Is democracy possible, or only necessary to our survival?

Joel RogersUW-Madison, COWS

jrogers@cows.org/608-890-2543

Prepared (sort of) for SINE, 6/26/12, BC, Boston

Kant’s questions

1. What can we know? 2. What should we do? 3. What may we hope for?

My questions

1. Why are we here?2. Where should we go?3. How might we get there?

My argument

1. Even as many of the institutions providing some semblance of democracy have collapsed, demand for them has increased

2. In the US, while external forces can explain much of the above collapse, the larger portion goes to inattention by those with democratic values

3. Inattention is a correctable failure, and there’s nothing in the current structure of the world, or people, that prevents democratic advance

I made some slides for you

Like this slide

And this one

I do wonder about PowerPoint

Power corrupts

Absolute power corrupts absolutely

Absolute PowerPoint just can’t be good

Gettysburg addressFour score and seven years ago our fathers brought forth on this continent, a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal. Now we are engaged in a great civil war, testing whether that nation, or any nation so conceived and so dedicated, can long endure. We are met on a great battlefield of that war. We have come to dedicate a portion of that field, as a final resting place for those who here gave their lives that that nation might live. It is altogether fitting and proper that we should do this. But, in a larger sense, we can not dedicate — we can not consecrate — we can not hallow this ground. The brave men, living and dead, who struggled here, have consecrated it, far above our poor power to add or detract. The world will little note, nor long remember what we say here, but it can never forget what they did here. It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us — that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion — that we here highly resolved that these dead shall not have died in vain — that this nation, under God, shall have a new birth of freedom — and that government of the people, by the people, for the people, shall not perish from the earth.

Abraham Lincoln, 19 November 1863

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Gettysburg Memo

Abraham LincolnCEO & CIC

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Agenda

• Civil War• Meet on battlefield (great)• Dedicate portion of field as cemetery• Choose strategy going forward

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Not on agenda

• Consecrate (or hallow)• Add (or detract)• Note (or remember)

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Organizational Overview

U.S. nation-building

Time (∞ ?)

-87 yrs

% complete

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New Nations

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Organization Niche & Strategic Objective

Organization niche• Conceived in liberty• Dedicated to “equality proposition”Strategic objective• Govt of/by/for “the people”

04/21/23

Summary & next steps

Summary• Civil war• Cemetery• Unfinished tasksNext steps• Rebirth of freedom• Government not perish

Hahahahahahaha … teeheeteeheeteehee

1. Why are we here?

Best and worst of times for egalitarian democrats

Best – representative democracy now dominant, people more educated than ever, cross-national inequality decreasing, science and technology advancing at a near singularity pace, internet makes many things easier to organize, threats to global commons creating global community, instinct for freedom pretty evident all over, experimentation ubiquitous

Worst – hollowed out by rising (in the US, more or less unprecedented) economic and political inequality, democratic values threatened by dominance of TNCs and global finance, nations both two weak and too strong to get key international rules in place, organized social base and role in the economy doesn’t exist, confusion, lack of credible alternative – look at the Right’s advantage in wake of great recession

Democratic capitalism or economic feudalism?• What’s good about capitalism is its market use of individual drive,

distributed information, and indifference to private failure to weed out “losers” and raise mean productivity. What’s bad is what’s always bad about inequality, exploitation, and markets (short time horizons, exit- vs. voice-rewarding behavior, inability to solve cooperation problems or self-correct its many imperfections and failures).

• Democratic capitalism limited these problems, but required assent of capitalists. This assent less available today. Capital has exit possibilities from national political institutions, ad the latter are less disciplined by a democratic public. Government again used simply to administer social exploitation and looting (extraction, suppression, crony corruption).

• You can maybe cure rent-seeking by sharply limiting the state, but that leaves you with instability as well as inequality. If you expand state power without paying attention to its negative use, and get a Machiavellian equilibrium. Not the private market convergence of supply and demand, but the convergence of private wealth and public power: those with gold get to rule, and those who rule get more gold.

US an extreme example of decay

• Highest economic inequality in the developed world• Political system most driven by private money• Weakest public-interested media institutions• Lowest voting, weakest labor movement• Weakest affirmative state, under unrelenting attack• Reactionary federalism• Intenserightward polarization of formal politics• Eating its seed corn, declining competitiveness, etc.

