And Death of the American Dream?
Friday, 21 October 2011 09:32
[Note: First published at <http://readersupportednews.org/>.]
With the Occupy Wall Street movement in full swing, now is the time to take a close look at the right-wing propaganda machine’s favorite canards about capitalism and the free market. In the wake of the worst banking crisis since the Great Depression and in the throes of a prolonged recession brought on by rogue financial institutions operating outside a regulatory system supposedly designed to prevent the very kind of reckless behavior and profiteering that led to the current doldrums, here is a short list of myths perpetrated by the corporate greed-is-good culture – myths that taken together add up to The Big Lie that is destroying the American economy, the middle class, and the good character of a once-great country.
Let’s begin with an axiom the US Chamber of Commerce, the National Association of Manufacturers, the major oil companies, and Goldman Sachs, to name but a few, would all wholeheartedly endorse: The free market is the best guarantee of peace, prosperity, and the greatest good for the greatest number.
Myth #1: There is no such thing as a free market, never has been, never will be. All markets are regulated, but some markets are regulated in the interest of the many and others in the interest of the few. The American economy is now clearly and indisputably regulated by the few and for the few who now control the wealth of the nation.
Proof: The top 20% own all but about 15% of the privately held money and assets in this country. The top 10% of taxpayers owns roughly 72% of the wealth and over 90% of the stocks, bonds, and mutual funds. Between 1981 and 2005, federal taxes on business declined 43 percent. Corporate income taxes accounted for about one-quarter of federal revenues in 1950; today, corporations contribute a mere 6% to the Treasury.
Myth #2: Market economies are hardly a guarantee of peace. The United States boasts by far the world's largest military establishment. Much of the money spent in the name of national security and war-waging goes to private corporations through hundreds of thousands of procurement contracts (around 400,000). For FY2002 through FY2008, nearly half of all federal expenditures went to eight federal departments and agencies involved in national and homeland security – including the servicing of war-incurred debt.
Proof: The US is still enmeshed in two protracted wars we initiated (Afghanistan and Iraq). Not counting the intelligence services and "black budget", the US accounts for 43-45% of total world military expenditures every year. According to the prestigious Stockholm International Peace Research Institute (SIPRI), the United States accounted for $19.6 billion of the $20.6 billion global increase in military spending in 2010 – fully 96% of the total. The "military-industrial complex" has corporate and defense tentacles reaching into virtually every political constituency. DOD alone maintains nearly 5,500 bases and military sites in the U.S. and around the world
Myth #3: Market economies are based on competition and therefore guarantee efficiency and prosperity.
Proof: At least 95 percent of the national debt is war-related. The Defense Department absorbs 25-30 percent of the federal budget, depending what is counted and who's doing the counting. Two-thirds (68 percent) of all federal government civil and military employees are involved in national security and war related activities. If you add the $100 billion or more for the two wars we are still fighting, the $80 billion for the intelligence budget, and various other defense-related expenditures, that figure is actually much higher – roughly one-half the entire federal budget for the period 2002-2008.
Myth #4: The Constitution prescribes that corporations are no different from natural persons, with the same right to freedom of speech and expression as you and me, which means, among other things, that Chevron and WalMart can spend as much money as they please to manipulate public opinion and influence the outcome of elections.
Proof: The Constitution does not declare that corporations are individuals. Rather, it was a notoriously misguided decision of the Supreme Court handed down almost a century after the Constitution was written and ratified.
Not until 1886 in the case of Santa Clara County v. Southern Pacific Railroad, 118 U.S. 394, did the Court make this astounding discovery! Never mind that it is preposterous to equate natural person and corporations: the 1886 decision is the jurisprudential sledgehammer which the Supreme Court - most recently the ultra-conservative Roberts Court - has used to smash all federal legislation aimed at limiting corporate campaign spending to bits.
It's true that in theory a democratic state will naturally make laws and regulations in the interest of the many, not the few. In practice, however, it clearly does not work that way in the United States anymore.
The extreme costs of political campaigns combined with the extreme inequality in wealth means that a very few individuals who control vast amounts of money can make or break virtually any candidate for high office, including incumbents. If you don't believe me, ask former Senator Russ Feingold of Wisconsin – a latter-day Solon who tried to reform our disastrous campaign finance laws and was defeated in 2010 by Ron Johnson, a business executive and prominent member of America's entrenched plutocracy, who poured eight million dollars of his own money into winning a Senate seat.
