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Marc Andreesen, the cofounder of Netscape, met Senator Barack Obama in early 2007.  Mr. Andreesen recalls, “In particular, the Senator was personally interested in the rise of social networking, Facebook, Youtube, and user-generated content, and casually but persistently grilled us on what we thought the next generation of social media would be and how social networking might affect politics — with no staff present, no prepared materials, no notes. He already knew a fair amount about the topic but was very curious to actually learn more.” (see Mr. Andreesen’s blog post)

As a social organizer and a lover of new technologies, Mr. Obama could be expected to make good use of such tools in getting elected, and he has done so.  What may not be as obvious is that Mr. Obama appears to have a keen interest in using such technologies in the act of governing.  And whether Mr. Obama becomes president, or Mrs. Clinton or Mr. McCain do, these new tools have the potential to transform how a government of the People, by the People and for the People communicates and operates. Let us consider the effects of Internet tools on the act of governing by first considering the effect of such tools on the election process.

Mr. Obama’s presidential campaign has made an unprecedented use of Internet tools. At my.barackobama.com Mr. Obama’s supporters can create a profile (complete with name, phone number, email and zip code), blog about their campaign experiences, track the latest campaign news and videos, plan, attend and discuss events, find other supporters, and help raise funds for his campaign.  More than 90% of the Obama campaign’s cash has come through donations of $100 or less, much of it through the Internet (see WSJ article).  The website can also be used to request further funds from prior contributors, which has likely helped Mr. Obama maintain a significant fundraising advantage.  Most importantly, the Obama campaign has put supporters to work not as passive volunteers but as empowered organizers.  On my.barackobama.com supporters are given the tools to find, convince and organize other supporters among their neighbors.

As the Rolling Stone reports:

[A meeting of Barack supporters at a recreation center] in San Marcos wasn’t advertised in any traditional sense. Instead, the campaign posted the event on my.barackobama.com — its social-networking site affectionately known as “MyBo” — and e-mailed local residents who had donated to the campaign or surrendered their addresses as the price of admission to an Obama rally. And the volunteers who showed up won’t be micromanaged by Ukman or anyone else from the campaign. They’ll be able to call their own shots, from organizing local rallies to recruiting and training a crew of fellow Obama supporters to man their precincts on election day. To identify and mobilize Obama backers, they’ll log on to the password-protected texasprecinctcaptains.com, download the phone numbers of targeted voters, make calls from their homes and upload the results to Austin headquarters. They’ll also organize early-voting open houses — which will be publicized on MyBo — to boost turnout among core supporters. “Instead of hoping that your neighbors vote,” [Obama staffer] Ukman tells them in an unintentional twist on the campaign’s central theme, “you’re going to take them to the polls.”

http://www.rollingstone.com/news/coverstory/19106326

The Boston Globe explains:

From a MyBO page, a member can click onto a list of 20 phone numbers with a series of prompts and scripts that the caller runs through, entering the responses of voters online. The information goes into the campaign database for its primary day get-out-the-vote operation.

http://www.boston.com/news/nation/articles/2008/02/24/technology_aids_obamas_outreach_drive/?page=1

Mr. Obama knows that supporters who feel closely connected to other supporters, who are kept closely informed about the cause, who are empowered to take actions in support of the cause, are likely to be not just casual supporters but members of a movement.  Internet social network websites allow people to share even small actions that move the cause forward, and shared small actions tend to evolve into larger commitments of time, attention and energy.

Of the candidates, Mr. Obama appears to be particularly aware of this potential change. Mr. Obama has often expressed on the campaign trail that to change Washington, to break the gridlock he sees engulfing both parties, he needs a movement that happens from the bottom up.  Although his strongest supporters may feel the election of Mr. Obama will effect this change, Mr. Obama does not seem to be of the same opinion.  To change how Washington operates he needs the movement to continue while he is in office.

Consider the tools a potential President has at their disposal.  While John F. Kennedy may have been the first television president, Ronald Reagan may have perfected speaking to the camera, and George W. Bush has utilized the power of a sympathetic television channel and talk radio hosts, each of these prior technologies have been largely one way mediums of communication channeled through media companies that distort the relationship a politician seeks to have with their constituency.  To organize effectively to carry a message across television and radio, modern presidencies run around the clock operations to drive a particular message through the external media companies that carry the information to the citizens.  The administration of George W. Bush has created common talking points that will appeal to a broad base of his supporters, which are used by a network of media figures and commentators that seek to stay on message.  In the 2000 and 2004 elections, Karl Rove harnessed direct mail technologies to send targeted political messages to particular constituencies, but he was using a broadcast medium to target small groups of supporters with the message that would most appeal to them.  Direct mail is very expensive to maintain on a prolonged basis, and therefore has been used mostly during election campaigns themselves.

