And It’s No Surprise

The public was not alarmed after Edward Snowden blew the cover on the government’s vast data mining operation. Without thinking too much about it, it looked like most of us had assumed it was going on all the time.

After all, in an age where anyone can find most of our relevant data through Google, “private” information requires just a bit more effort to get. Years of having our email accounts hacked, discovering that employers often have access to our medical records, reading about leaks and corporate espionage and identity theft, most people have come to take it for granted that any information about them can easily end up in the public realm. We are exposed daily to the sharing of information about our retail purchases, our surfing habits, our “likes” and “friends.” CCTV cameras track our every move. And, even if we don’t have the skills to do it ourselves, we know about the millions of geeks around the world who take every secret as a challenge to decode and unearth.

We know it — and yet we have not fully taken it in. Most people I know take routine precautions. They don’t respond to requests for passwords, and don’t send money to friends who have been allegedly stranded in a foreign country. But we are not as obsessed with security as we would need to be to keep our secrets safe or as cavalier as we should be in accepting our exposure. As The New York Times put it in an editorial, we have “traded privacy for convenience.”

And we try not to think about how vulnerable we are. As The Times went on to say: “the privacy war is asymmetric. Governments have spent billions to develop tools to conduct surveillance and hack into computer systems. Far fewer resources have been devoted to protecting users from such intrusions.”

As a result, people like Snowden and Pvt. Manning and Julian Assange are seen as modern day Robin Hoods. They steal the cloak of secrecy from the powerful to expose their hypocrisy. (See, “Can’t Hide in the Cloud.”)

Mainstream journalists now are rallying around the government, lining up against The Guardian, where Snowden’s revelations were first published, as well as the public’s inclination to celebrate their new Robin Hoods. The journalists do have a point, of course, as data mining on a grand scale is probably here to stay as a necessary tool to fight terrorism.

Tom Friedman wrote in The Times, “If there were another 9/11, I fear that 99 percent of Americans would tell their members of Congress: ‘Do whatever you need to do to, privacy be damned, just make sure this does not happen again.’ That is what I fear most.” (See, “Blowing a Whistle.)

In making that defense, however, Friedman and others are exposing the reality that the public has conceded the struggle already, and it has settled into a semi-paranoid complacency and a convenient surrender to round-the-clock surveillance.

Public attitudes here are not the point. Just as Wall Street needs careful regulation, intelligence needs monitoring by those who know what they are doing – as the rest of us go on pretending we still have secrets while looking the other way. The problem clearly requires the kind of specialized commitment, energy and know-how that journalists seem reluctant to call for.

Can We Look It In the Eye?

When capitalism took over the world roughly 200 years ago, it vastly increased society’s productivity but at the cost of immense human suffering. Millions of people were displaced and dramatic cycles of boom and bust rendered workers vulnerable to starvation and disease. Over time, the imbalances have been modified and corrected.

Henry Ford had the idea about a hundred years ago that if his workers were paid adequately they would be able to buy the cars they assembled in his factories. More sales, more demand, more work – and the link between work and consumption quickly became one of the celebrated aspects of a more balanced capitalism.

The logic still holds, but globalization has put a big dent in this bargain. Not only do big multi-national corporations search for the best tax breaks they can find throughout the world, starving governments of revenue in the process, – the topic I addressed in last week’s blog post – they search for the cheapest labor they can find around the world.

Daniel Gross noted in Newsweek: “Corporate profits have soared from $1.1 trillion in 2008 to $1.95 trillion in 2012—up 77 percent. The amount of cash on companies’ books has risen from $1.39 trillion in 2008 to $1.79 trillion in the fourth quarter of 2012—also a record.” Nonetheless, corporations are reluctant to hire more workers or increase wages. Gross went on to note that “Since the recession, companies have realized that if they freeze, or even cut, wages, workers will still show up and toil just as productively.”

The problem, though, is that then they don’t have money to spend. “Where are all the customers?” read a plaintive email from a Walmart executive that leaked in early February. “And where is all their money?”

“’Workers are consumers, and when they aren’t paid enough to buy goods, the economy can’t grow,’ said Amy Traub, senior policy analyst at the Manhattan-based think tank Demos.” She adds: “We end up trapped in a vicious cycle of low growth, and companies that persist in trying to cut labor costs further only make matters worse for themselves.” (See, “Apple Too Clever By Half.”)

The unbridled pursuit of profit in this phase of Investor Capitalism is pushing corporations into a destructive process. Not only are they not hiring, preventing the distribution of wealth, those who cannot get jobs are increasingly squeezed as governments cut back their safety nets.

