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Lazard global offices from Lazard web site

Lazard global offices from Lazard web site

MNGOP senate candidate Mike McFadden, challenging DFL incumbent Sen. Al Franken, is running on his business background as co-CEO of Lazard Middle Market. Since McFadden won’t even answer policy questions, I wonder if he’ll talk about how his parent company ripped off British taxpayers. When the British Conservative Party decided to privatize the Royal Mail, Lazard managed to sneak a huge chunk of the proceeds into its own pocket.

Conservatives of all western nations seem determined to privatize their postal services, not that it ever works, but there’s a chance to pillage for private gain, so can’t pass that up, and maybe Britain’s Conservative Party was feeling left out. So they decided to sell shares in the Royal Mail on the stock market, and they hired Lazard to advise on the pricing of the shares. They also asked some hedge funds to buy up a big bunch of shares and promise to hold them, thereby providing some price stability. One of those hedge funds was another branch of Lazard. Lazard promised not to flip the shares in exchange for buying at the initial price, but the shares nearly doubled in the first couple days (which means they were grossly underpriced)*, and if you can’t guess what happened next, you really need to work on your cynicism regarding big financial firms. Lazard flipped the shares, selling everything in the first couple days, not merely after promising not to, but after doing its best to get the government to underprice the shares.

Margaret Hodge, chair of the parliamentary public accounts committee (PAC), said Lazard “made a killing at the expense of the ordinary taxpayer that lost £750m on day one” of Royal Mail’s London Stock Exchange debut. [That’s roughly $1.5 billion]
An official report by the National Audit Office last month found that the government decided against increasing the flotation price of Royal Mail beyond 330p-a-share because of warnings from Lazard’s corporate advisory arm, Lazard & Co, that City funds would be put off.
On the day of the flotation, on 11 October, the shares rocketed 38% due to phenomenal demand from the City and public. They gained £750m in value in the biggest one-day rise in a privatisation since British Airways in 1987. The shares, which continued to rise to a peak of 615p, are now trading at 530p.



The discomfort of change

by Eric Ferguson on September 7, 2011 · 5 comments

UPDATE: A different way of explaining why facts sometimes don’t matter

I thought I’d take a couple paragraphs and completely revise the way we understand the American political spectrum.

Well, that sounded unduly grandiose. Let’s make it more than couple paragraphs. And maybe instead of revising all understanding, I’ll share a thought that’s well short of a theory. Maybe a hypothesis. It’s something I’m finding useful for understanding for some aspects of modern politics that don’t immediately make sense or might even seem contradictory in the usual right-center-left/conservative-moderate-liberal way.

For example, we might think of conservatism like William Buckley’s explanation of conservatism as standing athwart history and saying “stop!” Conservatism is about slowing the pace of change or stopping it altogether, making only such minimal changes as are necessary. However, how does that explain conservatives seeking radical changes like abolishing the right to organize or privatizing Social Security? Some on the left side of the political spectrum try sometimes, pet peeve alert, to say conservatives aren’t really conservative, or some policy isn’t really conservative. Please stop. Conservatism is whatever conservatives believe, and part of what I’m trying to do is figure it out as it is, not as it used to be defined, and looked at a different way, that they seek radical changes makes sense.

Or to put it another way, I think I’ve hit upon a way explaining how the modern tea parties could name themselves after people who were, quite literally, revolutionaries.
Another contradiction we keep trying to resolve is between fact and conservative belief. It seems like facts don’t matter. I don’t mean they don’t know the facts, or that we always get them right. We get frustrated that the right is presumably as smart as we are, presumably as educated, and they live in the same world with the same evidence, yet is seems in instance after instance the facts are irrelevant, whether it’s the belief Obama is Muslim, the founding fathers wanted essentially a Christian theocracy, global warming and evolution are hoaxes, or Nazis were leftists. Debunkings seem pointless, and a mountain of evidence one way can’t stand up against one ignorant but certain blowhard. Why?

And why doesn’t the Republican coalition come apart? I’m repeating what’s been oft-observed to say there are essentially three groups among Republicans: social conservatives, economic libertarians or corporatists, and defense hawks. They have issues that don’t seem inherently to go together, yet Republicans whose interest is clearly in one area stick by the other two, finding a way to get past tensions. What do they have in common?

There’s something similar on the left, in that the Democratic Party is a coalition of groups that have disparate issues that not only don’t consistently connect to each other, but once in a while seem at odds. Organized labor, environmentalists, immigrants, etc., keep winding up allied despite having conflicts on individual issues, like the Keystone XL pipeline pitting environmentalists against creating construction jobs for union members. What holds the left together?

I can even go back to Social Security privatizing, pushed by conservatives who are supposedly against change. We on the left are supposed to be big on changing everything, so why are we against privatization?