Internet tools do not have these limitations.  The Internet provides a platform for organizing and energizing social movements in a new way.  Therefore Internet tools could have a tremendous effect on not just how governments get chosen, but how governments operate.  Internet social networks allow people to stay engaged on a continuous basis.  They also allow large numbers of people to receive the same message at the same time, cost effectively, without any filter or immediate commentary from critics.  They allow targeted delivery of messages.  If you trust the brand of a social network such as my.barackobama.com, if you value its tools and its services to you, you end up trusting many of the messages you receive through it.

The President elected in 2008 can, if they choose, communicate with anyone who provided their personal information during the campaign at nearly no cost, without having their message filtered.  A sitting President could reach out to a broad base of strong supporters, keep those supporters in close contact with each other, keep those supporters funneling their support to sympathetic Congressmen, keep those supporters hounding political adversaries, and keep those supporters listening to their message.  Most importantly, the nature of the message can be very granular.  Millions of supporters in a particular zip code could be asked to contact their legislator on a particular bill that the President seeks to oppose or support.  In theory, supporters with particular demographics, with particular religious persuasions, in particular regions of the country, could be sent messages tailored for them.  For governing, the ability to coordinate a vast citizenry in such a manner is an innovation more significant than radio, more significant than television, and more significant than direct mail.

How is such a movement to be directed by a sitting President? After all, the President does not represent supporters, a President represents all of the People.  David Brooks has pointed out that while Mrs. Clinton sounds like a traditional executive, gathering experts, forging a policy, negotiating a crisis and making a final decision, Mr. Obama sounds like a cross between a social activist and a flannel shirted software CEO, a nonhierarchical collaborative leader inspiring autonomous individuals to cooperate for the sake of common concerns (see David Brooks article).  In some ways, controlling an Internet social network is about channeling its energies in moments of need, but otherwise just providing it tools and then allowing it to undertake its own path.  Many Obama campaign messages have not been things the campaign has created but items created by the crowd that the campaign chooses to highlight.  (see Fortune Magazine article)

Government in an Obama Administration will likely consist again of setting the basic message and then establishing the tools to reach the policy makers in government.  my.barackobama.com will likely be supplemented, but not replaced, with whitehouse.gov and refinements to other government websites.  As I noted in a prior post (see The value of transparency to (nearly) everyone), in his first term as a United States Senator, Mr. Obama cosponsored a bill with the Republican Senator from Oklahoma Tom Coburn, which would create a searchable database of government contracts, grants, insurance, loans and financial assistance with the goal of making finding information about federal spending as simple to use as a search of the Internet.

Mr. Obama perceives the role of the taxpayer and of the citizen in a very business like way.  In his book, The Audacity of Hope (see my book review), Mr. Obama credits Reagan for seeing what Democrats didn’t see.  “Reagan’s central insight - that the liberal welfare state had grown complacent and overly bureaucratic, with Democratic policy makers more obsessed with slicing the economic pie than growing the pie-contained a good deal of truth.  Just as too many corporate managers, shielded from competition, had stopped delivering value, too many government bureaucracies had stopped asking whether their shareholders (the American taxpayer) and their consumers (the users of government services) were getting their money’s worth.”

An Obama Presidency may approach both government bureaucracy and obstacles to Obama’s policy prescriptions the same way the Obama campaign has come to dominate caucuses against the Hillary Clinton campaign: provide supporters (and citizens) in depth information on how to team up and then explain to them the steps they have to take to prevail.

Some signs of how Mr. Obama intends to act can be seen in his policy prescriptions.  Mr. Obama wants to use “the most current technological tools available” to promote citizen participation in the actual business of government (see his website).  He plans to not just solicit the opinions of the public in the work of government agencies and policy makers, but to tap “into the vast and distributed expertise of the American citizenry to help government make more informed decisions.”  He also intends to have a website, search engine, and other tools that enable easy tracking online of federal grants, contracts, earmarks and lobbyist contacts with government officials.  He intends to use whitehouse.gov to give the American public the chance to review and comment on any non-emergency legislation for five days.  When the media expresses skepticism that he can get a healthcare policy passed, Mr. Obama indicates that while he himself can’t, he knows how to get everyone to the table for discussions, make those discussions open and transparent, and invite the American people into the conversation.  He intends to require his Cabinet officials to have periodic national online town hall meetings to answer questions and discuss issues before their agencies, and to employ technologies (such as blogs, wikis and social networking tools) to modernize internal, cross-agency and public communication and information sharing.

While Mr. Obama may be further along in understanding the implications of these tools then his rivals, they are so potentially powerful that it is likely at some point we will have a Digital Presidency, even if Mr. Obama does not obtain the Presidency.