Conclusion: A vibrant market economy will not be long-lived or “sustainable” in the absence of smart regulation designed to accomplish two primary aims – wealth creation and social justice. In the pursuit of wealth and justice, it is the role of the state to balance these two aims.
Regulation is not the enemy of incentive, invention, or innovation. Nor is it incompatible with progress, profits, or personal gain. In a properly ordered republic, business makes the money and the government makes the rules. If the federal government persists in allowing oil companies, investment banks, and front groups for billionaires to make the rules free of public scrutiny and transparency, the very competition so vital to a market economy will be ever more constricted and joblessness will become chronic rather than "cyclical", as companies cut jobs here at home, replace workers with robots, and go abroad in search of cheap labor, lax labor laws, and tariff-free access to fast-growing markets in Asia and elsewhere.
Let’s begin with an axiom the US Chamber of Commerce, the National Association of Manufacturers, the major oil companies, and Goldman Sachs, to name but a few, would all wholeheartedly endorse: The free market is the best guarantee of peace, prosperity, and the greatest good for the greatest number.
Myth #1: There is no such thing as a free market, never has been, never will be. All markets are regulated, but some markets are regulated in the interest of the many and others in the interest of the few. The American economy is now clearly and indisputably regulated by the few and for the few who now control the wealth of the nation.
Proof: The top 20% own all but about 15% of the privately held money and assets in this country. The top 10% of taxpayers owns roughly 72% of the wealth and over 90% of the stocks, bonds, and mutual funds. Between 1981 and 2005, federal taxes on business declined 43 percent. Corporate income taxes accounted for about one-quarter of federal revenues in 1950; today, corporations contribute a mere 6% to the Treasury.
Myth #2: Market economies are hardly a guarantee of peace. The United States boasts by far the world's largest military establishment. Much of the money spent in the name of national security and war-waging goes to private corporations through hundreds of thousands of procurement contracts (around 400,000). For FY2002 through FY2008, nearly half of all federal expenditures went to eight federal departments and agencies involved in national and homeland security – including the servicing of war-incurred debt.
Proof: The US is still enmeshed in two protracted wars we initiated (Afghanistan and Iraq). Not counting the intelligence services and "black budget", the US accounts for 43-45% of total world military expenditures every year. According to the prestigious Stockholm International Peace Research Institute (SIPRI), the United States accounted for $19.6 billion of the $20.6 billion global increase in military spending in 2010 – fully 96% of the total. The "military-industrial complex" has corporate and defense tentacles reaching into virtually every political constituency. DOD alone maintains nearly 5,500 bases and military sites in the U.S. and around the world
Myth #3: Market economies are based on competition and therefore guarantee efficiency and prosperity.
Proof: At least 95 percent of the national debt is war-related. The Defense Department absorbs 25-30 percent of the federal budget, depending what is counted and who's doing the counting. Two-thirds (68 percent) of all federal government civil and military employees are involved in national security and war related activities. If you add the $100 billion or more for the two wars we are still fighting, the $80 billion for the intelligence budget, and various other defense-related expenditures, that figure is actually much higher – roughly one-half the entire federal budget for the period 2002-2008.
Myth #4: The Constitution prescribes that corporations are no different from natural persons, with the same right to freedom of speech and expression as you and me, which means, among other things, that Chevron and WalMart can spend as much money as they please to manipulate public opinion and influence the outcome of elections.
Proof: The Constitution does not declare that corporations are individuals. Rather, it was a notoriously misguided decision of the Supreme Court handed down almost a century after the Constitution was written and ratified.
Not until 1886 in the case of Santa Clara County v. Southern Pacific Railroad, 118 U.S. 394, did the Court make this astounding discovery! Never mind that it is preposterous to equate natural person and corporations: the 1886 decision is the jurisprudential sledgehammer which the Supreme Court - most recently the ultra-conservative Roberts Court - has used to smash all federal legislation aimed at limiting corporate campaign spending to bits.
It's true that in theory a democratic state will naturally make laws and regulations in the interest of the many, not the few. In practice, however, it clearly does not work that way in the United States anymore.
The extreme costs of political campaigns combined with the extreme inequality in wealth means that a very few individuals who control vast amounts of money can make or break virtually any candidate for high office, including incumbents. If you don't believe me, ask former Senator Russ Feingold of Wisconsin – a latter-day Solon who tried to reform our disastrous campaign finance laws and was defeated in 2010 by Ron Johnson, a business executive and prominent member of America's entrenched plutocracy, who poured eight million dollars of his own money into winning a Senate seat.
