The Flaws of Capitalism

The major flaw of capitalism, that it has no limit of even a brake on greed, I have pointed out before, but there are others. Here are a few.

It is claimed that capitalism provides the most efficient distribution of resources. That may or may not be true, but capitalism sure doesn’t do diddly-squat for the distribution of production wastes. There are a spare few examples in which capitalism did have an effect upon waste. A steel company was drawing some heat from the amount of waste they were producing. This waste stemmed from the “pickling acid” (actually hydrochloric acid) used to reduce corrosion of newly poured iron ingots. The acid “passivated” the iron but it also dissolved a bit of the iron and so “wore out” its ability to perform that task. They were dumping that liquid waste, some legally, other not so much and were drawing heat from the federal government (too much regulation, my ass). A consultant told them that their “spent” pickling acid contained a great deal of iron(III) chloride which could be sold on the market and much of the unused acid could be recycled. The sale of the iron(III) chloride and reuse of the acid reclaimed paid for the processing and, in fact, made a profit. Ta da! A capitalism success story. Unfortunately such stories are rare. Dumping of waste is the lazy and cost effective way to deal with it and has been for a very long time.

A capitalism horror story involved a battery recycling plant near Oakland, CA. This plant took car batteries, broke them down, and recycled the lead in them to make new car batteries. Sounds cool, no? Well, part of the process involved emptying the old batters of the fluid in them which was heavily acidic (sulphuric acid, stronger even than hydrochloric acid) and had a great deal of dissolved lead in it as well. So, how did they dispose of this nasty liquid? They poured out on a bare patch of ground out back behind their buildings . . . for decades. Evidence of this waste process was discovered many tens of miles (hundreds even) away as the ground water system spread it out to cover a large part of central California. We do not possess the resources or the techniques to clean this up. The company? Oh, they declared bankruptcy to avoid any liability on the part of those who did the deed.

Basically, capitalism abuses “the commons,” that is those things we hold in common: the air, our waterways, the ground and all of the systems operating therein. Capitalists pollute it, we clean it up. (We are still spending tax money to clean up Superfund sites from decades ago.)

Capitalism does a lousy job of distributing wages. As a prime example, CEOs in the 1950’s made 20-30 times what their average worker made. Today, more than a few CEO’s make 300-400X what their average worker makes. Wow, did CEOs increase productivity, knowledge, customer satisfaction, anything that much? Nope. If one could track CEO productivity (and that would be hard to do), I am sure that CEO salaries have rocketed ahead of any productivity measurement you could some up with. How is this so? It is so because the CEOs packed their own boards of trustees with friendly faces and when the issue of “CEO salary” came up they vote for “raise” every damned time. Some of these CEOs return the favor by serving on their friend’s boards so they could get unwarranted raises, too. Unwarranted salaries paid out to CEOs doesn’t end up in shareholder’s pockets, so how could this happen? Capitalism basically doesn’t care.

In this country we have come to view capitalism as a thing in itself, rather than a tool we wield. We think “it” does this and “it” does that when it is we who do everything. It is very, very (very) clear that unregulated capitalism is disastrous. So, why does one of our two major political parties campaign all of the time on a “less regulation” is better and “no regulation” is best platform? Shouldn’t we be searching for the best regulation and if not that, better regulation? Why would capitalists campaign against the thing that makes capitalism viable? Oh, it’s the greed thing again. Even rabid anti-socialist politicians will vote for corporate socialism almost every time and the reason they do? They are being paid generously, by capitalists, to do so. Apparently politics doesn’t limit greed either.

Greed, Capitalism, and Fixing It

I will start by quoting myself:

The Achilles Heel of capitalism is that there is no limit to greed. (Me)

This is hardly a novel position. As evidence I offer:

“No bound is set on riches for men” (Solon)

“Money is like sea water: The more you drink, the thirstier you get.” (a Roman proverb)

“Whoever loves money never has money enough; whoever loves wealth is never satisfied with his income.” (Ecclesiastes 5:10)

The problem at the core of this problem is that wealth translates into political power. People with great wealth can use their wealth to buy political attention to their needs. Those needs always address their interests, the primary of which is maintaining and expanding their wealth.