A member of a recent panel at N.Y.U’s business school, argued that “current publicly traded U.S. companies were ‘actually obliged to maximize their externalities’ — economist-speak for behavior that harms the wider community — if that would increase their bottom line.” The panelist noted that “paying the lowest possible taxes is not the exceptional policy of one particularly greedy chief executive — it is what every executive seeks to do to keep his job. According to The New York Times, reporting on the panel: “the grim title of the session was “Can American Capitalism be Saved?”

In a new book, a University of Michigan sociologist, Mark S. Mizruchi, contends that the forsaking of responsibility for the wider community is a big shift in the behavior of U.S. business and a central reason for the country’s political and economic malaise. (See, “Aligning With the Greater Good.”)

“The current American corporate elite seems to be leading us toward the fate of the earlier Roman, Dutch and Habsburg Spanish empires, starving the treasury and accumulating vast resources for itself.”

“Unbelievable Chutzpah” or Brilliant Innovation?

Clearly the guys at Apple, talented at developing amazing products based on brilliant technological innovations, are also busy innovating in other ways, and that tells us a lot about how dysfunctional our financial system has become.

First came the news that the company was sitting on billions of dollars of profit, unsure what to do with it. More recently came the astounding news of its success in escaping taxes.

In the old days of traditional capitalism, new businesses sold shares to investors who thus became owners. In return, the shareholder-owners would get dividends, and with luck and good management the shares might also increase in value. That concept became obsolete when investors got interested in the far greater returns that could be gotten from flipping the shares. Companies then got interested in driving up the value of their shares, less interested in providing a reasonable and secure rate of return. The profitability of a company became less important than its ability to “increase shareholder value,” as that strategy became known — and in fact many companies stopped bothering to pay dividends at all. They wanted to raise “value.”

That’s how Apple’s ballooning nest egg of $145 billion came about. But then their shares did not continue to go up. What were they going to do with all that money? And how could they stimulate an increase in share prices? The ingenious solution was to borrow money to pay dividends. The problem with just paying out the money they already had was that then they’d have to pay taxes on it first. And the borrowed moneycould be used to buy back shares, and that too would bolster their price.

As noted in The New York Times: “About two-thirds of Apple’s cash about $102 billion — sits overseas in lower-tax jurisdictions. If it returned some of that cash to the United States to reward its investors, it could have significant tax consequences for the company.” In other words, they would have to pay taxes.

That takes us to the tax problem: Thanks to what lawmakers called “gimmicks” and “schemes,” Apple was able to largely sidestep taxes on tens of billions of dollars. “Over all, Apple’s tax avoidance efforts shifted at least $74 billion from the reach of the Internal Revenue Service between 2009 and 2012, the investigators said.” But they “have not accused Apple of breaking any laws and the company is hardly the only American multinational to face scrutiny for using complex corporate structures and tax havens to sidestep taxes.”

As one economist put it: “They have been so successful with their tax planning that they’ve created a new problem,” (See, “To Satisfy Its Investors, Cash-Rich Apple Borrows Money.”)

Edward Kleinbard, a former staff director at the Congressional Joint Committee on Taxation, said: “There is a technical term economists like to use for behavior like this. ‘Unbelievable chutzpah.’”

On Capitol Hill Monday, legislators made plain their fury over what they called Apple’s “egregious” and “outrageous” conduct. But after they vented their frustration and were assured that Apple had not broken any law, they calmed down and praised the company for doing such a great job. (See, “Apple’s Web of Tax Shelters Saved It Billions, Panel Finds.”)

It turned out that the Senators had no one to blame but themselves for having created those rules. As Tim Cook, Apple’s CEO, put it: “Apple pays all the taxes we owe – every single dollar.”

It’s Getting Worse

Suicide rates have been rising dramatically. But of special concern, as reported in The New York Times is the number of middle-aged men killing themselves: “Suicide has typically been viewed as a problem of teenagers and the elderly, and the surge in suicide rates among middle-aged Americans is surprising.” (See, “Suicide Rates Rise Sharply in U.S.”)

“It is the baby boomer group where we see the highest rates of suicide,” said the C.D.C.’s deputy director, Ileana Arias. “The boomers had great expectations for what their life might look like, but I think perhaps it hasn’t panned out that way.” She added: “All these conditions the boomers are facing, future cohorts are going to be facing many of these conditions as well.” The conclusion is that “the risk for suicide is unlikely to abate for future generations.”

The University of Virginia sociologist Brad Wilcox recently pointed out in The Atlantic that there’s a strong link between suicide and weakened social ties. Following the seminal research of Emile Durkheim, he added that people — and especially men — are more likely to kill themselves “when they get disconnected from society’s core institutions (e.g., marriage, religion) or when their economic prospects take a dive (e.g., unemployment).” (See, “What’s Driving Suicide Among Middle-Aged Men?”)

