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.

So . . . Why?

A recent statement issued by the editors at Scientific American include this comment: “It wasn’t just a testing problem: if almost everyone in the U.S. wore masks in public, it could save about 66,000 lives by the beginning of December, according to projections from the University of Washington School of Medicine. Such a strategy would hurt no one. It would close no business. It would cost next to nothing. But Trump and his vice president flouted local mask rules, making it a point not to wear masks themselves in public appearances. Trump has openly supported people who ignored governors in Michigan and California and elsewhere as they tried to impose social distancing and restrict public activities to control the virus. He encouraged governors in Florida, Arizona and Texas who resisted these public health measures, saying in April—again, falsely—that ‘the worst days of the pandemic are behind us’ and ignoring infectious disease experts who warned at the time of a dangerous rebound if safety measures were loosened.”

So, my question is this: what did Mr. Trump have to gain by taking this path?

Letting a pandemic ravage the working class is certainly no aid to business and it stresses what’s left of our social safety net. What possible advantage to Mr. Trump could there be?

The only sensible interpretation I could come up with that takes into account Mr. Trump’s and his base’s characteristics is this: he is poking a finger in the eyes of the coastal elites. (Take that Libtards!) The oh-so-smart “experts” who always know what the right thing to do is, while at the same time looking down their noses at the people living in the “fly over states.”

Mr. Trump has said that he downplayed the pandemic because he didn’t want to create panic. Some have spun this by saying that he didn’t want to cause a panic in the stock market. This, of course, makes no sense whatsoever. By downplaying the problem, he in essence, gave over any control over the problem he had, leaving him a situation that would play out as it would rather than as he or anyone else would have it. And, having this disease wreak havoc on crowded workplaces in the various businesses represented on the stock markets surely is not a recipe to avoid panic in the stock market. So, this “explanation” holds no water.

But the so-called “coastal elites” are seen as the architects of the demise of the middle class and poor by many people. The economists, the politicians, the corporation executives, the “experts” who speak in gobbledygook while dressed in many thousand dollar suits, who claim to know what is best for the rest of us. These are the people who are scorned by the “deplorables” who voted Mr. Trump in, and honestly have really failed at their jobs economically, having sold their services to the very wealthy or to become one of the very wealthy. (The “new rich” are almost all corporate executives.)

But in a classic “throwing the baby out with the bath water” move, this disdain for the politicians and economists and scientists has been spread out over public health officials who have not failed in the same way. Painting with a broad brush is at the core of politics, but in this case, there are possibly 100,000 Americans now dead because of that attitude alone.

Mr. Trump is merely reinforcing a “see, they aren’t so smart” attitude that he and many of his followers hold. Some will pay for that attitude with their lives (some already have) and some will pay with their careers. It is hoped that our ship of state can be righted. I have little hope that the Democrats can do this if given power, but right now they are the only chance we have because they are the only ones who seem to want to do that. It is terribly hard to bail the water out of the boat when others are drilling holes in the bottom, chanting “Sink the ship! Sink the ship!”

I will vote for Biden and work to get a much better president to succeed him. The problem we have is the uber-wealthy are spending gobs of money to make sure that we do not have the chance of electing someone not already in their pocket. We have to learn how to counter the power of their money.

They Say They Are Against Wealth Redistribution

The Fat Cats of America say they are against income redistribution and wealth redistribution but once again, it is only one particular type of that: they are arguing against taxing wealthy people to provide of the rest of us (social safety net, universal health care, etc.). They are not opposed to wealth redistribution when they are doing it, however.

As I have mentioned over and over that the very wealthy in this country have been gaming the system for the past roughly 50 years to redistribute wealth out of your pocket (the many) into theirs (the few). This has been now documented in a new economic study and according to Time magazine (link) the amount of wealth transferred is staggering. Here is an excerpt of that article. (Note that they are talking trillions of dollars, not just billions . . . thousands of billions!)

“This is not some back-of-the-napkin approximation. According to a groundbreaking new working paper by Carter C. Price and Kathryn Edwards of the RAND Corporation, had the more equitable income distributions of the three decades following World War II (1945 through 1974) merely held steady, the aggregate annual income of Americans earning below the 90th percentile would have been $2.5 trillion higher in the year 2018 alone. That is an amount equal to nearly 12 percent of GDP—enough to more than double median income—enough to pay every single working American in the bottom nine deciles an additional $1,144 a month. Every month. Every single year.

“Price and Edwards calculate that the cumulative tab for our four-decade-long experiment in radical inequality had grown to over $47 trillion from 1975 through 2018. At a recent pace of about $2.5 trillion a year, that number we estimate crossed the $50 trillion mark by early 2020. That’s $50 trillion that would have gone into the paychecks of working Americans had inequality held constant—$50 trillion that would have built a far larger and more prosperous economy—$50 trillion that would have enabled the vast majority of Americans to enter this pandemic far more healthy, resilient, and financially secure.”

