Naked Capitalism: Milking the Poor

Notes for an Elite Playbook: The Self-Licking Ice Cream Cone

By Lambert Strether of Corrente.

Recently, in “Control Fraud and For-Profit “Universities” (Et Tu, Bill Clinton?)” I took Bill Blacks formula for accounting control fraud, modified it, and showed how the modification could be used to describe the business practices of two for-profit universities,

The “Self-Licking Ice Cream Cone” Defined

The phrase “self-licking ice cream cone” was first used by S. Pete Worden, in the Proceedings of the 7th Cambridge Workshop on Cool stars, stellar systems, and the sun (!), 1992, who uses the Space Shuttle as an example:

“The Self-Licking Ice Cream Cone”

Since NASA effectively works for the most porkish part of Congress, it is not surprising that their programs are designed to maximize and perpetuate jobs programs in key Congressional districts. The Space Shuttle-Space Station is an outrageous example. Almost two-thirds of NASA’s budget is tied up in this self-licking program. The Shuttle is an unbelievably costly was to get to space at $1 billion a pop. The Space Station is a silly design. Yet, this Station is designed so it can only be built by the Shuttle and the Shuttle is the only way to construct the Station. Furthermore, the Shuttle has to be “improved” to support the Station with a new solid rocket motor which is to be built you guessed it in the District of the Chairman of the House Appropriations Committee. Since there are tens of thousands of jobs tied up in these programs and most of NASA’s budget as well, there is not only no money to get out of this endless do-loop, there are positive political pressures to make sure we don’t get out.

Ben Brody gives a useful definition and a second example in his article, “The definitive glossary of modern US military slang” (hat tip, Another Word for It):

A military doctrine or political process that appears to exist in order to justify its own existence[1], often producing irrelevant indicators of its own success. For example, continually releasing figures on the amount of Taliban weapons seized, as if there were a finite supply of such weapons. While seizing the weapons, soldiers raid Afghan villages, enraging the residents and legitimizing the Taliban’s cause.

Note that both writers begin with a sense of puzzlement and outrage: Self-Licking Ice Cream Cones (SLICCs) lack justification, by definition, yet exist. Now let’s take a moment to critique both Brody’s definition and Worden’s usage. (I know it seems churlish to critique the inventor of a term for his own usage of it, but the interests of science are paramount.)

Brody’s definition is both too broad and too shallow. It’s too broad, because what system — especially a political and/or economic system — does not appear to exist in order to justify its own existence? But it’s too shallow, since although Brody presents what I would call a correct fact set, he doesn’t make obvious conclusion explicit. He writes: “Soldiers raid Afghan villages, enraging the residents and legitimizing the Taliban’s cause,” but he doesn’t conclude that the raids are creating more Taliban (creating more raids (creating more Taliban (….)), in the iterative process Chalmers Johnson called blowback, and is in fact a feedback loop. However, Brody does notice the corrupt — not “irrelevant” — metrics[2] that instrument the system: At each turn round the loop, we capture more weapons, so we must be succeeding, right? (Brody also limits usage of the term to the military, which I do not propose to do.)

Worden’s usage includes the loop that Brody misses; he calls it, in good scientific FORTRAN style, a “do loop.” But Worden’s terminology is revealing, since a “do loop” is not necessarily a feedback loop, as Brody’s is. A system with feedback loops inserts its results back into itself; it’s recursive (like the negative feedback loop that connects a thermostat to a furnace, or the positive feedback of a squealing microphone or a Minskyian “deviation amplifying system”). Worden’s implicit definition, then, is also too broad and too shallow. Too broad (like Brody’s) because the world is full of systems that go round and round and round, stable, because of negative feedback, like my furnace (hopefully). And too shallow because, absent the notion of positive feedback, we can’t model the kind of feedback that can make a bad situation worse (and then worse (and then worse (….))).

So I would like to propose a different definition:

“Solutions” that amplify, to a rentier’s profit, the very “problem” they claim to solve.