Internationalization

Internet, higher investments (outside US) in education

The inner green shading represents the proposed safe operating space for nine planetary systems. The red wedges represent an estimate of the current position for each variable. The boundaries in three systems (rate of biodiversity loss, climate change and human interference with the nitrogen cycle), have already been exceeded

Environmental catastrophe

Source: Johan Rockström et al, “A Safe operating space for humanity,” Nature 461, 472-475(24 September 2009)

Financialization

[F]inanciers … [who] played a central role in creating the crisis … are now using their influence to prevent … reforms. One channel of influence … the flow of individuals between Wall Street and Washington. Robert Rubin … Henry Paulson … John Snow ... Alan Greenspan – Simon Johnson

Perhaps the single biggest distortion … is when a number of private institutions are deemed by political and regulatory authorities as too systemic to fail. Resources are trapped in corporate structures that have repeatedly proven their incompetence, and further resources are sucked in from the taxpayer as these institutions destroy value… these institutions can play a game of chicken … The consequences are …a system of crony capitalism. … …corrupt officials can hide behind the doctrine of systemic importance to bail out favored institutions … two sets of rules, one for the systemically important, and another for the rest of us. – Raghuram Rajan

Crony capitalism

Productivity and compensation

Growing together, growing apart

Growing together again

Middle class America

Great divergence

Gilded Age

Great compression

End of shared prosperityNew Gilded Age

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More or less unique to U.S.T

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U.S.

Income gains to the top (PTPT, 1979-2007)

This increase for top 1% equal to the total income of the bottom 40%

Inflation-adjusted post-transfer-post-tax income (in $K’s), averaged within each group, is respectively, for 1979 & 2007, 15.5 &17.5 for bottom 20%; 44 & 57 for middle 60%; 350 & 1,300 for top 1%

Change in actual income

Real action at the tippy tippy top

• Share of pretax income earned by top 0.1% increased over last 30 years from 2.7% to 12.3%

• Rest of upper 1% increased their share from 5.3% to 5.7% • So could have had a ≈ 10% income increase among all others,

including the rest of the 1%, if .01% share had been constant• Wealth of course is worse. Richest 400 Americans own more

than the bottom 155 million combined.

Great Gatsby Curve

IGE estimates the likely preservation of parent relative position.

Heading toward caste society

Tax system hasn’t helped much

Low level of public goodsCountry Total taxes

as % of GDP Country Total taxes

as % of GDP

Australia 30.6 Luxembourg 41.8

Austria 43.9 Mexico 16.0

Belgium 45.7 Netherlands 42.1

Canada 38.2 New Zealand 35.6

Czech Republic 40.4 Norway 41.6

Denmark 50.4 Poland 35.2

Finland 46.2 Portugal 34.3

France 45.8 Slovak Republic 35.3

Germany 37.7 Spain 35.1

Greece 37.1 Sweden 52.2

Hungary 39.2 Switzerland 34.4

Iceland 36.3 Turkey 31.3

Ireland 32.3 United Kingdom 36.3

Italy 43.3 United States 28.9

Japan 26.2 EU average 41.6

Korea 23.6 OECD average 37.3

Country Total taxes as % of GDP

Country Total taxes as % of GDP

Australia 30.6 Luxembourg 41.8

Austria 43.9 Mexico 16.0

Belgium 45.7 Netherlands 42.1

Canada 38.2 New Zealand 35.6

Czech Republic 40.4 Norway 41.6

Denmark 50.4 Poland 35.2

Finland 46.2 Portugal 34.3

France 45.8 Slovak Republic 35.3

Germany 37.7 Spain 35.1

Greece 37.1 Sweden 52.2

Hungary 39.2 Switzerland 34.4

Iceland 36.3 Turkey 31.3

Ireland 32.3 United Kingdom 36.3

Italy 43.3 United States 28.9

Japan 26.2 EU average 41.6

Korea 23.6 OECD average 37.3

Line of e

quality

Cumulative share of population Cum

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The Gini coefficient

The Gini coefficient is the ratio of the area that lies between the line of equality and the Lorenz curve (marked 'A' in the diagram) over the total area under the line of equality (marked 'A' and 'B' in the diagram); i.e., G=A/(A+B). The Gini coefficient can range from 0 to 1. A low Gini indicating a more equal distribution; 0 would indicate perfect equality. A higher Gini indicate more unequal distribution; 1 would indicate perfect inequality.