While it is clear Internet tools will have profound effects, it is not yet clear what those effects will be because it is not clear how such tools will be managed. The most advanced Internet social network technologies are controlled by private companies such as Facebook, Myspace and Google/Youtube.  Although these companies follow political issues, they do not have a strong political axe to grind.  Hopefully they will act as a counterweight to social networks that are motivated by a political cause.  In the political sphere, the most advanced and people rich Internet social networks appear to belong to the candidates for the Presidency.  By the nature of their cause, they attract the most attention and have the most capital both in money and people to develop their platforms.  Intriguingly, with a big enough brand name an individual is far less reliant on the party apparatus if they are able to develop or build their own Internet social network.  Perhaps this means that once a candidate has run for President once, they will be in a good position to run again.

In The Audacity of Hope (see my book review) Barack Obama describes the advantages of politicians who already hold a political office as being: (a) name recognition, (b) a fund raising advantage, (c) gerrymandering (where the already elected representatives redraw their districts to in effect choose their voters), (d) most politicians are pretty likable, and (e) the already established support of grass roots organization (which is as important as cash).  Mr. Obama interestingly states that these advantages of incumbent politicians push rival candidates to look for the support of the opposing political party.  What do the political parties bring to a candidate?  Organization.  They own the list of donors, of voters, of volunteers.  They can help with raising funds, finding the right voters to hear a message, or even crafting the right message to tell.  For Democrats organization means unions, environmental groups, and prochoice groups.  For the Republican party organization means the religious right, local chambers of commerce, the NRA, and anti-tax organizations.

Clearly the political parties, the unions, religious organizations, and cause motivated organizations are behind the technological times.  While these organizations have amassed databases of supporters and potential supporters, for the most part they have not created active, vibrant Internet social networks.  Perhaps they will do so in the future as they seek to preserve their role and power in the political ecosystem.  Despite the obvious privacy concerns, perhaps the government will create its own Internet social networks, for any citizen who wishes to use them, authenticated in some manner.  Perhaps some of these networks will even be accessible to all politicians to use to reach their constituencies.

Use of these new tools has profound implications for the American form of government. America was founded on the principle that sovereignty lies with the people, but also with the somewhat contradictory principle that the people’s representatives should be removed from the worst passions and impulses of the people.  The founders were aware that factions form when people care deeply about something, and that although factions are unnecessary, they can also fail to think dispassionately, becoming ruled by emotions and an allegiance to their faction.  Many of the founders of America held in high esteem the idea that representatives would be chosen by the people, but would be disconnected sufficiently from the people to take whatever action was wise.  They disliked mobs grouping together to take action.  Even Thomas Jefferson, who formed the first political party of a young America and secretly started a very partisan newspaper to give it a voice, detested what he perceived as the necessity of doing so.

Yet the system of governance we have today is one where representatives are in the long term accountable to the people, but in the short term look for support to various factions, either special interest groups (such as unions, the NRA, etc) or monied interests (such as companies, wealthy individuals, etc).  These factions end up having an outsized influence on what representatives are chosen and they make any representative who wishes to support a policy that goes against their chosen factions pay a severe price for the disloyalty.

By increasing the involvement people have with their government, or the involvement they feel they have with their government, the Internet can change, for good or ill, the relationship between citizens, such factions and government in ways that may have horrified the founders. One vision is to transform America’s modern republic into something more similar to an Athenian democracy, where every governmental decision is watched and weighed in upon by a connected populace.  Another vision is to increase the transparency and accountability of government, but still keep the baser angels in check.  Yet another vision is to prevent even a majority of moderate thinkers from impressing their particular policy prescriptions upon those who simply want the liberty to disagree.

To coordinate a mass of people when the issues being discussed are technical and complex, to retain the attitude of a reasoned debate and not descend into purely factional allegiances, is a significant challenge.  Even if a moderate consensus emerges on major issues, it is not clear that a moderate majority acting through coercion to force others to adopt their particular policy feelings is something to be esteemed.  A broader movement, a more open and transparent system, can be an improvement, but it can also be a curse.  The task of reconciling these visions lies ahead.

However the political world evolves, the greatest safety citizens have may reside in the design of the Constitution and the Internet. The Constitutional design makes changing the judicial branch of government a slower process, no matter what the popular will, and it entrusts the judiciary to protect the minority’s rights even in the face of a coordinated hostile majority.  The Internet is designed in a manner that permits any device, any software, and any new service to be reached through it.  New forms of organizing people on the Internet are constantly being invented, from Google to Wikipedia to Facebook.  Each new tool creates different systems of behavior, has different strengths and weaknesses.  If these new tools allow one person, through a cult of personality, or one faction, even if it is a sanctimonious majority, to amass unchecked power, to choose popular whim over in depth thought, it will likely be because the citizens and their judges ignore other voices, other social networks, and their own better natures.

In one of the Democratic primary debates Barack Obama slammed Hillary Clinton by saying, “While I was working on those [Chicago] streets, watching those folks see their jobs shift overseas, you were a corporate lawyer sitting on the board of Walmart.”