It has been getting tougher for men. Brought up to believe they are the stronger sex, expected to be the primary bread-winner for their families, with corporate leaders and entrepreneurs as role models, they have been finding it difficult to sustain their expected social roles. As a result, their self-esteem has been taking a beating.

Wilcox goes on: “And over the last two decades, it’s men without college degrees who have ended up most disconnected from the core institutions of work, marriage, and civil society. Guess who is most likely to kill themselves? Men without college degrees.”

“In fact, according to recent research by sociologist Julie Phillips and her colleagues, suicide has surged in recent years . . . among precisely this group of less-educated middle-aged men, even as suicide remained essentially stable among middle-aged men with college degrees over this period.”

Ross Douthat commenting on these trends in The Times noted: “The hard question facing 21st-century America is whether this retreat from community can reverse itself, or whether an aging society dealing with structural unemployment and declining birth and marriage rates is simply destined to leave more people disconnected, anxious and alone.”

Yes, Douthat is correct to note a “retreat from community,” but in generalizing the problem he moves away from the insight that it is typically middle-age men who are most at risk. They are the ones who suffer from disconnection and declining opportunity as a result of such trends as growing economic inequality and shrinking job markets.

And he moves away from seeing it as relevant to politics and social policy. At the very end of his piece, citing an article in The New Republic on “The Lethality of Loneliness,” he notes “one in three Americans over 45 identifies as chronically lonely.” In other words, he changes the subject: “There are public and private ways to manage this loneliness epidemic — through social workers, therapists, even pets. And the Internet, of course, promises endless forms of virtual community to replace or supplement the real.” (See, “All the Lonely People.”)

He reduces the problem to one of mental health and proposes various forms of supportive psychotherapy as a solution. Politics has become irrelevant.

As a therapist myself, I certainly am sympathetic to the call for more therapeutic services. Those who are suicidal need therapy, to be sure. But the loss of community is not a problem that can be dealt with through psychotherapy. That’s just passing the buck.

Religion and “Schismogenesis”

The escalation of religious intolerance has reached a point, according to the noted anthropologist T.M. Luhrman, that people are becoming reluctant to own up to being religious at all.

She notes that since the early 1990’s, the number of people without religious affiliations has “more than doubled to 20 percent from less than 10 percent.” For people under 30, it’s “close to a third.” She cites the political scientists Robert D. Putnam and David E. Campbell who found that “recent years have seen the sharpest points of disagreement between religious believers — of nearly all stripes — and those who denounce religious belief of all types.”

“The last few election cycles have made it clear that many evangelicals think that those without religion are dangerously wrong on many issues. A crop of equally committed atheists and agnostics have reciprocated, with vigor.” She calls this process of the growing divide “schismogenesis,” borrowing a term from Gregory Bateson to describe how positions diverge and harden.

Luhrman adds: “We know that most of these people still believe in God or a higher power, whatever they mean by that. It’s just that they are no longer willing to describe themselves as associated with a religion. They’ve seen that line in the sand, and they’re not willing to step over it.” (See, “How Skeptics and Believers Can Connect.”)

This is particularly interesting as Americans have tended in the past to emphasize – if not to actually lie about – the extent of their religious behavior. When asked about going to church, two out of five say they attend regularly. But observational data as well as the reports of ministers, priests and rabbis tell us that the actual figures are way less.

Slate covered that story over 2 years ago: “The results are surprising. Americans are hardly more religious than people living in other industrialized countries. Yet they consistently—and more or less uniquely—want others to believe they are more religious than they really are.” (See, “Walking Santa, Talking Christ.”)

So how to make sense of all these contradictions? Back then, when I wrote in my blog about that, I thought the American affirmation of religion was a disguised and indirect form of patriotism. There are so many cultural and ethnic differences among us that we may well feel that all we have in common is the affirmation of being “One Nation Under God” (See “Americans Go To Church.”) What politician would admit to being an atheist or, even, an agnostic?

Has it gotten worse? Have the tensions and conflicts among Americans reached the point that we no longer even have god in common? Or, have religious disagreements gotten so intense can we no longer use the fiction of religious belief to cover our disagreements? Either way, god has gone into the closet. “Religion” has become so politicized that it is almost entirely now about such social issues as abortion, marriage and sex education.

In the past, people fought and died over their different faiths. Was god a trinity? Was he strict or forgiving? Did he really live in heaven? Now he has become an ideologue, and an embarrassing one at that.