Conclusion: A vibrant market economy will not be long-lived or “sustainable” in the absence of smart regulation designed to accomplish two primary aims – wealth creation and social justice. In the pursuit of wealth and justice, it is the role of the state to balance these two aims.
Regulation is not the enemy of incentive, invention, or innovation. Nor is it incompatible with progress, profits, or personal gain. In a properly ordered republic, business makes the money and the government makes the rules. If the federal government persists in allowing oil companies, investment banks, and front groups for billionaires to make the rules free of public scrutiny and transparency, the very competition so vital to a market economy will be ever more constricted and joblessness will become chronic rather than "cyclical", as companies cut jobs here at home, replace workers with robots, and go abroad in search of cheap labor, lax labor laws, and tariff-free access to fast-growing markets in Asia and elsewhere.
Meanwhile, a dysfunctional Washington dithers, the rich get richer, the middle class gets poorer, the poor lose hope, and the American Dream dies a slow but certain death.
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Comments
it has been used to bypass American labor laws, standards and wages and our environmental laws
it was never free, other countries cleverly used it to take away our markets and jobs by flooding the country with slave-labor, dirty industry products sold for much less
the only way Americans could comptete was to send all of our factories there and to import poor immigrants, and immigrants willing to work for a little less than American professionals
it never was free. they should call it fool trade, it only benefited those who made fortunes by selling off our country to others.
that depends on how you look at it. 'progressives' like to imagine that politicians should be working selflessly for the national good. failure to do so then becomes a personal failure of individual politicians, who are replaced with the ideal model, and the system returns to desired performance.
the world is not like that, nor ever has been. but believing the system works for the people except for a few 'bad apples' excuses 'progressives' from having to confront reality: the state was designed by slave labor plantation owners to preserve the wealthy from the control of the many. washington isn't dithering, it is doing what it has been designed to do.
if you want a nation which aims to provide the people with a good life, the people must rule. 'for the people' needs 'by the people.'
failure to recognize this blatant truth demonstrates that culture overrides logic and observation, that americans are those horses that run back into the burning barn, over and over again. god help them, they are too brain-washed to help themselves.
See: http://www.nytimes.com/2011/10/24/technology/economists-see-more-jobs-for-machines-not-people.html?_r=1
--sinclair louis
"One withstands the invasion of armies; one does not withstand the invasion of ideas."
--victor hugo
occupy party reaches critical mass/seismic effect--now what?
lose this OS editor that put you on the cover and get in touch
Only invest in something if it engenders fear or greed. (actual texts)
The Free Market Lie For The Ages:
The Invisible Hand is a Universal Force like Gravity. No, it is what the banker learned in Course 101.
This is what you learn at Wharton; This is what is disproved at MIT. Which has the brighter pupils?
but if he would please be more simple
They knew that, in order to make a democracy, such as they had in mind, last, they knew that they'd have to make it relatively hard to "capture" (this being the favorite catch phrase of the day to indicate subornation of a system.)
They separated church and state to prevent a religious theocracy. They made a tripartate form of government so that the other two could act as a counter to the one, whichever one you'd like to pick as the odd man out. They couldn't reshape the entire fabric of society without inciting a completely chaotic second revolution of anarchy, fracturing the nascent country before it could even get started.
Yes, there were slave owners and wealthy landowners involved in the formation of our government. There were also plenty of bootstrap successful merchants and businessmen who had a say in how things developed. Additionally, there were many things they considered, studied and rejected in order to do what they set out to do -- make a form of government that was beholden to the people instead of the other way 'round.
They knew it wouldn't last forever, but they also knew that the efforts they put into place would -- if we maintained our vigilance -- last longer than anything else that was more democratic than authoritarian -- you know, like being kings.
So they did consider the common man, because they knew the common man, the man in the street, the lowly freeman was the backbone of any country. And they knew that they had an obligation to provide for them as much as they were providing for themselves. Again, they couldn't reshape completely the fabric of society, but they put in place the means and wordings to allow it to come when we, as a people, were ready for it.
WE have lost our way through apathy, loss of faith in our own power and the effects of a group of wealthy people who have, as their main objective, to amass not just great wealth, but all of it to the exclusion of all others not in their country club.
We are seeing the effects of that now.
The Free Market is, and never has been, free in the sense that it has no controls and is allowed to run its own course. This would be a complete recipe for disaster within a generation of it's inception.