The accusation played very well with the audience, and was hailed by commentators as a stinging blow.  Yet the blow is only stinging, the accusation only biting, if an association with Walmart is something to be deeply ashamed of.

That Walmart is evil seems like conventional wisdom these days. The message of Walmart’s evil is promoted through documentaries, magazines, books and on numerous websites.  In the Democratic party the view of Walmart as evil has prevailed so significantly that even Mr. Obama, who demonstrated in his book The Audacity of Hope (see my book review) a willingness to admire some Republican policies and who has generally held himself to a tone of polite political discourse, reminded Hillary of her role as a Walmart director with a combination of ferocity, incredulity, disdain and relish (see the debate video).

In contrast, it is a matter of faith that Google, while it may not always be good, at least tries hard to do good. Many political candidates have traveled to Google’s famous campus and expressed their admiration for the company, including Barack Obama, Hillary Clinton, and John McCain.  (see the candidates at Google)  When Mr. Obama was at Google he said, “It is wonderful to be back [at Google]. …  It’s always good to be back in Mountain View.  … We know how the first chapters [of the Google story] have turned out, after all all of you have good jobs. … Technology and innovation have reshaped our economy and our lives at breathtaking speeds … Google has helped to show us the way.”  (see the video)

Yet perceptions of companies can be really wrong. Warren Buffett, the world’s richest person and arguably its most successful investor, and a skillful observer of corporate and public behavior, pointed out in his 1989 Chairman’s letter that what people think of as evil corporate behavior and what they think is generous can be completely unrelated to reality.

Mr. Buffett writes, “One of the ironies of business is that many relatively unprofitable industries that are plagued by inadequate prices habitually find themselves beat upon by irate customers even while other, hugely profitable industries are spared complaints, no matter how high their prices.  Take the breakfast cereal industry, whose return on invested capital is more than double that of the auto insurance industry… The cereal companies regularly impose price increases, few of them related to a significant jump in their costs.  Yet not a peep is heard from consumers.  But when auto insurers raise prices by amounts that do not even match cost increases, customers are outraged.  If you want to be loved, it’s clearly better to sell high-priced corn flakes than low-priced auto insurance.”

Let us therefore consider the conventional public perceptions of Walmart and Google with a degree of care.  What has caused such different perceptions of Walmart and Google?  What makes one company evil and another good?  Is it huge profit, market dominance that crushes all competition, or low salaries and benefits?  Is it something else altogether?

One criticism that is often made of very successful companies is that they use their dominance to make huge profits that they then use mostly to reward their shareholders. It is undeniable that both Walmart and Google make a lot of profit.  Walmart made almost $13 billion in profit in the last twelve months, and its profits grew 13% from the prior year.  Google made $4.2 billion in profit in the last twelve months, and its profits grew 37% from the prior year.  Google actually makes a lot more profit for its shareholders as a portion of its revenues than Walmart.   For every dollar of revenue, after all costs are paid (including employee salaries and benefits), Google makes 25 cents for its shareholders, while Walmart makes 4 cents.

Another criticism of a strong company is that by crushing the competition it is depriving customers of choices. Both Walmart and Google started very small, and admirably grew to dominance despite the presence of much larger, better financed competitors.  As the leader in providing low prices, Walmart has made goods vastly more affordable for people at all parts of the economic spectrum.  Even if you don’t shop at Walmart, it has forced companies that compete with it to lower the prices they charge you, improve their ambiance and start selling goods that can’t be found at Walmart.  Similarly, even if you don’t use Google it has forced other search engine companies to get much better and it has forced the advertising industry to reappraise the value they provide for each advertising dollar.  Walmart and Google have both caused some competitors to fail and others to adapt.  Google’s dominance crushed Excite, Lycos, and AltaVista, while hurting severely once dominant companies such as AOL and Yahoo, and posing a long term threat to very dominant companies such as Microsoft and Apple.

Both Walmart and Google have tremendous market share, but in their markets Google is by far more dominant, with Walmart accounting for about 7% share of retail goods and food sold, and Google having more than a 58% share of search advertising.  While it is easy to avoid Walmart, most people don’t end up avoiding Google in an average day.  It does not seem like Walmart is growing its dominance very much, since people simply prefer other stores to Walmart for many goods, whereas Google’s market is increasing in size even as its market share is increasing.  Also, while Walmart is unlikely to push into new industries, Google is bringing its sophisticated technology and advertising methods to what have historically been considered to be completely different industries, potentially threatening newspapers, and radio, television, and telecommunications companies.

But isn’t Walmart stingy with its employees, while Google is generous? Walmart is often criticized with respect to the salary and benefits its employees receive.  In contrast, Google is praised for being generous to its employees, with great salaries, stock grants, and a list of perks that excite adulation and envy.  Yet when people contrast the evilness of Walmart with the goodness of Google, they overlook that they are comparing workers at far different skill levels, but compare the salary and benefits both provide as if they had employees of the same skill level.