Gini’s around the world

2009 PISA Scores

US ranks 23rd on science, 17th on reading, 31th on math

What produces this corruption?

• Low popular mobilization (voting, unions, etc.)• Private for-profit media with 24-hour news cycle (more

entertainment, junk news, less analysis), leading to angrier and often even less informed public

• Bigger and better organized money (and thus more pliant, ideological, rich-favoring candidates and electeds)

• Nastier polarized politics• Radicalized GOP (contract, ATR pledge) with discipline to

play parliamentary politics on a Madisonian playground (e.g., by exploiting filibuster in Senate, repeated roll-call votes in House)

U.S. Presidential election turnout, 1824-2008

Voting

National elections Off year elections

Union membership and coverage

Source: 1960-2010 ICTWSS data from Amsterdam Institute for Advanced Labour Studies (AIAS).

Union density

The concentrated 24/7 media circus

Concentrated influence of money

.05 percent give the max to any congressional candidate

.01 percent give more than $10,000 in a election cycle

.0000061 percent (196 people) account for 4/5ths of new super PAC money

Lessig 2012

.026 percent account for 68 percent of all contributions

Gilens 2012

Link of policy to preference

Gilens 2012

Link of policy to preference

Gilens 2012

But what if preferences diverge?

More specifics

Gilens 2012

They’re just not that into you

No, they’re really not

“The results for the vote on raising the minimum wage reflect the political plight of low-income constituents with special poignancy. Those results suggest that senators attached no weight at all to the views of constitutes in the bottom third of the income distribution — the constituents whose economic interests were obviously most directly at stake —even as they voted to approve a minimum wage increase.”

Bartels 2008

Polarization and inequality

Party Polarization 1879-2011Pe

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Source: Poole et al, 2012, voteview.com

Dis

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Polarization in 90th, 100th, 110th Congress

Pox on both their houses?

Cloture, 88-110th Congressional Sessions

More radical GOP, more cautious Democrats

ATR pledge taken by 41 Senators, 238 US Representatives, 13 Governors, 1,275 state legislators

Right-polarized court

Right-polarized nation (the “big sort”)

Thomson 2010, J.A. 2010. “A house divided: polarization and its effect on RAND”. RAND Corporation. <http://www.rand.org/pubs/occasional_papers/OP291.html>

Decline of competitive counties, 1976-2008

1976 2008

What’s the bottom line explanation of all this?

Many things contributed. The decline of the surplus, increased competition, failed response to that, stagflation, the costs of empire, a weak and ineffective labor movement (in barren marriage with Democratic Party and still dedicated to a “contracts are us” business unionism), culture wars, anxieties of race, rise of sunbelt, workforce and political heterogeneity, etc.

But the bottom line was simple. A new American Right ─ joining the divergent interests of libertarian, social conservative, main street, Wall Street types around the improbable program of repealing the 20th century (getting rid of the affirmative state, New Deal, income tax, the works) ─ out-organized the rest of the country. This included most of its left, which wasn’t really paying attention.

Political infrastructure (CBSM4)seven functional capacities of all successful democratic politics

• Communication: among leadership, to and from base, with mass public• Blood (new, i.e. youth): recruitment, training, placement, etc.• Service centers: on a variety of functions best organized in one place for

economies of scale or scope (think leadership academies, policy shops, centers of campaign expertise, media support centers, etc.)

• Message & program: something simple and positive to say to about what we should be and a few things to get us closer to that

• Messengers: many diverse people talking in public, running for office, with message discipline in frames, analysis, talking points, etc.

• Models: models of what works that can be replicated and scaled• Money: patient but demanding capital, committed to both experiment and

performance, prepared to withdraw on failure

After the Powell Memo (1971), the new Right actually organized these elements of political infrastructure. Progressives never did. Which is why we’ve lost so badly until now. We were barely, really, in the game.