That said, a "Free Market" is intended to be free in the sense that there is no exclusionary policy that prevents anyone from joining in and making the attempt to prosper. In the time since the New York Stock Exchange opened (as well as the others in their turn) and over the course of time that magnates and the ultra wealthy have attempted to suborn it completely to their ends -- we have seen the potential for anyone to make a fair bid for prosperity decrease, not increase.
Free Market doesn't mean free from regulation -- it means free to give it a whirl at your own risk and without special exclusions, exemptions or barriers to entry based on anything more than what you can manage to scrape together and get going. Free Markets demand regulation because in this sense the Free Market means fair market. Of course, we still don't have that, but that's the intent.
With the movers and shakers of wealth acquisition in command of the system, it's clear that the Market not only requires regulation to keep it fair and balanced, it demands it.
The simple review of before and after regulation shows that the regulatory strictures that were in place prior were one of the few things that kept the power hungry, the greed driven and the controlling interests from doing what they have now done: destroy, break and bankrupt the system that made them rich -- denying anyone they deem "unworthy" the opportunity to prosper.
One of the more interesting things I have seen recently is an article that points out a study of many different businesses and corporations and their informational, technical and financial 'footprints' in communications around the world. It showed that, out of thousands of businesses, a mere 147 major financial and industrial corporations funnelled and controlled over 35% of the aggregate wealth of the world.
That's 147 corporations running 1/3 of the world's entire wealth. I wonder how many jobs those companies have created with all this wealth in the last decade?
Savings and loan deregulation ended up with the Savings and Loan financial debacle, which, up to that time, was the single largest financial shock to the American economy from one sector.
Then we deregulated the airline industry and next thing you know, competition didn't increase, it decreased and many airlines got sucked into conglomerations that, when they reached critical mass, failed and sent the industry into a tailspin (pun intended.)
So, with those two fiats of idiocy behind us, did we learn our lesson? No. We deregulated cable and communications and now, we have five companies that control over 90% of our Mainstream Media and those five companies are owned by maybe a dozen people when you get right down to it.
Was that the straw that breaks the camel's back? Nope. We stopped watching Fannie Mae and Freddie Mac and we deregulated the banking industry. And now we have a bailout that makes the savings and loan debacle look like chump change.
Each time these things have happened, no-one at the top gets charged and they walk away completely clean, no new laws or re-enactment of the regulation is made -- and, the icing on the cake? -- We, the People, pay for it both coming and going.
If we didn't allow this. If we simply stopped not caring what our politicians are doing and who they're going on their knees for, we could have had a much nicer, much wealthier country. It's too late to whinge and cry about it, but it's not too late to stop it and correct our course.
As to automation, there is a real danger that, with enough automation, humankind will be out of any jobs that require menial skills only. This might sound like a great idea, but in reality, there's a world of people out there who currently have no higher calling than repetitious and menial tasks. And to have a job that pays the bills, allows a little to be put away for retirement, to educate their children to a better life and way of life is not a luxury -- it's a necessity of life.
Automation is something that's been on my mind. My specific training made of me a fairly necessary part of the machinery. I fixed the machines that were automated to the point where one person now could perform the task of five or six, sometimes more.
Now, though, my job skills are not in demand in this country. I could find another industry to ply my skills, but at 51, there's a bevy of young, fresh talent out there that look like they'll work for a lot less than someone with my decades of direct hands on experience.
And this, ultimately, is what the powers that be want. Health care? Forget about it, if you're too sick, weak or old to work at the speed they demand, you'll simply be replaced. If you die quickly, that's all for the better, because then there's more room for the young, strong new workers that are more deserving of the meager scraps they throw our way.
Social Security? Retirement? If you're too old to work, we don't want you around. The sooner you die, the better, you won't be dragging down the economy with your wasteful lack of effort.
The ultimate objective is a return to the days of kingship, where if you have the wealth, then you're a king. The rest? Peons, serfs and laborers who's manifest destiny is to remain who and what you were born to -- right along with the kings, whose children will inherit their enormous wealth, their kingship and their callous disregard for the "common rustics" wallowing about out past their walled cities full of gardens, guards and gold with no education, no social services that don't provide benefit to the work being done or any chance to gain the ability to speak to redress their grievances.
In short, if you want to continue to live in a democratic republic, or if you'd like to see your children be able to rise above their 'station' as set by those in power -- now is the time to start paying attention.