My notion is that the explanation is change, or rather the degree of comfort or discomfort with change. I’ve invented new terms to try to define the comfort/discomfort. Let me also add I’m not at all clear people are clumped into a few spots, or spread evenly across the spectrum. I’m guessing clumped, but there’s no data to back that up. Just seems clumping helps explain the sharp ideological division today. These new terms:

  • Traditionalist: finds change discomforting or even threatening, wants to stop it or even roll it back to the way things used to be. Whether the perception of the way things used to be is accurate is irrelevant.
  • Modernist: comfortable with change and wanting more of it.
  • Modern: A modern is comfortable with the modern world and a moderate pace of change, resistant to either being pushed forward too fast or being pulled back.

    I completely admit “modern” is committing the grammatical indiscretion of using an adjective as a noun. I’m groping for better terminology. Though it roughly corresponds to “centrist” or “moderate”, I’m trying to use new terms for a different model.

    Once I started looking using this modernist-traditionalist spectrum, a few things started to make more sense, like the reactions to the election of the first non-white president. It always struck me as too pat to explain the right as being racist, and the left as Obama being a blank slate his supporters filled in from their own hopes and values.

    Conservatives who refuse to believe Obama is native born and Christian actually have been willing to back black conservatives. The blacks who’ve garnered conservative support seem to be the likes of Allen West or Alan Keys, and I doubt it’s the homophonic first names. Other than their skin color, they represent going back to a time when everyone was Christian, everyone was straight, liberals didn’t exist, etc. Obama, whether he’s regarded as liberal, or a moderate, and even when he buys into some conservative frames, is no conservative. So the reaction to Obama wasn’t just he’s some black guy, but that his election indicated the country is changing very rapidly. The reaction from traditionalists seems purely from the gut and divorced from facts because that’s exactly what’s going on. Traditionalists aren’t thinking in terms of “I hate black guys”, but in terms of their place in the world being profoundly challenged.

    Likewise, I’m suggesting modernists responded on a gut level. I reject the notion Obama’s supporters projected themselves onto Obama because it wasn’t Obama’s specific policies, even misunderstandings of his policies, that they responded to. It was the profound change he represented. His election suggested to modernists that the world is changing rapidly, but this was a good thing. This helps explain the disappointment many Obama supporters feel, because it wasn’t the specific policies, but the fact change is stopped or much slower than expected. This I suggest is why so much disappointment has not been amenable to lists of accomplishments.

    Let’s return to the question of why the left, which wants change, is against drastic changes in Social Security, while the right, which should want only the most necessary tweaks to an 80-year old program, wants drastic changes. In this traditionalist-modernist model, we hear traditionalists bemoan how the country has changed, and they sometimes cite the New Deal as when it all started to go wrong, or at least more wrong. Returning America to its traditional condition requires undoing the New Deal. The paragon of the New Deal is Social Security, so if you’re to undo the New Deal, you need to kill off Social Security, and I do consider the drive to privatize as an attempt to kill it. From a traditionalist point of view, killing Social Security, even if it’s been established 80 years, even if it’s working well, makes sense.

    On the left, we hate changing Social Security, even though it’s been around a long time. Aside from policy prescriptions, I suggest that to modernists, Social Security is a powerful symbol of modernization. Probably the New Deal can be understood that way. So we can have modernists responding to change as a threat to modernization — in other words, a threat that change will stop and be reversed.

    If you knew that traditionalists want to go back to before the New Deal, and that modernists see rolling back to before the New Deal as a threat to modernization, you could predict who would be on which side over privatizing Social Security. You could also predict that moderns would side with the modernists on this one, because the program is so long established, the changes suggested by modernists are small (like lifting the income cap on the tax) while the changes proposed by traditionalists are radical.

    For another example, take an environmental issue — any environmental issue. Environmentalists used to be called “conservationists”, and it’s no coincidence “conservation” and “conservative” have a common root. So shouldn’t conservatives be in favor of environmental preservation, and shouldn’t progressives want progress like draining the swamp to plant a field and cutting the trees to build a building? That’s progress, right? Yet environmentalists are almost always on the left, and anti-environmentalists are on the right. I was struck by something said by anti-Keystone XL activists from Texas and Nebraska during a Netroots panel on environmentalism in red states. Even though they could get conservatives, even some tea partiers, to oppose the pipeline, they at all costs avoided saying the word “environment”. The word was so toxic, it could break up the pipeline opposition. Why?

    Think about what changes. If we keep doing what we’ve always done, what we’re used to and maybe even assume is a right, something outside us has to change, either nature or other people. If we want to keep our clean air, clean water, and pretty scenery, then we have to change. The changes could be big, like replacing fuels. Now which side will be taken by traditionalists and which by modernists? Traditionalists don’t have anything against an environment that doesn’t make them sick, and I don’t buy for a second they really care about incandescent light bulbs. They’re reacting to being made to change. Light bulbs are controversial because they feel they’re being told how to live their lives right down to how they run their own households. Modernists presumably find adapting to new light bulbs an inconvenience and recycling is extra trouble, but since change is generally a good thing, being told, “if you want to preserve the natural environment, you’ll have to change some things” is no challenge to their worldview. It’s “we’re making positive changes” versus “you’re imposing unwanted changes on me”.