So the big question is: “How do we fix this flaw” in the grand American experiment in self-governance? If greed results in the collapse of our society, as history shows that it will, how do we address it?

At first I was thinking of a bottom-up solution constructed of social pressures. One idea was that when people earn certain levels of wealth we would slap titles on them. Say, one a millionaire we would refer tot hem with the title of A Really Big Deal or Fat Cat. As their wealth increased with would come up with more and more disparaging titles that we would use publicly. Maybe at the ten million dollar wealth plateau, they would be Rich Assholes. At the Jeff Bezos level, maybe Filthy Rich Money-grubbing Obnoxious Asshole.

I have decided this won’t work as people have the attention spans of gnats nowadays and would be distracted by Brittany Spears news or something equally irrelevant, and stop following through.

There is a method that has worked for us and could work again and that is progressive taxation. During World War 2 the highest income tax bracket was close to 100%. Now, to clarify, that taxation rate was on earnings over $100,000 dollars when the average worker was making about $1885 per year (1942 figure). So, two points: this tax rate didn’t kick in until one had made $100,000 and only applied to the money earned after that $100,000 was earned. And $100,000 represented 53 times what the average worker made!

We generally craft tax brackets so there are small jumps in the tax rate between any two categories but that isn’t necessary. It could be 39% and then after $250,000 it could jump to 95%.

The consequences of doing this were made obvious when we had this system deployed. One consequence was that CEO salaries were about 20 time that of the average worker in their corporations instead of the 250-350 times we see now. And, instead of paying their CEOs ever more money, stock options, etc. They were treated with the trappings, or as they called them the perquisites, of their offices. They had lavishly decorated offices, with very expensive art work on the walls. They had company cars and trips on company airplanes, clothing budgets, and on and on. Many of these are now necessary to be declared as “income” for tax purposes, but they were not necessarily back then.

Of course to change the tax codes along these lines we would need to take back control of our Congress, but no matter what solution we come up with that task will be at the core, otherwise the wealth of the rich will result in laws undermining any system we set up.

And as part of the results of that “natural experiment” in economics that were our progressive tax rates after WW2, we found out that American corporations could be lead by leaders to become pre-eminent in the world without making 200 times or even 50 times, what their average worker made. CEOs have gamed the system to their benefit, not their corporations and not ours.

And, as you might not know, President Franklin Roosevelt brought the “captains of industry” and their ilk to the White House to strong arm them into accepting the high marginal tax rates with little to no protest using the scare of the Socialist Party of America, then one of the the largest socialist organizations in the world, and Labor Unions to make his point. They had to be given something otherwise labor chaos would result. (No business type likes labor chaos.).

Of course, priority one for the fat cats after WW2 was the destruction of the Socialist Party of America, which ceased operations on December 31, 1972 (and not because their goals had been met—Note another Socialist party rose from the ashes, in 1973, but it was and still is much smaller and almost entirely without political influence). And, as you probably know, union jobs in the US have shrunk from about a third in the 1950’s to around 7% today. This is due to a concerted effort on the part of the rich to de-fang labor unions, Our neighbor Canada still has the same level of union jobs as they had in the 1950’s, likewise about 33%, but they had no organized political effort to disempower their unions.

If We are Going to Pass Anti-blasphemy Laws We Should Know What Blasphemy Is

A number of high ranking officials in the Muslim world, most often it seems the President of Pakistan, have been suggesting that western nations really, really should pass anti-blasphemy laws.

So what is blasphemy?