What is the appropriate pay for a worker? An individual or a company employs someone to do a job only if the value they are getting appears to them to exceed the price they are paying.  Sometimes the value you get from having a gardener do some landscaping is vastly greater than the market price you pay for the gardener’s services.  Sometimes you have enough wealth to easily pay the gardener far more than you do.  But there is an understanding between you and the gardener that they will be paid about or a little above the market price for their services.  That market price is not based on what you could pay.  A market price is based on what their alternative best employment choice is.

Walmart utilizes a small group of well paid managers, some well paid highly skilled workers, and a very large base of low skilled workers who have a wage far below that of the average Google employee, but a reasonable wage compared to Walmart’s primary competitors.  Google has a small group of highly paid managers but it also has a broad base of highly skilled workers who have a wage far above that of the average Walmart worker.  The truth is that Walmart does employ some web developers that have a skill level similar to those at Google.  Interestingly, it pays those workers at a level similar to that of a Google employee.  It must do so, for a high level of skill brings a high value to an employer, which must then meet market prices for that skill level.

Is Walmart really paying the market price for the services of its low skill workers? If there were better pay available in the market place for the skill levels of the people Walmart employs, people would presumably be leaving their job at Walmart.  Yet when Walmart posts a job opening there is overwhelming demand to fill it.  For workers of a certain skill level, a Walmart job is very attractive compared to their alternatives.

Walmart has found a business model that obtains a profit using workers at a low skill level paid at market prices.  When politicians admire Google’s cleverness, they interestingly overlook that Google hasn’t figured out a way to profitably employ people at the lower skill levels that Walmart will hire at.  While people complain about the market rate salary and benefits Walmart is willing to pay to a worker that has a low skill level, it passes unnoticed that Google offers low skill level employees no salary, no benefits and indeed no job.  One rationale is that Google is in an entirely different business that requires a higher skill level from its employees.  That is clearly true, but the fact remains that Walmart offers a job to workers at a low skill level and Google simply doesn’t have a profitable way of employing them.

While it is convenient for a politician to attach responsibility to Walmart for the low market price in salary and benefits that a low level of skill gets, it doesn’t set the market price for those skill levels.  If the value a low skill level employee was generating were worth a higher salary and higher benefits another employer would lure them away from Walmart with the promise of higher pay then Walmart is willing to give.

Isn’t Walmart diminishing the number of jobs at a low skill level that exist in the economy? One criticism that is made of Walmart is that because it is so successful in the retail industry it has reduced the overall number of low skill jobs in the country.  The problem with this criticism is that the number of low skill workers outside of the retail sector dwarfs the number in the retail sector, and even in the retail sector the number of low skill workers outside of Walmart dwarfs those in Walmart.  Walmart is likely to influence the market price for low skill level workers, but it doesn’t set the market price.

Imagine for a moment that an inventor in Silicon Valley suddenly started selling for a very low price a box that could instantly transport goods from one place to another.  That kind of technology would be heralded as a great innovation.  It would save so much money in terms of distribution costs it would inevitably make the economy far more efficient.

Yet it would also change what kind of businesses exist.  It would displace the postal service and numerous retail establishments, possibly including Walmart’s large stores.  On the whole that box would be good for society but it would cause considerable readjustments in what kinds of companies investors have faith in, what kind of profits can be obtained, and what kind of work workers end up doing.  When it comes to a technology displacing the low skilled workers that worked in retail, it is easy to see that the efficiency the technology brings doesn’t kill alternative careers for those low skilled workers because there are still very useful jobs they can do.

When a new business model such as Walmart comes along, people don’t view it the same way they would view a gee whiz technology that has a similar economic effect.  Walmart is a more efficient distribution box than what existed before it.  While a low skill worker may lose a job at a Walmart competitor that does not adapt, they may gain one at a competitor that does adapt, or at a service business that takes advantage of the extra cash a Walmart customer has to spend because of Walmart’s existence.

Even if Walmart is paying their employees at the market price for that skill level, shouldn’t Walmart at least provide its employees better healthcare? In a just society, everyone clearly should have a certain amount of basic services, including healthcare.  Politicians like to speak about universal coverage but they aren’t very specific about who gets to decide the level of coverage or who pays for it.  The way the American healthcare system currently works is that if you obtain health insurance for yourself you receive no tax benefit in obtaining that coverage.  If your employer pays for your healthcare, they receive a reduction of their taxes.  This has led most companies to provide some form of healthcare coverage for their employees.  This coupling of employment and healthcare creates some perverse incentives in the healthcare system.  It has created a feeling of paternalism, like companies are our fathers or families, wrapping us in their warm embrace.  We all expect every effort will be made to protect our health, and we would like our companies to pay for all of it.