-r-
you are kewl
now reduce
Markets are either efficient, inefficient, or somewhere in between.
If you want to talk about how markets that were thought to be relatively efficient seized up and caused a financial panic, we could have a discussion.
Your myth is that anyone gives a fuck free markets.
I don't think war has much to do with free markets. War is a matter of government. Freeish markets can coexist with a non-democratic government --- witness China.
In fact, you could argue that the real estate bubble and toxic mortgage mess might have popped fairly painlessly if we hadn't gone deep into debt to pay for 10 years fighting pointless wars.
Efficiency never happens in a war zone. Wars destroy people, property and prosperity. Efficiency is about enhancing value, you don't do that with a bomb.
We all know that didn't happen. Now, I'll be the first to say that propping up those institutions was necessary, because if they went down, the entire world's financial system would have gone down.
What we have done is socialize the losses and privatize the gains. When things were going good, all those firms who levered up to 30-40 to one got to reap those rewards. And when the whole thing came crashing down, the invisible hand they talk about was replaced with government handouts.
If a company is too big to fail, it is too big, period. It needs to be broken up.
And don't even tell me that would destroy the economy. That's bullcrap. Before JPMorgan Chase came about, there was Chase Manhattan, Chemical Bank, J.P. Morgan, Bank One, Washington Mutual, and Bear Stearns.
Citi came about as a result of the consolidation of Citibank and Travelers. Those companies were conglomerates put together as well.
I think about the tens of thousands of jobs lost during the consolidation, the loss of competition because of it, and the requirement to bail these companies out when they screw up because they are too big to fail.
And it pisses me off.
You must be kidding.
"However, he did make one remarkable speech on June 18th, 1787. In this he attacked the states’ rights proposal of William Paterson. In this speech he upheld the British government as the best model from the world for the colonists to use. He advocated that the best solution lied in an aristocratic, strongly centralized, coercive, but representative union with devices that would give weight to class and property."
he liked madison's ideas, particularly the limited franchise, which has been gradually eroded. with jay, these three men wrote the constitution which has brought america endless war, repetitive financial convulsions, and widespread poverty in a nation blessed above all others in natural resources.
the only popular test of the constitution was in rhode island, where the referendum failed. the constitution was established by the grandees of the state congresses.
from this political base of freedom, 'free markets' have merely been a means to loot the economy, and leave the wreck to the 'losers.'
You have a lot of good facts in there, but I question if you understand the underlying concepts behind them.
Who cares if you tax a corporation or not? If you do, they pass the cost to the consumer and we all end up paying their taxes anyway.
It's the hoarding and wasting of wealth and capital that matters, not whether I pay an extra $.05 for a bottle of coke so that the coca cola corporation can pay $5 million to the feds 3 years after filing their taxes (since even the corporations that pay income tax get a 3-year deferment) or if I pay $.05 less and they pay nothing. Their income remains constant, which means they have the same capital in both scenarios, If they hoard the capital, the economy suffers. If they apply it to industry and investment, the economy prospers...
Y'all are pissed about the wrong stuff.
Thought I’d point out the irony in your post with a question: If China is beating us at “the capitalist free market game” why do their people work for slave wages? I'll answer that, China is not beating us, don’t take my word for it; the U.S. has the highest GDP in the world by far. And if we compare GDP per capita in the U.S. to China, the evidence couldn’t be any clearer that our economy is by far superior to that of China. Hats Off to China for finally embracing capitalism and pulling hundreds of millions of their people out of poverty.
I fear that we have no real options until the unemployed reach about 25% year over year and they set fire to the stores and banks. Sadly, they will burn their neighbors out of jobs in the process.
If Americans hate communism, then why do millions of them have accounts at credit unions. Credit unions are run for the benefit of their members, not for the benefit of shareholders.
And the country's largest insurance agency is State Farm, which is a mutual insurance company. Mutual insurance companies underwrite half the of the auto and life insurance policies and about a third of all business policies. Mutual insurance companies are not run for the benefit of shareholders, because they don't have any. They're run for the benefit of policy holders.
You want to talk about "from each according to his ability, to each according to his needs?" What do you think insurance is? People pay in month after month. And then when they need it, they call their insurance company and that company pays them.
If you ask people if they're against communism, they'll tell you yes. Truth is, they're against what certain pundits have turned the word into.
They're not against the concept behind it, because if they were, they wouldn't purchase insurance from mutual insurance companies nor would they bank at credit unions.