“Blasphemy is an insult that shows contempt, disrespect, or lack of reverence concerning a deity, a sacred object, or something considered inviolable. Some religions consider blasphemy to be a religious crime.” (Wikipedia)

But, you see, blasphemy is a religious crime, specific to each religion. You cannot generalize it. The churches themselves do not vehemently insist that you cannot blaspheme another religion. You can only blaspheme your own religion, they say. If you do try to generalize blasphemy so that it applies to all religions . . .
• Any Catholic who demeans a Protestant religion could be charged with blasphemy.
•  Any Hindu who demeans Muslims could be charged with blasphemy.
•  Any Muslim who demeans Hindus could be charged with blasphemy.
•  Any evangelical who bad mouths the Pope could be charged with blasphemy.
•  Any movie actor swearing according to script could be charged with blasphemy.
•  Political cartoonists could be charged with blasphemy on an almost daily basis.
•  Comedians could be charged with blasphemy on an almost daily basis.
•  Any one putting pineapple on a pizza could be charged with blasphemy.

Well, maybe not that last one.

Would we really want our courts bogged down with such cases? Plus, consider the complications. Would jurors be asked what their religion was during voire dire? (If so, what happens to the Constitutional “no religious test for public office/position” provision?) Would public defenders have to be the “right religion?” What would happen if the “church” of the religion so offended disagrees with the decision of our secular courts?

Think about what the standards for “showing a lack of respect” for a religion might entail. Where I come from, if you want respect, you have to earn it. Such laws would apparently give respect to all forms of worship (even worshipping Satan or the Flying Spaghetti Monster?) whether it has been earned or not.

Can you imagine the religious brought into court for demeaning the worship of Satan? (Oh, please, please, please let it happen.)

I have no problem if religions want to chastise or punish members of their churches for such infractions. But when they try to impose their rules on the rest of us, that is where I draw the line. What’s next? Country clubs trying to impose their dress codes on the rest of the nation? Book clubs deciding what we can and cannot read?

I think these people have become a bit too full of themselves. I do know that for officials like the President of Pakistan, that this is a form of virtue signaling, but some less observant think he is serious in his demands.

The Massage Parlor Shootings

It seems that everyone has some kind of opinion about why these killings were made. Waiting for the shooter to be interviewed and the investigation to be complete is apparently too much to ask. By the time we find out what his motivations were, we will have moved on to some new atrocity or other.

I am placing my bet right now, however. I am betting that that young man’s training occurred at the toxic intersection of white privilege and evangelical Christianity. Both “communities” prey on young men, distorting whatever values that might have had. One pushes hard on white supremacy, the other on male supremacy. Both blame others for any problems they experience. Both demonize “others” matter-of-factly.

Why do we keep doing this to ourselves and then protect the right to do so as something near sacred?

The Anti-American Big Corporations

When it became clear to corporate leaders that the rest of the manufacturing world was catching up, what was their response? If you believed their rhetoric, it would have been to double down on American workers. These leaders would have reached out to labor unions and partnered with them to devise ways to shove American productivity, then the highest in the world, even higher. This was necessary, it is said, because while other workforces were nowhere near as productive as ours (most were not even close), the low cost of the labor in many of those countries allowed for that lack of productivity and still allowed for very healthy profit margins.

So, the segment of our society we call “corporate leaders” saw the writing on the wall and did . . . what? They lifted up themselves on their own ideology (“My Country Right or Wrong” “This is the greatest country in the world!” “American exceptionalism is what guides commerce.” etc.), rolled up their sleeves . . . and moved their factories to countries with cheaper labor.

Not long after this “movement” swept the bulk of American manufacturing jobs overseas, it was shown that the lower productivities, the difficulty of managing factories from far away, and the increased transportation costs (for both raw materials and finished goods) ate up all or most of the so-called savings harvested by moving production facilities overseas.

So, why did they do it? Mostly, it was for purposes of tax avoidance. Tariffs were low, so not much had to be paid to import those “American Made” goods (yes, they still claimed they were American made because they were made in American owned factories). But by running their “earnings” through shell corporations in low tax countries they could reduce the taxes they paid substantially.