Companies themselves often buy into this view.  After all, it is easier to create a team ethic if everyone feels they are a family, working towards a common goal.  Yet companies aren’t really families.  If the healthcare and salary received by an employee exceeds the value they bring to an employer, they won’t get hired and will be without both healthcare and salary.  Since a low skill worker is not of much economic value to Google (except as another eye to put advertising in front of), low skilled workers have no opportunity to earn a salary or receive healthcare benefits from Google.  Walmart does derive economic value from low skilled workers, but it seeks to pay salary and healthcare benefits that are at the market price for such workers.  Before governments mandate an employer provide certain levels of healthcare to its employees it is therefore worth asking whether this will cause certain workers to be without a job and what role employers or governments should have in organizing healthcare coverage at all.

Whatever organization is paying for healthcare, whether it is Walmart, Google or the government, must obtain the resources to pay for the healthcare from somewhere and must then decide how those funds will be spent.  Organizations do this by reducing the salary their employees would otherwise receive and then deciding to offer their employees a limited set of healthcare plans.  This creates three problems for the employee.  The first is that individual employees, who often know their own health needs far better than an organization, have a limited ability to decide whether to receive extra salary versus extra health coverage.  The choice to trade one for the other is taken away by the organization that arranges their healthcare.  The second problem is that to a large extent employees have no real control over the type of coverage they obtain.  If they prefer a health plan with alternative medicine coverage, they only have the ability to obtain it if enough other employees agree and lobby the human resources department of their employer successfully.  Finally, to the healthcare insurer the employer to a significant extent becomes the customer they have to please, rather than the employee.  This takes away some of the accountability in the system, and makes the employer far more important in the employee’s healthcare decisions than they have the right to be.  This has translated into a difficulty of carrying insurance coverage to a new employer when you leave your prior employer.  A complex system becomes difficult to manage.

It is ironic that the Democrats, who have a tendency to express a dislike of corporate power, are strongly in favor of expanding corporate responsibility for healthcare.  A better solution is for the government to make sure (through direct grants or via a tax credit) that every citizen receives a certain dollar value of healthcare coverage, but give citizens the freedom to buy healthcare coverage of an amount and a type that the individuals choose.  This would make individuals the customer for the healthcare system, without forcing them to adopt health plans chosen by a paternalistic employer or government.  To his credit John McCain has proposed reforming the tax code to eliminate the bias to employer sponsored health insurance and provide all individuals with a significant tax credit to increase individual insurance coverage (Mr. McCain’s health policy; Fortune magazine article on the candidate’s healthcare policies).  This could cause a radical restructuring of how healthcare coverage is obtained in America, with workers being paid a larger salary and companies stepping out of the business of providing healthcare coverage.  If low skilled workers are falling below the minimum level of health coverage American society thinks is necessary for all of its citizens, the answer is not to saddle their potential employers with costs that might deprive those low skilled workers of jobs, it is to provide a base level of funding through the tax system to make sure every American has the ability to find suitable health coverage while ensuring they have the freedom to obtain such coverage in the way and from the providers that they prefer.

What is really to blame for the rage that Walmart is receiving? It is a good thing to care for people, and to be concerned that they are not earning enough.  It is terribly unfortunate that the market price for low skill workers is so low.  When a politician condemns Walmart for its evil ways, let us realize that the market price for a low skill worker is not set by Walmart.  It is set by the value of that worker’s skills, as that worker can realize that value through the alternatives they have.  There are alternatives to working at Walmart for a low skilled worker but they just aren’t that good, and they certainly aren’t offered by employers politicians praise like Google.  Companies exist to solve problems for their customers, and in doing so increase the value provided to our society at the lowest cost to our society.  If Google finds that low skilled workers can’t perform a job Google needs done Google shouldn’t be required to hire them, but comparing Google to Walmart does illustrate that Walmart must be paying at or above the going market price for low skilled workers, Google pays no price for low skilled workers, and that this is because Walmart’s business model is better at making those low skilled workers useful than Google is.

The true solution for improving the lives of people with low skill levels is to increase their levels of skill.  Even if not everyone is capable of increasing their skill level, if some are able to make the transition there will be a smaller overall number of low skilled workers in society, which will diminish the supply of low skilled workers and thus increase the market price they receive for their services.  Why is this not being done already?  The real fault for the low level of skill these workers have lies in a system of education that lacks sufficient competition, accountability and resources to elevate those with low skill levels to higher levels of skill.  Who controls the education system that most of these low skill workers suffer under?  For most of the low skilled workers that are the subject of political scorn of Walmart, it is the public elementary and middle schools.  These schools often face a challenging environment, because they are required to teach students who are sometimes not equipped for success, using teachers with inadequate training, the wrong skills or insufficient time, all while being deprived of resources.