How might that change?

2. Where do we want to be?

20th century• Fight were about capitalism vs. socialism, markets vs.

government, democracy vs. authoritarianism, exclusion vs. civil rights

• Solutions were extend market capitalism and liberal democracy, widen opportunity and security within national economies through different versions of a “Keynesian welfare state” (KWS), social democratic politics

• And the winners were … capitalism, markets, hollow representative democracy, wider inclusion

fin de siècle consensus

Government isn’t the solution to our problems. Government is the problem.

Ronald Reagan

There’s no such thing as society. There are just families and the market.

Margaret Thatcher

The unabashed victory of economic and political liberalism announces the end of history.

Frances Fukuyama

21st century problems

• Environmental collapse and resource scarcities … climate disruption, species extinction, destabilizing mass migration, including for food and water

• Pandemics … nobody’s been cured of AIDS • Nuclear proliferation (& terrorism) … more suitcase bombs?• Systemic financial risks … trillions disappearing in days• Global imbalances and diversity … in trade and other• Extreme poverty … you want to live on $2 a day?

These problems don’t care about your ideology, or where you live

And remember, after we’ve failed to solve these problems, it’s still cold and lonely out here

They’re different from the old ones

• Global not local … both bigger effects and no escape• Highly interdependent … poverty ↔ health ↔

population ↔ resources ↔ environment ↔ stability ↔ violence …also with bigger effects

• Require cooperation in solution … across nations, races, classes, religions — not just market coordination of self-interested actors

• … and much learning, experiment (drawing on local as well as general knowledge), and capacity to adjust quickly … since uncertainty (about life courses, risks, technology, opportunities, etc.) is now radical and effectively permanent

What is pretty clear is that

Highly interactive life-threatening global public problems whose solution requires ongoing cooperation across nations/races/classes/ religions and continuous learning and experiment drawing on local as well as general knowledge are …

… not going to be solved by deregulated markets and conventional politics

But they can be solved by an organized democratic public

So we should stop fighting the last war …

… and start building that

A basic finding about human nature

“These results show clearly that people are not generally the self-interested actors of traditional economics, since they value treating others fairly, and will incur personal costs to do so. Nor are people the unconditional altruists of utopian political theory, since they want to hurt free-riders and other norm-violators. They also show that strong reciprocity is not simply a mechanism for norm-enforcement, but also often includes a powerful concept of fairness or sharing — the notion that all else equal, there should be a rough balance of rights and obligations in social exchange. Proposers in the dictator game treat sharing as a good in itself, and respondents in the ultimatum game retaliate not against the violation of norms in the abstract, but against norms of equal sharing in particular. “

Bowles & Gintis, “Is equality passé?,” 1998

Homo economicus or homo reciprocans?

Homo economicus — self-directed, outcome orientedHomo reciprocans — concerned with others (both positively and negatively), process oriented. Combines “strong reciprocity” with “basic needs generosity.”

Strong reciprocity is a propensity to cooperate and share with others similarly disposed, even at personal cost, and a willingness to punish those who violate cooperative and other social norms, even when punishing is personally costly.

Basic needs generosity — distinguishes among the goods and services to be distributed, favoring those which meet basic needs, and among the recipients themselves, favoring those thought to be “deserving."

The new learning

Atomistic → Networked Equilibrium → Disequilibrium Linear → Non-linear Mechanistic → Behavioral Efficient → Effective Predictive → Adaptive

Independent → Interdependent Individual ability → Group diversity Rational calculator → Prudent approximatorsSelfish → Strongly reciprocal Win-lose → Win-win or lose-lose Competition → Cooperation

As one people, united, we acknowledge the reality: that the future of the human race requires the cooperation of its members … OWS

New learning clichés

What goes around comes around The better you do, the better I do So, we all do better when we all do better It’s survival of the smartest Smart means being willing to cooperate Teamwork wins There’s no such thing as a self-made person All for one, one for all

Democracy as a force of productionDemocratic institutions provide representation and fairness. That’s great. But that’s not all. They can also be a force of production

– By getting people with respect and fairness, they induce greater effort, better information from them

– This increases productivity directly, but also increases social problem- solving capacity

– As public institutions, they can increase efficiency by correcting market failures and imperfections – solving prisoner dilemma (and concomitant free rider) problems for public goods

– By providing public goods, they can further increase efficiency and entrepreneurship (e.g., insurance to reduce risks in risk taking), not just greater equity by lowering the cost of necessities

– Efficient public goods in places also make density more attractive, yielding positive network effects (aka “agglomeration effects”), and more innovation

What does that mean for democratic organizations in the economy?