This approach has the merit of including the feedback loop but making it positive (“amplify”), connoting false justification (via the irony quotes shrouding solutions, and problems, but including a metric — profit![3] — that’s far more appropriate than weapons counts or jobs, which are mere proxies for profit. In addition, I say “rentier”[4] since, again by definition, a SLICC is about business and not industry; hence the false justifications. A business model that sold bottled water to people after polluting their wells would be the mother of all SLICCs.

Ferguson as a Self-Licking Ice Cream Cones

The ills of the Ferguson law enforcement system are well-known[5], but let’s take a quick look at them through the SLICC frame. (Quartz has a fine article “by the numbers.”) NPR summarizes:

A new report released the week after 18-year old Michael Brown was shot and killed in Ferguson helps explain why. ArchCity Defenders, a St. Louis-area public defender group, says in its report that more than half the courts in St. Louis County engage in the “illegal and harmful practices” of charging high court fines and fees on nonviolent offenses like traffic violations — and then arresting people when they don’t pay. The report singles out courts in three communities, including Ferguson.

Last year, Ferguson collected $2.6 million in court fines and fees. It was the city’s second-biggest source of income of the $20 million it collected in revenues.

Earlier this year, in the series Guilty and Charged, NPR’s investigations unit found that the practices in Ferguson are common across the country. The series reported that nationwide, the costs of the justice system are billed increasingly to defendants and offenders, and that this creates harsher treatment of the poor. Because people with money can pay their hundreds or thousands of dollars in fines and fees right away, they are usually done with the court system.

People who can’t pay their fines and fees go on payment plans. But then there are extra fees, sometimes interest — 12 percent on felonies in Washington state — and, if poor people fall behind on payments, they may go to jail. Courts often ignore laws, Supreme Court rulings and protections that outlaw the equivalent of debtors prisons.

In Ferguson, Harvey says going to court creates more anger. The system, he says, favors people who can hire a lawyer. But poorer defendants simply take a guilty plea.

“And then if you can’t pay all the fines at once, they put you on a pay docket, and that just means [you] come to the court once a month and pay a certain dollar amount or explain why you haven’t paid,” Harvey says.

But the ticket may be in a far-away court that’s not easy to get to in a region with sometimes spotty public transportation. If someone doesn’t pay, a warrant can be issued for their arrest.

Jeff Smith, an assistant professor at the New School and a former Missouri state senator from St. Louis, says Ferguson “facilitates a debtors prison” because of the high number of arrest warrants that get issued when people don’t pay. When people go to jail, they sometimes lose their jobs.

They get caught in this downward spiral, and it happens to a lot of people. This stuff accumulates,” he says.

“It’s a risk to go to the store,” says [Better Family Life CEO] “Outside of that community, it’s a risk to go to any educational institution, to get a job, to go for job interviews. Especially since most of the jobs are maybe 5 to 10 miles away. So some of them just don’t even try anymore.”

Morther Jones describes the same dynamic:

Court fines for minor infractions tend to snowball. For example, drivers accumulate points for speeding, rolling through stop signs, or driving without insurance. You can pay to wipe your record, which is pricey. If you can’t afford to, and rack up enough points, your license will be suspended and your insurance costs will probably jump. Need to get to work? If you’re caught driving with a suspended license, your court fines increase, you gain more points, and your suspension is lengthened. That’s how rolling through a stop sign could end up costing you your job, messing up your degree plans, and more.

So, the problem — or “problem” — is revenue, right? Well, no, not exactly. Emerson Electric is a corporation with $24 billion in revenue, and its property tax valuation is “rock bottom.” And the solution — or “solution” is turning law enforcement into a business, just Reaon’s Robert Poole advocated, right? How’s that working out?

And in the middle — between the “problem” and the “solution” — we’ve got the “amplification,” the positive feedback, where the “solution” makes the “problem” worse (the “snowball,” as Mother Jones calls it; the “downward spiral,” as NPR has it). I can see several:

1) The downward spiral of those arrested: They pay interest on their fines, and if they fail to make a payment, they’re arrested and imprisoned, from which they can escape only by making more payments;

2) The downward spiral of the community: People can’t risk “going to the store,” let alone getting a job or an education. Even leaving the human element aside, I can’t imagine that’s good for property and hence property taxes, or for sales taxes (which Ferguson apparently has).