They have stolen enough money that had it flowed instead to the rest of us, it would have been “enough to more than double median income—enough to pay every single working American in the bottom nine deciles an additional $1,144 a month. Every month. Every single year.” That’s the bottom 90% of U.S. society were talking about, including you and me.

These are the same people who are against regulation of the markets . . . unless they are doing the manipulating themselves. Against all kinds of other things . . . for other people, but okay for themselves.

Wake up people, your house is being robbed . . . right now. Wake up and stop the robbery. They are stealing your retirement. They are stealing your kid’s futures. It doesn’t have to be this way.

The Time article’s bottom line? “We chose to cut taxes on billionaires and to deregulate the financial industry. We chose to allow CEOs to manipulate share prices through stock buybacks, and to lavishly reward themselves with the proceeds. We chose to permit giant corporations, through mergers and acquisitions, to accumulate the vast monopoly power necessary to dictate both prices charged and wages paid. We chose to erode the minimum wage and the overtime threshold and the bargaining power of labor. For four decades, we chose to elect political leaders who put the material interests of the rich and powerful above those of the American people.”

Actually the governmental representatives they bought did this all for them. We didn’t choose those things. We are only allowed to chose candidates that they have already bought. They did this, the filthy rich did this.

Trickle Down Economics . . . and What to Do About It

I begin with an interesting quote:

Williams Jennings Bryan said: “There are two ideas of government. There are those who believe that if you just legislate to make the well-to-do prosperous, that their prosperity will leak through on those below. The Democratic idea has been that if you legislate to make the masses prosperous their prosperity will find its way up and through every class that rests upon it.”

He said this in 1896. Eighteen effing ninety-six!

Trickle down economics was not a new invention during the Reagan presidency, it is the tried and true instrument of the rich to retain and expand their wealth and also, they believe, their status in society.

We are in yet another Gilded Age of wealth accumulation. The filthy rich have bought the courts, the governments, and the news media and now those instruments of our society only bleat what they are told to bleat. And what they bleat is support for the position of the plutocrats, the wealthy elites.

Those elites have sold the idea that how much wealth you have is a measure of your social status, your worth as a person, so much so that religions have cropped up to support just that, e.g. featuring prosperity gospel preachers of the like of Joel Osteen and the perfectly named Creflo Dollar.

If we are to ever have a chance at real democracy, on in which “you legislate to make the masses prosperous their prosperity will find its way up and through every class that rests upon it,” then we need to take action. One thing under our control is to socially ostracize the very wealthy.

Is there any good reason that Jeff Bezos should have $200+ billion dollars of wealth? Could that degree of wealth be accumulated without the rules being bent to allow it? Think about this. If Mr. Bezos were to give you one billion dollars . . . if . . . if you could spend it in one calendar year, do you think you could do it? To do this, you would have to spend an average amount per hour of every eight-hour day, five days a week, fifty weeks in that year. (You’d get two weeks vacation, after all what good is being rich if you don’t get to enjoy it?) Do you know what that amount would be? It is $532,000 per hour! Think about how hard you’d have to work to spend just $532,000! Sure, you could go out and buy a house. So, now you have a house and you need to spend 532,000 more dollars in the next hour, and the next, and the next.

And Mr. Bezos has accumulated over two hundred billion dollars for himself.

Do you think Mr. Bezos thinks this is enough, that from now on he will take whatever he earns and share it with all of the Amazon workers who work so hard under trying conditions? Gratitude is important, right? Plus Mr. Bezos could spend $532,000 per hour of every working day for the next 200 years and not spend all of his accumulated wealth . . . not making one more penny.

Do you think he thinks enough is enough? No?

I do not, either.

Start the shame campaign. Impugn the patriotism of the uber-rich. Impugn their commitment to democracy. Shame them for their Greed. Unleash the Lash of the Mortal Sin of Greed upon their backsides.

Being wealthy is fine. Being filthy rich no longer is. Stop looking up to them, admiring them. Stop thinking of the Mitt Romneys and Donald Trumps of the world as “self-made men” when their fathers gave them millions of dollars of seed money. (I worked almost forty years as a college professor and earned about two million dollars of salary. Donald Trump was given five million dollars to “get started.”)

Repeat after me: Boo! Hiss! Every time one of the uber-rich appears in public, let them know their true social status: as greedy bastards who will grind armies of ordinary people under their heels to make themselves richer than Croesus.

Need Ammunition?
So, Bill Gates is a nice guy, right? Personally I think this is correct. Professionally not so much. Consider all of the lawsuits over shady business practices that Microsoft lost. The Internet Explorer scandals. The European anti-trust prosecutions, in essence, etc.

