general hospital across the street made only about $5 million. This continued until a priest was told that he needed heart surgery and he went to another doctor for a second opinion and discovered that he did not need surgery at all!

In our healthcare system operations bring in a great deal of money and the operating room has become the engine room of the “factory” hospital. That model of payment for each surgery may be as inappropriate as the “operation” run by those Redding doctors. Meanwhile in socialist Cuba doctors get paid very little, but they still go from house to house caring for the sick and doing preventive medicine, perhaps making last resort operations much less central to their health industry.

Now if the bottom line of the health care industry is to make money, rationalizing its sector like any business, then the capitalist models for it is by-and-large inappropriate. Health care is a necessity and the first thing a clinic asks for, even in the telephone call before a doctor visit, “Do you have health coverage; if so, what kind?” Then in comparison with Cuba, I believe it was fifty years ago when I remember a doctor making a house call. As sick as we can be, we have to go to the doctor’s office and the doctor is allotted only a few minutes to attend to us. What’s wrong with this picture? Is it capitalist medicine?

There is a very collective aspect to illness in our society as well. What fault is it of a person who catches a virus or catches a deadly infection in the hospital that was supposed to make him or her well? What about a person who gets cancer? These sicknesses have a collective aspect and are often environmentally and socially determined. If I go skiing and break my leg, it is accidental, but certainly related to my life-style. If I drink and smoke and ruin my liver and get lung cancer, there is certainly a measure of individual fault. But say that I get lung cancer from second hand smoke as a non-smoker! To become bankrupt by paying doctor bills seems to add insult to injury, which itself has been inflicted by society.

Let me return to the theme of unnecessary operations with a personal anecdote. When I went to an old doctor with knee trouble, he said that he could operate to take out my torn meniscus, but I still had arthritis, so he advised against the operation. He was honest enough to advise me against an operation that could have brought him $20,000 to $30,000 in income – but how many doctors can muster that kind of integrity?

To conclude with the economy in general, even with the total rationalization for profit as the bottom line, a business can have the integrity of paying its workers a living wage, providing dental and health insurance as well providing an excellent product for purchase enhancing the common welfare of the people. Such companies and such corporations represent capitalism with a human face, to coin a phrase opposite Dubček’s short-lived (1968-69), Czechoslovakian socialism with a human face.

Real ethics have to permeate every sector of our economic lives, whether they are appropriately capitalist and freedom based or based on sheer necessity. Parents are not free to feed or not to feed their children. Their freedom consists in fulfilling their responsibility to feed and nurture their children. Often one cannot presuppose that what is true for the individual is true for the whole society, but although they are different, individuals have to take responsibility just like the governments has to take responsibility for its people. People also have the right not be made sick by the environment.


[1] “A model,” according to D’Angel Rugina, “is a set of assumptions to define a framework, where we are [re]searching  a problem.” In other places from my notes: “A model is a small picture.” and “A model is a world in itself.” Such a model resembles Max Weber’s archetypes, which should not become confused with reality. Models can help to investigate economic realities and perhaps realities can be shaped to resemble a certain model more. Rugina argued that the Sowyet Union proved that the 0% Mα and 100% Mω was possible, so therefore the 100% Mα and 0% Mω should also be.

[2] “Is there anything new to be said after Adam Smith, Marx, Walrus, and Keynes? Toward a third revolution in economic thinking” by my old inspiring college professor from Northeastern University in Boston, Anghel N. Rugina: International Journal of Social Economics, Vol 26 No. 10/11, 1999, pages 1227-1248. See my essay, “On Anghel Rugina and our Financial Crisis” for the exact citation.

[3] D’Angel Rugina taught before the issue of universal health coverage was debated, so I do not know if he would have supported it. But he held that the government should do what the private sector could not do for the people.

[4] When Rugina charts the society, economy, and government it is somewhat like Habermas theorizing the life-world and the two systems: the economic and the political ones. The relationship is somewhat clearer in Habermas, because the systems exist for the sake of the life world and the money of the economic system and the power of the political system should not uncouple the language, the words, the communication, which is the currency of the life-world. When this occurs then the life-world becomes colonized by the systems. Rugina sees the basic principles of his models bringing freedom or slavery to all three sectors.

[5] These quotations are taken from the notes I took in his course.

N.B. For a review of Anghel Rugina’s life and work, as well as a list of his many publications, see “Facets in the life and Work of Anghel Rugina.”

New Translation: Friesenlied: Where the North Sea Waves

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This is a beloved German song that my father and the family used to sing, so I thought I would translate it into English.

Friesen Song: Where the North Sea Waves

1. Where the North Sea waves roll in against the shore,

And yellow flowers bedeck the lush green moor,

|: Where the cries of sea gulls pierce the ocean’s roar,

There you’ll find my homeland, where I lived before. (Repeat)

2. Wind and waves sang me their lilting lullaby;

My childhood sheltered there by dikes so high.

The land knew all my yearning, when I was still but small

When flying o’er the oceans I had to leave it all.

My heart’s no longer aching, gone is all the pain,

I may have made my fortune, but I’m homesick again.