To their credit, politicians of all political stripes recognize this is a problem.  The most powerful solution, increasing competition, is resisted by well intentioned members of the public that fear a voucher system or privatizing elementary and middle schools.  Parents who feel strongly that public schools are underperforming simply pull their children out of public schools, if they have the means.  Greater accountability is resisted by many powerful teacher’s unions, who dislike merit based pay, the freedom to fire the underperforming and broader testing with better tests.  Greater resources are resisted by the segment of the public that has already given up on the public schools as highly inefficient, by the many parents who have used the free market to route around the inadequacies of public schools by putting their children into private schools.

Happily America is a place where even in the face of strong political opposition new ideas do get tried.  Barack Obama, to his credit, has stated in his book The Audacity of Hope that teacher’s unions are sometimes part of the problem and that they must come to accept merit pay and firing the underperforming (see my book review).  John McCain has suggested that public education should be defined as one in which the public funds for a child’s education should flow to whatever school a parent chooses (Mr. McCain’s education policy).  Although there are significant differences between these policy positions, both are an improvement over where we are at today.  Just as importantly, numerous entrepreneurs are figuring out ways to cost effectively deliver education, inside or outside the four walls of a school.  Examples include edu20.org (a web based learning management system that also allows the sharing of teaching materials and pooling of resources), ck12.org (a website allowing the easy creation and dissemination of textbooks with modular components), edufire.com (a website that makes it easy to find and connect with a paid tutor through web video) and the Equity Project (a New York City charter school that plans to pay its teachers $125,000 plus a bonus based on performance but that also demands they perform; see NY Times article).

Perhaps it is no accident that Walmart, which at $290 million a year is the second largest corporate donor in America, has decided to revise how it makes donations to focus on three areas only: healthcare, environmental sustainability, and education and training for 12 to 30 year olds (see article in the Financial Times).

Steven Pinker does an excellent job at describing some of the scientific research done on morality in a NY Times Magazine article.

Some of the interesting points he makes along the way:

Moral illusions exist: “… our heads can be turned by an aura of sanctity, distracting us from a more objective reckoning of the actions that make people suffer or flourish. It seems we may all be vulnerable to moral illusions the ethical equivalent of the bending lines that trick the eye on cereal boxes and in psychology textbooks.”

Moral decision making is being studied with new tools: “Moral intuitions are being drawn out of people in the lab, on Web sites and in brain scanners, and are being explained with tools from game theory, neuroscience and evolutionary biology.”

Moral decisions can be well defined: “Moralization is a psychological state that can be turned on and off like a switch, and when it is on, a distinctive mind-set commandeers our thinking. This is the mind-set that makes us deem actions immoral (“killing is wrong”), rather than merely disagreeable (“I hate brussels sprouts”), unfashionable (“bell-bottoms are out”) or imprudent (“don’t scratch mosquito bites”). … The first hallmark of moralization is that the rules it invokes are felt to be universal. … The other hallmark is that people feel that those who commit immoral acts deserve to be punished”

Culture wars are shaped by the question: is it a lifestyle choice or immoral?  “Much of our recent social history, including the culture wars between liberals and conservatives, consists of the moralization or amoralization of particular kinds of behavior. Even when people agree that an outcome is desirable, they may disagree on whether it should be treated as a matter of preference and prudence or as a matter of sin and virtue. … Until recently, it was understood that some people didn’t enjoy smoking or avoided it because it was hazardous to their health. But with the discovery of the harmful effects of secondhand smoke, smoking is now treated as immoral. Smokers are ostracized; images of people smoking are censored; and entities touched by smoke are felt to be contaminated (so hotels have not only nonsmoking rooms but nonsmoking floors). … At the same time, many behaviors have been amoralized, switched from moral failings to lifestyle choices. They include divorce, illegitimacy, being a working mother, marijuana use and homosexuality. Many afflictions have been reassigned from payback for bad choices to unlucky misfortunes.”

People match their moralization not just to a sense of harm, but to their own lifestyle.  “We don’t show contempt to the man who fails to change the batteries in his smoke alarms or takes his family on a driving vacation, both of which multiply the risk they will die in an accident. Driving a gas-guzzling Hummer is reprehensible, but driving a gas-guzzling old Volvo is not; eating a Big Mac is unconscionable, but not imported cheese or crème brûlée.”

There are a few themes that are universal to moral concerns across cultures.  “The exact number of themes depends on whether you’re a lumper or a splitter, but Haidt counts five — harm, fairness, community (or group loyalty), authority and purity — and suggests that they are the primary colors of our moral sense. Not only do they keep reappearing in cross-cultural surveys, but each one tugs on the moral intuitions of people in our own culture.”