So, this country was still their country, right or wrong, but they didn’t want to pay for any of it in either case.

We tend to exalt these corporate tycoons, but based upon their behaviors, they should be seen as pariahs instead. The taxes they avoided have been picked up by others (the rest of us and in the form of national debt). They have used political power, through bribes, er campaign donations, to gut American labor laws even after hiring new labor forces in other countries. They hate unions, just hate them. It used to be that corporate power was opposed only by labor unions and the government (remember anti-trust actions?). They eliminated the labor unions by changing the laws protecting them and protecting workers. They eliminated the government opposition by bribery, er campaign donations, and co-opting regulators (who often go to nice jobs in the industries they regulated after they leave government).

We could eliminate tax havens with a stroke of a pen, by changing the tax laws that allow for them. That does not happen because the legislators have been bought off. We could disadvantage companies who move overseas, but we don’t (guess why).

All we have the power to actually do is to change their social standing. Instead of idolizing the Jeff Bezoses and Elon Musks of this country, we should call them out on their abuses of their workers and our tax laws. These are far from nice people, we shouldn’t give them elevated social status to further inflate their already inflated egos. We should, instead, elevate what they owe to the culture and country that made what they have done possible. We should demand a higher level of civil virtue the bigger they get (. . . from those according to their ability . . . , btw this is not just to be found in Marx, but also Christian scripture). Instead we expect them to only manifest the worst of us . . . greed. Corporations have been sold the bogus idea that they should direct their efforts only to maximizing shareholder value. (Gee, I wonder who promoted that bogus idea? Step One: Find an economist needing a bit of money. Step Two: have them promote your bogus idea. Step Three: Spread a bit more cash around in economic circles to get the idea discussed. Done.)

These are the same corporations that have been making money hand over fist during the pandemic and who supported a government approach to the problem that guaranteed that the pandemic would last longer than anyone thought. Never let a good catastrophe, er opportunity, go to waste.

We are reaping what we have allowed to be sown.

It is Time to Do Away with the Stock Markets

A couple of recent stories surrounding the stock market are indicative of why we need to do away with it.

#1 “Collapsed revenues, astronomical losses, red-hot cash-burn, hellish new debt. Meanwhile, amid craziest markets ever, airline shares soared.”

#2 A stock buyback – a company purchasing its own shares to reduce the number openly available and so push the price up – is a form of market manipulation that was illegal in the US until Ronald Reagan decided that to ban it was to restrict market freedom. As a result, many corporations, instead of building factories, now plough money into their own shares.

It has helped raise the stock market to record levels and provided shareholders with a huge bonus. But few others have benefited. The pharmaceutical company Merck insists that it must charge exorbitant amounts for its medicines to help fund new research. In 2018, the company spent $10 billion on research and development – and $14 billion on share repurchases and dividends. One report suggests that had Wal-Mart diverted half the money it has spent on stock buybacks into wages, one million of its lowest-paid employees, many of whom live below the poverty line, could have had a 50% pay increase.

#3 A bunch of Reddit geeks on the online forum r/wallstreetbets, an investment discussion group that boasts more than 6 million users, decided to buy GameStop shares en masse. Perhaps they saw it as an investment, perhaps they were bored, perhaps they wanted to inflict pain on Wall Street. Whatever the reason, the consequence was to push GameStop’s share price up. And up. Once it became a global story, others piled in too, boosting the share price from about $40 to almost $400 in a matter of days. As a result, big investors lost big (billions of dollars reportedly), one hedge fund, Melvin Capital Management, even being forced to seek a rescue package. (They, of course, were “shorting” that stock looking to make money by providing, well, nothing to earn it. So sad.)