Old worker organizations•Contracts are us, staying clear of managerial core•>50% certification•Firms or establishments•Silos of solidarity•No independent politics

New worker organizations•Harmonizing standards of fair treatment•Equipping workers with skills and other assets to navigate labor market•Seeking allies everywhere, and an ongoing relation to members•Inevitably more political•Spatially rooted

Productive democracy

3. How might we get there?

What’s a (political) strategy?Many things, but minimally it’s a plan of action with a defined goal, clear and plausible incremental steps in getting there, with progress in each step making the next one more likely (aka “momentum”), and a basic message (interpretation) on reality that makes sense of it.

What matters most is not where or how you start but that you start, with shared clarity on aims and means. Some courage and conviction help too. Anybody who says “ideas don’t matter” or “people don’t care about making sense of reality” is no less an elitist fool than someone who thinks “the best idea always wins, even without people fighting for it.”

The Right’s strategy

Goal … end all social constraints on capital

Incremental steps … deregulate business, demonize and starve government, crush unions, regressively redistribute income and wealth, etc.

Momentum … each step increases material insecurity, and reduces social capacity to relieve it

Basic message … “You’re on our own (YOYO!), and anybody who tells you different is a LIAR!”

So what’s the alternative to this?

Let’s start with the economy

What makes a place rich?

In the end, a place’s wealth is determined by the productivity of its human, physical, and natural capital. Productivity is a function of the value ($) of goods and services produced (itself a function of their uniqueness or performance) and the efficiency of that production (i.e., output per unit of input). Productivity should be measured by value per unit of input, not output per unit.

What matters is not what industries a place competes in but how firms compete in those industries. Firm variation is much more important than sectoral variation.

Identity of owners also not important, though its concentration and diversity of form certainly is.

What makes a place worth fighting for?

Democracy: a community of free equals, enjoying equal protection, equal opportunity, equal political power

Shared prosperity: high and rising living standards; with the benefits of increased productivity widely shared (through labor compensation, more equitable private wealth, or progressive public goods) and fair opportunity to contribute to and receive those shares

Sustainability: both achieved in a way that doesn’t limit future welfare

“High road” refers to a (universally available and scalable) strategy to achieve progressive values under competitive market conditions.

Values – Equity, sustainability, democracy

Strategy – Use democratic organization to– Reduce waste– Add value – Capture and share the benefits of doing both– Learn from what you just did, and repeat

High road is a strategy

Two ways to compete: high road and low road. One’s good for workers and the other’s not. One’s sustainable and the other’s not. One’s socially accountable and the other’s not. Both can be profitable.

High road choice for firms

Low Road

Compete on price, resulting in

• Economic insecurity• Rising inequality• Poisonous labor relations• Little firm commitment to

place• Environmental damage

High Road

Compete on productivity, requiring

• Continuous improvement• Better trained and equipped workers• System-wide reduction in waste• Public goods to get these things

and producing • Higher worker incomes & profits• Reduced environmental damage• Greater firm commitment to place

High road choice for communities“the wealth of networks”

Exclusion InclusionWaste ReuseDivestment Investment

Poverty Wealth

Connectedness

Isolation

High road

Low road

Can you measure it for communities?

Health, wealth, educational attainment, unemployment, savings, public goods, quality of public goods, access, equality, participation, public power, etc. etc.

How about firms?

• Value-Added / FTE > average for its industry• Avg. Hourly Wage >= 3 * Federal Minimum Wage• Hourly Worker Payroll + Benefits >= 0.5 * Value-Added• Healthcare Coverage for >= 85% of Hourly Workers• Employer Healthcare Premium >= $5,000 / Covered Worker• Employees Using Computers >= 67% of Employees• Employee Turnover Rate < 20%

Varieties of mixed capitalism not that hard to see!