Jeff Bezos created and owns a large part of Amazon.com and all of its spin-offs. Amazon has been running commercials lately, highlighting employees who think working for Amazon is just swell. Have you seen these?

Have you seen similar commercials for Costco? No? That’s because they don’t exist. All you need to know what working for Costco is like you can see on the badges of its workers. many say “Employee since 1997,” others show 10 and five years served. People don’t stay with an employer unless they are treated . . . and paid . . . fairly. Costco has a reputation of being a good, even a very good employer. People stay with them. (And no, they are not perfect, just good.)

Amazon runs commercials to offset the bad press they have gotten from mal-treated and disgruntled employees. You, know, for canceling the health insurance of part-time employees at the beginning of the COVID-19 pandemic, things like that. The amount of money saved doing that to be put in Jeff Bezo’s pocket wouldn’t make a rounding error in his net worth. That’s how Mr. Bezos thinks wealth is created.

Do your research. Every time you feel yourself slipping into admiration for a very wealthy plutocrat, do some research and find out how they got all of that money. If they appear on a radio show, call in and tell them what you really think. If they appear on a TV show, change channels, so their ratings will go down. If a local news program shows a gushing puff piece for one of these bastards, call in and give them a piece of your mind.

I hope that booking an uber-rich asshole in the future will be about as popular as booking an avowed racist is now. Make ‘em bleed.

A Pandemic Rude Awakening?

The GOP and to some extent the Democrats have been suppressing wages of working people for decades now. Worshiping at the altar of profits, the route to greater and greater profits has been to lower taxes on businesses (in essence transferring them onto individuals) and reducing the cost of production, which is dominated by wages paid to workers. So, wage suppression has become a fine art in corporate circles.

A consequence of this approach is that people, aka “consumers,” have less and less disposable income to buy the output of American businesses. American companies have taken the strategy to the max. Many jobs that could be kept here have been exported to “low wage” countries, which now turn out to be not so low wage because the wages in those countries have been rising (It’s the demand, idiot!) and transportation costs, obviously, went up a great deal, management, too.

The Pandemic Recession, looking to morphing into the Pandemic Depression, is showing the short-sidedness of the short-term pursuit of profits, profits, profits. Here is an excerpt from a Naked Capitalism post on small businesses:

“It’s depressing, but not exactly surprising, to see a major New York Times story about one-third of the small businesses in the city have died or expected to shutter. Needless to say, it’s not just restaurants.” How’s Your Economy, Small Businesses Death Watch Edition

Small businesses in NY City, it is reported, constitute 98% of the employers and account for 3 million jobs in the city. The businesses close, the employees are without jobs, and while jobless, they will be having trouble paying their bills. This will crater other small businesses and away we go . . . spiraling down the economic toilet.

So, I am told (by Dwight Eisenhower, no less) that one shouldn’t criticize unless one has a better alternative. (It is far too easy to tear something down and much harder to build something up. Take that you “creative destruction” purveyors.) So, what is the alternative? Easy peasy. Be patriotic. Keep jobs here, pay higher wages, make less profits.

What was that? I just saw a Republican running past me with his hair on fire, sputtering “Higher wages . . . less profits . . . Arggghhh!” Please do realize that many believe that in our “pay as you go culture,” a business must make a profit to continue to exist. But even this dictum is soft. I had a fellow professor leave teaching to set up his own business. His first major mistake was he didn’t pay himself enough. At the end of his first year, he had profits, which he paid business taxes on, which he then paid to himself, which he then paid income taxes on and thus got double taxed on what he had made. He learned to pay himself everything that might be considered to be a business profit, and paid income taxes on those sums but no business taxes. His business happily perked along make no profits to speak of . . . but I digress.

The titans of commerce have taken the “We have to make a profit,” an acceptable dictum, to “we have to maximize our profits over every other consideration we can conceive of.” This is dubious at best. There is no limit to how much profit can be extracted from a business (as a percentage, not in absolute terms) consequently using “we have to maximize profits” as a motivation is an incentive without any boundaries whatsoever. This is a fatal flaw of capitalism: there is no limitation on greed.

What if corporations considered one of their “products” to be “reliably good jobs for people in our community,” or “creating healthy lives for our employees,” or even “creating happiness for our employees.” Don’t laugh, all of these have been stated by corporations as goals in the past (or their equivalents).

No one begrudges companies or corporations reasonable profits. Everyone should begrudge corporations who make obscene profits by grinding their employees under their heels to make them.

With Apologies to Lerner and Loewe

Musical theatre for 2020 and possibly the campaign song for Donald Trump’s re-election campaign:

Why can’t the poor be more like rich?
The rich are so honest, so thoroughly square;
Eternally noble, historically fair.
Who, when you win, will always give your back a pat.
Why can’t the poor be like that?