The “stock market” as you were taught about in school barely exists. Some companies do “go public,” selling pieces of their company to raise the money to expand, modernize, whatever. But this activity constitutes less than 10% of the activity of the American stock markets. Most of the “market activity” is what are called the “secondary market” in which people buy and sell stocks already existing. This benefits the companies not at all and, as you can see from point #2 above, it is not unusual for a company to buy and sell its own stock to manipulate their stock’s price (which is what stock brokers are complaining about in point #3, that manipulation not being done by the right kind of people, don’t you know).

The entirety of the stock market has been studied and shown to be a drain on the economy, so why do we allow this abomination to exist? Basically wealthy people are siphoning off money from the economy by pushing paper in the stock markets, contributing nothing in return. But because they are wealthy, and contribute much money to the campaign coffers of politicians, there is no serious movement to “defund the stock markets” as it were.

The time has come: either get rid of it or place a transaction tax upon the traders. That would at least discourage rampant secondary market stock trading which has no value for the American people (actually it has negative value).

Religious Privilege and What It Buys Us

The wages of sin religious privilege are death.

This is quite worth reading, regarding recent Supreme Court rulings on religion.

“No Place for Science in the Supreme Court’s Christian America”

Anti-Mask Protests

There continues to be anti-mask wearing protest rallies occurring fairly frequently (Only slaves wear masks . . . only slaves wear masks! Yeah!). The question is: what to do about those protesting by not wearing masks?

These are our fellow citizens so I think we should treat them with respect. I also expect them to treat the rest of us also with respect. So, they are free to make their own life choices. They are also free to suffer their own life choice consequences. This is a problem that solves itself, we just don’t want them to take us down with them.

So, we will respect their desire to not wear a mask, but this means that they cannot attend an event that requires masks. If a store/restaurant/whatever requires people to be masked, they may not enter. If the city or state they are in requires masks be worn out in public spaces, they must stay home. If their children’s schools reopen, but require the kids to wear masks, they will have to home school their kids.

I would also suggest that since they are engaging in reckless behavior that they should be last in line for respirators and oxygen in hospitals and last in line for vaccinations. Oh, and should they get the ghastly disease, their health insurance should not have to pay for their treatment because they were undertaking reckless behavior that they were warned against, but continued doing.

Oh, about the Anti-Vax Rallies . . . <ditto>.

Do realize I am being consistent. In my home state, California, a law was passed that motorcycle and scooter riders had to wear helmets when operating their rides on public roadways. Ah, the anguish expressed! “They are taking away our freedom!” riders complained. Not being someone to take away someone’s freedom, I also think that actions have consequences. So, if a motorcyclist gets into an accident when helmetless, then their insurance company should not need to pay out anything as reckless behavior was involved in the accident. (Yes, they still need to have insurance, silly!) Also, their health insurers shouldn’t be liable for paying to have them patched up, either. So, emergency healthcare professionals can, if they choose, patch them up a little, but only after their ability to pay has been established.

The cost of liberty/freedom certainly isn’t cheap. Sometimes it involves more than eternal vigilance, sometimes it involves hard cash. Maybe we should have the helmetless/maskless/vaccineless post a bond . . . hmm, still thinking about this one.

If You See Something . . .

Remember after 9-11, the patriotic thing to say was . . . no, not Freedom Fries, but “If you see something, say something.”

I suspect that those troglodytes who invaded the Capitol Building in Washington, D.C. on Wednesday won’t be able to contain themselves and will be posting “selfies” on Instagram and Facebook. If you see such pictures, forward them to the FBI if you would. Every single one of those assholes needs to be arrested and prosecuted to the fullest extent of the law.

Let’s see … I recognize that guy … and that guy … oh, look a videographer, I wonder if he will post his videos?

I can hardly wait to hear them plead that they didn’t know that what they were doing was wrong, or that they were just following orders, or that if the president recommends it, it is legal. Can’t wait.

I also can’t see Republicans objecting to us wanting those involved to take individual responsibility for their actions. This used to be a pillar of Republican ideology and I suspect they will want to be recapturing some of that from now on.

Lock them up! Lock them up! Lock then up!

Worth a Thousand Words

A picture is …