People start with a moral conclusion based on a feeling, and then move toward a rationalization … and this may be heavily influenced by biology, itself shaped by Darwin’s natural selection.  “The five spheres are good candidates for a periodic table of the moral sense not only because they are ubiquitous but also because they appear to have deep evolutionary roots. The impulse to avoid harm, which gives trolley ponderers the willies when they consider throwing a man off a bridge, can also be found in rhesus monkeys, who go hungry rather than pull a chain that delivers food to them and a shock to another monkey. Respect for authority is clearly related to the pecking orders of dominance and appeasement that are widespread in the animal kingdom. The purity-defilement contrast taps the emotion of disgust that is triggered by potential disease vectors like bodily effluvia, decaying flesh and unconventional forms of meat, and by risky sexual practices like incest.”

Understanding these different moral spheres can help you understand foreigners or people of a different moral persuasion in your own culture.  “Many of the flabbergasting practices in faraway places become more intelligible when you recognize that the same moralizing impulse that Western elites channel toward violations of harm and fairness (our moral obsessions) is channeled elsewhere to violations in the other spheres. Think of the Japanese fear of nonconformity (community), the holy ablutions and dietary restrictions of Hindus and Orthodox Jews (purity), the outrage at insulting the Prophet among Muslims (authority). In the West, we believe that in business and government, fairness should trump community and try to root out nepotism and cronyism. In other parts of the world this is incomprehensible — what heartless creep would favor a perfect stranger over his own brother? … Many bones of contention, like homosexuality, atheism and one-parent families from the right, or racial imbalances, sweatshops and executive pay from the left, reflect different weightings of the spheres. In a large Web survey, Haidt found that liberals put a lopsided moral weight on harm and fairness while playing down group loyalty, authority and purity. Conservatives instead place a moderately high weight on all five. It’s not surprising that each side thinks it is driven by lofty ethical values and that the other side is base and unprincipled.”

Searching for an absolute morality is tough.  “Putting God in charge of morality is one way to solve the problem, of course, but Plato made short work of it 2,400 years ago. Does God have a good reason for designating certain acts as moral and others as immoral? If not — if his dictates are divine whims — why should we take them seriously? Suppose that God commanded us to torture a child. Would that make it all right, or would some other standard give us reasons to resist? And if, on the other hand, God was forced by moral reasons to issue some dictates and not others — if a command to torture a child was never an option — then why not appeal to those reasons directly?  This throws us back to wondering where those reasons could come from, if they are more than just figments of our brains.”

But there are reasons why morality should be adopted by rational creatures.

“One is the prevalence of nonzero-sum games. In many arenas of life, two parties are objectively better off if they both act in a nonselfish way than if each of them acts selfishly. You and I are both better off if we share our surpluses, rescue each other’s children in danger and refrain from shooting at each other, compared with hoarding our surpluses while they rot, letting the other’s child drown while we file our nails or feuding like the Hatfields and McCoys.  …

“The other external support for morality is a feature of rationality itself: that it cannot depend on the egocentric vantage point of the reasoner. … I can’t act as if my interests are special just because I’m me and you’re not, any more than I can persuade you that the spot I am standing on is a special place in the universe just because I happen to be standing on it.  … Not coincidentally, the core of this idea — the interchangeability of perspectives — keeps reappearing in history’s best-thought-through moral philosophies, including the Golden Rule (itself discovered many times); Spinoza’s Viewpoint of Eternity; the Social Contract of Hobbes, Rousseau and Locke; Kant’s Categorical Imperative; and Rawls’s Veil of Ignorance. It also underlies Peter Singer’s theory of the Expanding Circle — the optimistic proposal that our moral sense, though shaped by evolution to overvalue self, kin and clan, can propel us on a path of moral progress, as our reasoning forces us to generalize it to larger and larger circles of sentient beings.”

His conclusions are worth emphasizing:

“At the very least, the science tells us that even when our adversaries’ agenda is most baffling, they may not be amoral psychopaths but in the throes of a moral mind-set that appears to them to be every bit as mandatory and universal as ours does to us. …

“The moral sense, we are learning, is as vulnerable to illusions as the other senses. It is apt to confuse morality per se with purity, status and conformity. It tends to reframe practical problems as moral crusades and thus see their solution in punitive aggression. It imposes taboos that make certain ideas in-discussible. And it has the nasty habit of always putting the self on the side of the angels. … People have shuddered at all kinds of morally irrelevant violations of purity in their culture: touching an untouchable, drinking from the same water fountain as a Negro, allowing Jewish blood to mix with Aryan blood, tolerating sodomy between consenting men. And if our ancestors’ repugnance had carried the day, we never would have had autopsies, vaccinations, blood transfusions, artificial insemination, organ transplants and in vitro fertilization, all of which were denounced as immoral when they were new. …

And finally:

“Our habit of moralizing problems, merging them with intuitions of purity and contamination, and resting content when we feel the right feelings, can get in the way of doing the right thing.”

You can find the entire article here:  http://www.nytimes.com/2008/01/13/magazine/13Psychology-t.html?ei=5088&en=21ff00bccd4e9e91&ex=1357880400&partner=rssnyt&emc=rss&pagewanted=all