Why does every one do what the others do?
Can’t the poor learn to use their heads?
Why do they do everything their parents do?
Why don’t they grow up, well, like the rich instead?

Why can’t the poor take after the rich?
The rich are so pleasant, so easy to please.
Whenever you’re with them, you’re always at ease.

One rich man in a million may shout a bit.
Now and then, there’s one with slight defects.
One perhaps whose truthfulness you doubt a bit,
But by and large we are a marvelous sort!

Why can’t the poor take after the rich?
‘Cause the rich are so friendly, good-natured and kind.
Better companions you never will find.

Why can’t the poor be more like the rich?
The rich are so decent, such regular chaps;
Ready to help you through any mishaps;
Ready to buck you up whenever you’re glum.
Why can’t the poor be such chums?

Why is thinking something the poor never do?
And why is logic never even tried?
Applying for welfare is all they ever do.
Why don’t they straighten up the mess that’s inside?

Why can’t the poor behave like the rich?
If I were one of the poor who’d been to a ball,
Been hailed as royalty by one and by all;
Would I start whinging like a jilted lover,
Or carry on as if my home were in a tree?
Would I run off and tell no one where I’m going?
Why can’t the poor be like me?

Adapted from “Why Can’t a Woman Be More Like a Man?” from My Fair Lady by Lerner and Loewe.

Once Again The Brilliant Yves Smith . . . This Time on the Police

Over at the Naked Capitalism website, the wonderful Yves Smith unpacks the propaganda “To Protect and Serve.” The Police Weren’t Created to ‘Protect and Serve.’ They Were Created to ‘Maintain Order.’ A Brief Look at the History of Police in America

Here’s a taste:

To understand the true purpose of police, we have to ask, “What’s being protected?” and “Who’s being served?”

Urban police forces in America were created for one purpose — to “maintain order” after a waves of immigrants swept into northern U.S. cities, both from abroad and later from the South, immigrants who threatened to disturb that “order.” The threat wasn’t primarily from crime as we understand it, from violence inflicted by the working poor on the poor or middle class. The threat came from unions, from strikes, and from the suffering, the misery and the anger caused by the rise of rapacious capitalism.

What’s being protected? The social order that feeds the wealthy at the expense of the working poor. Who’s being served? Owners, their property, and the sources of their wealth, the orderly and uninterrupted running of their factories. The goal of police departments, as originally constituted, was to keep the workers in line, in their jobs, and off the streets.

 

GOP Has Been De-Funding the Police for Many Years!

Not surprisingly, anytime the federal government acted to police the activities of the rich, the GOP was there to oppose it or defund it.

Republicans are hypocrites. They happily ‘de-funded’ the police we actually need

 

 

You Might Want to Wear Asbestos Gloves While Holding This Article

Regardless, the author is spot on about the “New GOP” having almost nothing to do with the “Old GOP” and now merely a subsidiary political arm of the filthy rich.

‘Here’s a bedsheet, make a parachute!’ Republicans say, pushing us out of a plane by Hamilton Nolan

GOP Thinking—Fast and Slow

Maybe it is a fluke, but I think not, that some part-time workers who are now able to apply for unemployment insurance whereas before they were not and so are making more on unemployment than they were working.

Republicans are worried, deathly worried, that we are encouraging sloth. They are worried that people will not want to go back to work. Such are the moral hazards in the Republiverse.

These same people don’t seem to worry about the moral hazards when we bail out banks or shaky corporations, like Boeing. They don’t seem to worry that those companies would rather suck off the government teat than make good products. They also love to bail out stockholders who are elevating rent extraction above honest work as a profession.

Okay, I can solve this problem for my Republifriends. I start with a fable, maybe even a parable . . .

Let’s say that a friend, a good friend, of yours tells you about a job offer. “Dude, there is this job I think you ought to apply for. It is right up your alley . . . except, well, you will be working harder and get paid less than you are now. What do you think?” I know what you would think: “Are you effing crazy?”

If the GOP is worried that people are making more money off of unemployment insurance than working, the solution is obvious—pay better wages! Pay workers more than they can make off of unemployment payments (which are effing temporary in any case!).

If people were losing significant money while on unemployment, they would be dying to get back to their regular job. In fact, many, many problems would be solved if wages were to go up substantially. There would be less need of food stamps, other forms of welfare, charity, food banks, etc. People would pay more in taxes, lowering the annual budget deficit we always seem to run.

See, it is simple. Except there is this teeny-tiny bias the GOP has. It worries about moral hazards only when they involve the poor or middle class. That the billionaire class and corporations are raking in huge windfall profits from the government’s efforts to ameliorate the pandemic are just something that does not interest them, at least not after the scheme to funnel all of that wealth toward the billionaire class has been accomplished.

Mission accomplished! GOP!