    This I suggest is where denialism is coming from, at least science denial. It’s why traditionalists refuse to believe global warming, but accept the internet runs on computers they never see doing things they don’t understand. The internet’s existence doesn’t challenge tradition (some content is a cultural challenge, so the content may be restricted or denied, but not that it’s there) but accepting environmental science implies not being able to burn all we want as we’ve always done, destroy wild land to do whatever we want with it as we’ve always done, etc. A modernist’s understanding of the world or his culture isn’t challenged, so there’s a greater willingness to accept the implications of accepting what science says. If science was usually telling us we have things right, and proposed changes are actually bad ideas, we might see science denial reverse. Hard to prove that without science getting on the side of stopping change, but it’s why I don’t assume the right is more inclined to denialism than we on the left. I leave open the possibility we just aren’t having our core values challenged.

    I’m not suggesting that financial interest, religious belief, or group identity don’t play a role. I’m suggesting that comfort or discomfort with change underlies these.

    I’m also suggesting the pace of change explains the seeming growth of denialism, the seeming decrease in the relevancy of facts, and the bitterness of divisions in modern America. America has experienced rapid change since European colonists started arriving, but the pace has varied. It’s been particularly rapid over the last couple decades, when the partisan divide has gotten so intense, and which I consider a symptom as well as a cause — call it a feedback. I’m not just referring to technological change, though obviously that’s part of it. Social change has been rapid, and the “great recession” or “lesser depression” has caused serious economic change, threatening if not devastating to many people.

    So getting back to the earlier question of what holds each party’s coalition together, what the Republican groups have in common is they’re trying to keep things as they are or get back to how they used to be, when everyone was a social conservative, business had no restraints, and the outside wanted to destroy us. What keeps the Democratic groups together is they’re all trying to make changes against traditionalist opposition, whether it’s the expansion of women’s rights, the expansion of minority rights, the restriction of corporate power, and so on.

    One more question: does this apply just in the United States? My thinking is this comfort or discomfort with change is coming from human psychology, culturally influenced but not culturally specific. So if it’s right, then it should apply outside the US.

    To close (well, pending the post-posting updates I have a feeling will come, maybe after commenters ask interesting questions I didn’t anticipate) I want to acknowledge two things. One is that there was nothing in here about how to apply this traditionalist-modern-modernist idea when actually talking to someone. I haven’t gotten that far, though I’ll guess that since I put myself in the modernist end (keep in mind I’m referring to tendencies and assuming we all move around the spectrum a bit), figuring out how to talk to modernists will come easiest.

    Second, it’s completely possible I picked examples that fit the theory. The way to test this is to apply it to an issue where I don’t know who is on what side, and see if I can correctly predict who will be on which side. The problem with coming up with an issue where I know enough to evaluate it but don’t know who is on what side is I hope obvious.

    Maybe this is a better way of explaining why sometimes correcting factual errors makes no difference. Suppose you’re talking to a traditionalist who doesn’t believe global warming is real. I don’t mean “denier” in the sense of you happen to be talking to a leading denier like James Inhofe or someone paid to disbelieve by some fossil fuel funded think tank. Just somebody, who makes the point that the Medieval Warm Period was natural. The implication is we aren’t causing modern global warming, so we can’t and shouldn’t do anything about it. You correct the mistake by pointing out that the Medieval Warm Period was mostly just Europe, and the global average didn’t rise much, not nearly as much as we’ve experienced. You probably already know this person won’t change his mind, even after getting correct information. Why?

    Because the correct fact doesn’t change the core problem: accepting global warming is man-made requires accepting the necessary changes to stop it. Whether it’s changing how a business operates or changing how a household is run, changes have to be made, and these are changes his worldview says are wrong. Having the fact right or wrong doesn’t affect the threat of change, and in this model, that’s why the traditionalist won’t change his mind. If this is right, the modernist with the same misunderstanding on this specific point was probably ready to accept the need for changes anyway, so there’s no threat in this factual correction and it might even be reinforcing. A modern is unlikely to be locked into a denier position anyway, so while they have probably heard other misinformation, they should be persuadable if that information is corrected because there’s no threat to their way of life if global warming is real, or at least a worldview isn’t threatened, even if they really prefer incandescent lights and don’t like being told to change light bulbs.


  • Nothing is easier than solving a problem on the backs of people who are poor, or people who are powerless, or don’t have lobbyists, or don’t have clout. I don’t think that’s particularly courageous.

    UPDATE: the quote is about 46 minutes in.