3. Homesick for green and yellow flowering moor,

Where North Sea waves wash up against the shore.

|:Where the cries of sea gulls pierce the ocean’s roar,

That’s the place where I lived, the home I had before.  (Repeat)

September 6- 8, 2012 peter krey

In Plattdeutsch:

Friesenlied (Wo die Nordseewellen)

Wo de Nordseewellen trekken an den Strand,
Wo de geelen Blöme bleuhn int gröne Land,
|: Wor de Möwen schrieen hell int Stormgebrus,
Dor is mine Heimat, dor bün ick to Hus. (Repeat)

2 Wind un Wogen sungen mi dat Weegenleed,
Un de hohe Diek, de kennt min Kinnertied,
|: Kennt ok oll min Sehnsucht as noch lütt ick weer:
In de Welt to flegen, ower Land un Meer. (Repeat)

Nu is alls verswunnen, wat mi quäl un dreev,
Hev dat Glück woll funnen, doch dat de Sehnsucht bleev.

Modern German:

1. Wo die Nordseewellen spülen an den Strand,
Wo die gelben Blumen blühn ins grüne Land,
|: Wo die Möwen schreien schrill im Sturmgebrus,
Da ist mine Heimat, da bin ich zu Hus. (Repeat)

2. Well’n und Wogen sangen mir min Wiegenlied,
Hohe Deiche waren mir das “Gott behüt”,
|: Merkten auch min Sehnen und min heiß Begehr:
Durch die Welt zu fliegen, über Land und Meer. (Repeat)

3. Wohl hat mir das Leben mine Qual gestillt,
Und mir das gegeben, was min Herz erfüllt.
|: Alles ist verschwunnen, was mir leid und lieb,
Hab das Glück wol funnen, doch das Heimweh blieb. (Repeat)

4. Heimweh nach dem schönen, grünen Marschenland,
Wo die Nordseewellen spülen an den Strand,
|: Wo die Möwen schreien, schrill im Sturmgebrus,
Da ist meine Heimat, da bin ich zu Hus. (Repeat)

Hear it sung in Low German by Ronny: Friesenlied

Written by peterkrey

September 14, 2012 at 6:37 am

Posted in My Songs, Translation

Unity Brings Strength, Healing, and Renewal

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Unity Brings Strength, Healing, and Renewal: before this blog was called “Why Do You Always Want to Get Close?”

Ordinarily I would write in my personal diary, but I guess I’ll just write with others in mind, so that others can also benefit from my thoughts. I was reading about the Red Cloud School in the Pine Ridge Indian Reservation, where I sometimes send small donations. The superintendent of schools was being interviewed in their newsletter and was talking about how his office was 90 miles away from some of the schools, but that they were getting Macintosh computers, which would make their dialogue better.[1]

The human power they need in a troubled reservation, such as they have, requires a way of getting close, that e-mails, Skype, and other computer communication will not be able to provide. I remember Nora asking me, “Why do you always want to get close?” This morning the reason suddenly occurred to me.

It took a long time. She may have asked me that question twenty-five years ago. Of course, I am the eleventh child of sixteen and I remember the feeling of being one with a family. Reading psychology, some people’s comfort zones are more distant than others. Perhaps with unresolved emotional attachment issues, I want to fuse with another person, because I could not tolerate emotional separation. There is a chart in a book I just recently read that compares (when together) of being connected with each other versus being enmeshed, feeling alone versus isolated, and differentiated maturely versus fused with another person. [2] Feeling that kind of insecurity, delayed the insight I had this morning. Was I just a person who wanted to fuse with another person, because I could not mature myself and differentiate into a sound individual?

Two thoughts: the one from this morning and the second that just occurred to me. We need to get inside each other spiritually, because there is power in there comparable to nuclear fission or fusion. Way back in college when I was trying to write scientific poetry, I wrote: the way the smashed atom releases power, the broken Christ releases love. Love =[E=mc2]2 .  Secondly, a citation from Pierre Teilhard de Chardin has always guided me: “True unity differentiates, it does not confound.” [3] Enmeshment and immature fusion that avoids healthy individuation is like the conformity and uniformity that Teilhard compares with true unity. When everyone wants to be the same on the outside, it can be called conformity or uniformity. In my New England up-bringing, I had teachers who were non-conformists. One, for example, instead of reading from the Bible for mornings exercises, read from Darwin’s The Origin of Species. Non-conformists felt that to join a group meant to sacrifice their individuality. But when soldiers wear uniforms they march in step and are trained to kill and no one can tell where their heart might be, that is, the center of their responsible and human life-loving self. True unity means that your hearts become one, so that in that oneness you trust each other and remain trustworthy for each other. With this inner unity or oneness, persons gain freedom and they can become as different as they want to be, but outwardly. Internally they have become one heart and one soul.

When the Native American, Bob Brave Heart Sr. talked of the incredible distances involved in the Red Cloud School from his office and his hoped for computer solution, I again thought of my experience of striving for unity with the staff, teachers and directors of my vacation church schools and day camps. Following the thirty-some-odd programs Les Schulz did in Cincinnati, I directed 14 in Coney Island and three in Oakland, CA. We would begin with a leadership training laboratory that lasted a week. It was not merely a matter of my wanting to get close to people. I became insecure, because I thought I might just be trying to get back my large family and the wonderful experience of growing up in it.

