Thursday, March 31, 2011

Obama's Graft and the Woeful State of Consumer Arbitration

I've occasionally cited industrial investment in party politics as the primary motivator in party competition (a point I've largely refined from my reading of Thomas Ferguson: Golden Rule: The Investment Theory of Party Competition...). Yves Smith agrees - its donations that manage the presidential policy positions:
"Obama needs to raise an estimated $1 billion to win the 2012 election. He’s moved further and further to the right over the course of his Presidency. Why is he going to change gears and alienate one of his biggest donor groups by appointing Warren?"
Also, Yves points out to these startling statistics on the bias of consumer arbitration:
"An example we cited a few days ago, that of the settlement reached between the Minnesota attorney general and the National Arbitration Forum, illustrates this point. The [NAF] was so successful in stacking the deck on mandatory arbitrations in favor of its clients, big busineses, via the roster of arbitrators it chose that consumers won in only 4% of the cases." Yves Smith: Why Liberals Are Lame (Part 2)
Anyone who knows about arbitration knows that it is an inherently biased structure - public oversight is negligible and arbitrator bias is kept in check in-house (which means that the 'house' wins, whoever that may be). On the other hand, arbitrage has a balancing effect between organizations that are able to have fair negotiations to determine the arbitrator firm or individual arbitrators which will form their collective cycle. For instance, many labor contracts use private arbitrators, and organized labor negotiations often allow for this kind of balance.

But when the conflict is between unorganized consumers and efficient capitalist structures - the contracts that the latter write are non-negotiable, and they reveal the balance of the underlying market leverage 96% weighted against consumers. Its worth noting that this is a private system - it'd be interesting to compare similar bias in dispute resolution insofar as it manifests in the government.

Back to the graft: the Obama administration has disciplined and "corralled" progressive lobbies in order to maintain control (and the aforementioned investment flow):

"Soon after the election, the Administration began corralling the big liberal DC interest groups into a variety of organizations and communication networks through which they telegraphed their wishes — into a virtual veal pen.  The 8:45 am morning call co-hosted by the "liberal" Center for American Progress, Unity 09, and Common Purpose are just a few of the overt ways that the White House controls its left flank and maintains discipline.  


"If there is going to be a serious progressive movement in this country capable of standing up for health care against an industry that spends $1.4 million a day on lobbying, we can’t just look to the members of the Progressive Caucus and say "hey, you, get something done."  They need cover.  They need to know that they will be supported.  And people like Van Jones who have given their lives to causes we say we value like prison reform and environmental advocacy need to know that they will be defended, and not handed over to Glenn Beck as an acceptable casualty in the battle for K-Street dollars." Jane Hamsher: Van Jones: A Moment of Truth For Liberal Institutions in the Veal Pen
(HT:Francois T: comment on "Why Liberals are Lame (Part 2)")

Read more: Yves Smith: Why Liberals Are Lame (Part 2)

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