3) The downward spiral of the municipality: And then, of course, there’s the Michael Brown shooting and subsequent events, which, again leaving the human element aside, can’t be good for revenues either (absent some future real estate development along West Florissant, and it would very interesting to know which insiders know which properties, if any, are up for that).

Given that Ferguson was turned by its local elites into a giant debtors prison with “law enforcement” transformed into a collection agency — and with the debtors disproportionately black — I don’t see how policymakers could have imagined that anything other than what happened, would happen. An explosion is often the outcome of a feedback system in runaway mode.

Oh, and the rentiers, and that pesky metric, profit. Forbes:

According to its 2014 Comprehensive Annual Financial Report (CAFR), the 21,000-person city has $25.9 million in total debt, or well over $1,000 per resident. About $3 million of this came from building an aquatic park; another $6.2 million is for tax increment financing bonds on a private mixed-use redevelopment project. The city also gave employees 6% raises that year, and like many others, grants defined-benefit pensions to retirees. … Money was spent on a boondoggle here and a subsidy there; employee pay raises were granted in an era of private sector wage stagnation; and the city spent over 5% of its $17.8 million budget on interest.

My point here is merely to show that Ferguson fits my definition of a SLICC — “to a rentier’s profit” — and not to quarrel with or justify the funding decisions of the Ferguson town government. That said, Emerson Electric is mysteriously absent from the Forbes discussion, and the “boondoggles” look like the sort of boondoggles any desperate small town makes, in the attempt to right itself; no worse than anywhere else. Moreover, the 2008 financial collapse is also mysteriously absent. Bloomberg:

Violent unrest that captured global attention is revealing Ferguson, Missouri, as a city still struggling to mend its finances more than five years after the end of the longest U.S. recession since the 1930s. .. Ferguson acknowledged in its budget last year that “the recovery has been extraordinarily slow” and it has struggled to collect revenue. After 2007, the city lost almost $1.5 million annually in sales taxes and hasn’t fully recovered, according to the document.

So, whatever a solution for Ferguson might be, we can be sure that the “solution” is not law enforcement for profit.

Conclusion and Exhortation

Readers, I wonder if you can give more examples of Self-Licking Ice Cream Cones? And more importantly, can you refine the definition? Are Accounting Control Fraud and Self-Licking Ice Cream Cones really commensurate?

Even more importantly, can you propose other plays? I think reverse engineering a playbook out of observed elite behavior would be very useful; we might be able to skate, as it were, where the hockey puck is going to be, instead of where it is.

NOTES

[1] Wikipedia’s definition is similar and has similar weaknesses, besides being even more teleological: “A self-perpetuating system that has no purpose other than to sustain itself.”

[2] Tarak Barkawi in Al Jazeera:

Neoliberalism, with its audit culture and fetish for short term quantitative indicators, is a mass production facility for self-licking cones. Everywhere bottom line measures of “efficiency” shape the activities of organisations and determine career advancement, selecting the kind of people and personalities who prosper in the system.

[3] The archetypal play — often cited during the dot.com era — could be South Park’s famous “Underpants Gnomes” (non-) business plan. Consider this a template:

The process, as explained by thee gnomes goes something like this.

Step 1. Collect underpants.

Step 2. ?????

Step 3. PROFIT

Of course, our elites tend to have a much firmer grasp on Step 2, and its substeps, than the Underpants Gnomes do; the Playbook is there to flesh that part out (besides substituting some good for the Gnomes’ primitive accumulation of underpants.

[4] Rentier: “[A] person living on income from property or investments.” Both of the examples I give below involve state action. Holders of government bonds are rentiers by definition, and benefit at least from municipal bonds in Ferguson, as well as from conflict investment.

[5] Marginal Revolution, to their credit, was strong on this issue: see “Ferguson and the Modern Debtor’s Prison.” However, it would have been nice to have some acknowledgement of how libertarians created the ideological justifications for the system whose outcomes they now decry.

[6] Autocoprophagous gets at the same idea, but as a word, it’s just too fancy. I myself would go so far as to define the creation of SLICCs as the very definition of corruption[6] — far more so than cash in a white envelope, or even a job for a family member.

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