But now I realize that was not the case, except for my insecurities about it. The idea was to achieve a greater approximation of unity – others might call it team-building. But I think on a religious level. Christ said, “Amen, amen” – he started his words the way we end ours in a prayer – “I tell you, if two or three of you agree on earth about anything you ask, it will be done for you by my Father in heaven. For where two or three are gathered in my name, I am among them” (Matthew 18:19-20). Now that is a promise we can trust and rely on. The only problem is that it is so difficult to become one. I used to despair during the training sessions. Friday would come around and I would say, “I don’t believe that we’ve gotten off first base and I was at least hoping for a double or triple. The kids that are coming to us need us to hit a home run!” But there was always so much resistance to getting closer to each other, that we would have to make do with the shoddy relationships we shared with each other.

Partly, I was not mature enough and I did not have the skill-set to bring about more unity. Amateur teachers were often better than professional teachers we hired for our little school. The professionals already had hardened hearts and they were not about to grow. The question: how can we bring up these rough kids, if we have a staff that does not dare to bring anything up? One professional teacher was stuck on oppressive rules and could only think of ways to punish the children. Bringing it up made her miss the next day and made all the staff turn on me and say that I was not firm enough with the children. They were right. But the challenge was for me to grow – to get through the pain involved in becoming more firm and not such a bleeding heart, and her softening her heart and having some human feelings, some compassion and understanding for the children in her class. We would take them all to a swimming pool and three quarters of her children could not go into the pool because they were being punished. I asked the girls what they had done. In the bus they were trying to figure out where babies came from and she heard them talking!

In Cincinnati I learned a whole new vocabulary: what was the place someone was hung-up? What were each person’s hang-ups? Could we bring up an observation about another staff member? Was the person too up-tight? I later called “bringing something up” leveling with each other, using Virginia’s Satir’s Peoplemaking.[4] Some people could not handle any criticism and some could not handle any affection or love and some could not handle one or the other. Thus we talked about our growing edge. Where did we need to grow? When the vacation church school and day camp was going right, you could feel  yourself grow. Not only could a wound in the soul be uncovered and treated lovingly, but someone who could not bear an affectionate compliment was also listened to and attended with all empathy we could muster. Pastor Schulz had two beautiful daughters, who said, “Who needs a fuzzy?” It meant that they would give you a big hug. I was much too shy to ask for it. But it was incredible how we could all become aware of each other’s growing edges and could try to find ways to help each other face and work with them. It was the work of the soul.

When I spoke of the broken Christ and the smashed atom, I experienced that in the Cincinnati leadership training labs. Sometimes it seemed like a rock had hit the group and everyone split off in a different direction. A couple of sessions followed with insurmountable resistance. Then a reconciliation took place that overwhelmed us. The junior counselors were not with us; only the senior staff experienced these difficult sessions. When we came down to the junior staff and held hands in prayer,  all the junior staff burst into tears. But we entered a power of life, love, and renewal that was overwhelming. I could deal with a 14 year old who would fight me and bite me, if he could. We had rough kids and we could draw the line and set limits and they could not play one member of the staff off against the other. We had achieved an approximation of unity in the tough life forces of the inner city that could turn children around.

How can we bring them up if we can’t bring something up? How can teachers teach if they have forgotten what it is like to learn? You look at a computer and say, “It’s impossible for me to learn how to use that!” You muster your courage and learn one thing after another. How can we help others grow and mature, if we are unwilling to do so ourselves? With brave hearts, when two or three are gathered together, and move into greater approximations of unity, Christ sets to work setting miraculous personal learning and growth afoot. When our program was going right, you could feel yourself grow.

[1] “The Road Ahead: a Q&A with Bob Braveheart SR.,” Red Cloud Country, Vol. 4 Issue 1 (Summer 2012). See www.redcloudschool.org

[2] See Ronald W. Richardson, Creating a Healthier Church: Family Systems Theory, Leadership, and Congregational Life, (Minneapolis: Fortress press, 1196), pages 66ff. and 101ff. Richardson cites a funny story about porcupines in a very cold winter wanting to get close together for their body warmth, but having to stay away just the right distance not to stick each other with their needles. (p. 66)

[3] Pierre Teilhard de Chardin, The Future of Man, (New York: Harper Torch Books, 1964), page 55: “the coming together of separate elements does nothing to eliminate their differences. On the contrary, it exalts them. In every practical sphere true union (that is to say, synthesis) does not confound; it differentiates.” Then page 265: “totalisation by its nature does not merely differentiate but personalizes what it unites.” And on page 316: “Must I again repeat the truth, of universal application, that if it be properly ordered union does not confound but differentiates?”

[4]Virginia Satir, Peoplemaking, (Palo Alto, California: Science and Behavior Books, Inc., 1972).

Written by peterkrey

September 1, 2012 at 9:27 pm