But is it really possible?

1. We know it’s possible to increase productivity dramatically, increasing returns to new investment

2. We know it’s possible to eliminate large amounts of waste, increasing disposable income

3. We know the economy is largely regional, and that it’s possible to organize regional productive infrastructure

4. Doing (1) & (2) in (3) will attract capital while grounding it. That permits bargaining over division of surplus and direction of future investment. And starting local doesn’t mean you’ll stop there.

Adding value

Within-sector firm variation in productivity

Not related to establishment size

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75th Percentile 25th Percentile Median

Large CompaniesSmall Companies Very Large Companies

Establishment size

Decreasing waste

Middle quintile ($36,070-$57,944) consumption

≈60% of household necessities (housing, transportation, energy, health) in areas of obvious waste

A chance to rebuild America

82.0 billion new squarefeet from replacement

131.4 billion new square feet

295.6 billion square feet in 2000

427.3 billion square feet in 2030

213.4 billion new square feet of built

space

More cars or more wealth?

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Monthly Car Sales

Personal Savings Rate

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Exceptional waste in energy

Exceptional waste in health

Regions

The world’s not flat, it’s spikyUrban shares of GWP, top 130 cities

100 US Metros: 75 % of GDP

• Incomes rise and investment moves out• Revenues decline• Public goods deteriorate• Middle class flees • Tax base erodes • Poverty concentrates

An Iron Law of Urban Decay?

Or a wasting of obvious assets? E.g.: size, location advantages, density, key infrastructure, appeal for new industries, eds and meds foundation, more skilled workers, younger workers, immigrants, key infrastructure, greater energy efficiency, tax base for public goods, political tolerance, higher wages and productivity, more easily organized

Get smart and unapologetic about cities

Metro % of GDP, population, union, land (2009)

Two views of Chicago

But don’t ever forget, it’s a political project, not just an economic one. You can’t win justice unless you build power, and can’t

build power unless you organize, and can’t organize if you don’t have any tools

So you’ve got to build them as you use them• Communication: among leadership, to and from base, with the

mass public• Blood (new, i.e. youth): recruitment, training, placement, etc.• Service centers: on a variety of functions best organized in one

place to realize economies of scale and scope (think leadership academies, policy shops, centers of campaign expertise, media support centers, etc.)

• Message & program: something simple and positive to say to about what we should be, and a few things to get us closer to that

• Messengers: many people talking in public and sometimes running for office, showing message discipline, shared frames, talking points, etc.

• Models: models of what works at scale and can be replicated• Money: patient but demanding capital – long-term but

experimental and performance based, prepared to withdraw on failure or non-performance

So what’s a progressive strategy?Goal: a society fit to live in (aka a sustainable, prosperous democracy, with equal opportunity, protection, and chances for love and learning)

Incremental steps: Start paving the high road (start with waste, it’s all over the place!), probably first in cities, being clear on what we’re doing. Repeat and extend, in all feasible areas of economy and polity. Build political infrastructure. Try to act as a movement that’s more (not less) than the sum of its parts. Use power outside government to improve policy within it, and policy to build power outside the state.

Momentum: People are attracted to success and power; the more the public sees how much contribution a productive democracy makes to their welfare, the more willing its members will be to defend and extend it.

Basic Message: “We’re smarter and stronger and better together than alone. Equal opportunity, equal protection, and acting together with intelligence, beats business domination and loneliness.”

Soundbite(s) summary

This is about growing productivity, cutting waste, holding free-riding scofflaws accountable, and sharing the benefits of doing all three in smart, organized, democratic places. This bets on the productivity of democracy over business domination. This is about adding value, not just values, to the private economy, by setting rules for essential free competition among those who can excel under them. This treats markets as tools, not gods. It doesn’t “throw money at problems” but is prepared to make specific scaled investments of proven social value. This demands accountability of government as well as citizens. It applies the private sector’s metrics revolution and benchmarking to government and public administration. It aims at government efficiency, which is not the same as cutting prices. It values experiment and learning. It is clear on its values and open to working with anyone who shares them. It’s not against business but against business as usual. It’s for for wealth creation and business contribution to that, while recognizing the contribution of a democratically organized people.

What’s not to like?