To Shore Up The 1% They Were Willing To Destroy Democracy

They hate the government for taxing them and regulating them, so they decided to destroy it, which means they decided to destroy our democracy because that’s the kind of government we have here.

It began in the 70s with a memo Lewis Powell wrote to the US Chamber of Commerce. Workers had rights, polluters were being regulated, corporations didn’t like being taxed and regulated by a public sector that inhibited them from predatory practices.

You can read up on Lewis Powell at Bill Moyers' website, and learn more about Powell's influential memo that stole the economy back for the plutocrats. Powell went on to sit on the Supreme Court and help convert it into a law firm for the wealthy.

In the 70s the super-rich decided enough was enough and decided to fight back.

Slowly, over the past 3 or 4 decades, workers’ incomes have flatlined and infrastructure, schools, and trusted institutions have been deliberately degraded.

The Right knew that the only way to destroy democratic government was to defund it, degrade it, discredit it, make it not work, make people distrust and dislike it.

Now the Congress is owned by the people who own for a living. The Court works for the people who own for a living. And the president is one of the people who own for a living.

The Citizens United court ruling turned democracy into a proxy operation by which ordinary people voted for their government but wealthy corporate clubs owned and operated one major party and dominated the Supreme Court through the Heritage Foundation and the Club for Growth and a whole zoo of upliftingly and patriotically and vaguely named non-profits devoted to free market absolutism.

Bill Moyers has some very good analysis of the powerful octopus of tax-free lobbying operations led by Heritage.

They had a single goal: the total levitation of the owning classes above the bothersome social responsibilities that constitute citizenship, the stuff contained in the social contract by which you contribute of yourself and expect decency and fair play in return. The corporate absolutists who drove this Big Idea felt no obligations beyond themselves and felt the average citizen and his or her government owed them absolute freedom of action and total obedience. When you’re very very big and powerful your dreams are big too. The 1% now own the world.

CEOs Buying Their Way Out Of Jail

David Cay Johnston reports on GM executives' ability to buy their freedom with corporate funds.

It should be illegal to barter cash for an executive's free ride. It's like permanent bail offered to criminals with infinite cash.

How is bartering company cash to avoid executive jail time not unlike bribing officials?

How is an executive in such a leverage position not essentially bargaining with employees or the wider economy as a hostage?

I realize the complexities of the case and the odds of a conviction play into these bargains, but the amount of money a CEO has to bargain with distorts the justice system and enables the distortion of the economy.

Another example of the Rule of Accumulated Advantage.

At the other end of the justice system, the low end where people have very little money, justice is distorted by the mechanisms prosecutors use to extort fines and penalties. In an inverse fashion, the leverage of money works against the person charged. At the low end of the economy lack of money leverages a person’s other disadvantages.

There should be an algorithm to calculate how money buys freedom at the high end of the wealth spectrum and how lack of money is used against defendants at the low end. There is a key difference between how it works. At the upper end these CEOs buy freedom with their company's money; at the low end the people prosecuted for the various crimes associated with being poor are invariably paying their fines and bail bonds by mortgaging all they have.

This is not a new phenomenon. During the Middle Ages the extortion racket was conducted by the Church. It was the selling of indulgences and got people shorter terms in Purgatory.

This disparity between rich man's justice and poor man's justice does make you wonder. Do CEOs and others in the so-called "leadership class" (those who own for a living), do they possess sovereign status? Are they immune from the laws and hazards that govern the rest of us? Are they above the law? Does Might, after all, make you Right? This was a belief that democracy was supposed to make obsolete, but our society has delegated so many moral decisions to our money. We've let our money take the place of our conscience, and our courts of law and our politics have been corrupted by this.

Re Too Much Investment Class Wealth Chasing Too Few Plausible Investments

Paul Krugman writes about it this morning.

Two observations I've been making for a while––and the financial press has been ignoring.

1. You don't have as many plausible investments when workers'/consumers' incomes are flat for 35 years. (This, combined with a concentration of investment wealth = bubble)

2. Now that the Boomers are living on their portfolios they don't want working incomes to rise either.

I wrote about this fragile combination in 2011

I believe Paul Krugman was there before I was.

Question: why has economic orthodoxy moved so far to the right that it cannot see this dynamic and its dangers?

One explanation I’ve been suggesting more recently is that we have allowed our money to think for us. Money is impatient, greedy and has no human factor in its calculations.

(I think letting our money make its own rapid decisions is similar but more dangerous than this new chimera the press is worried about: AI, artificial intelligence, HAL the computer.)

Far from being coldly rational, the money brain is easily panicked, as we’ve seen over the last four days.

When wealth is distributed more broadly with a framework of practical safeguards, the brain in the economy isn’t as skittish or irrational. Look at how it behaved from 1945-1980. But we were too impatient and greedy to tolerate that kind of economy. Or some of us were: The 1% who now make all the financial decisions.

The Insurance Industry Has Been Asleep

Scientific American is reporting on catastrophic flood projections in NY this century.

Wired magazine is describing similar catastrophic flooding in Miami.

Other coastal cities will experience similar catastrophe worldwide.

Two Questions:

Why hasn’t the insurance industry factored this enormous future cost into the premiums paid in coastal cities?

How and when will the insurance industry offload this enormous cost onto the public?

The insurance industry is supposed to inform its risk calculations with the best science. They didn’t.

Why?

Because the major insurers have for a few decades (at least since the merger mania during Reagan) considered themselves financial companies, not insurance companies. For this reason they’ve been more focused on the huge profits from fossil fuel investments during peak oil than on the huge costs that fossil fuel will precipitate through climate change as our major port facilities and coastal properties are flooded.

They’re all insured, by the way.

But major financial companies are too big to fail, so we will pay for their greed and the mistakes greed caused them to make. If, as purists say, capitalism and free markets are supposed to do our society’s thinking and planning, they’ve certainly failed us. They’ve all been asleep, selfish, self-centered, self-satisfied fools.

Killer Business Model

Excellent article in the Washington Post about how furniture rental companies gouge three times the value of the furniture from people who can't afford to buy. This is called the Genius of Capitalism.

Faced with a need or a shortage, do you set about filling that need, that shortage, or is your first question how to exploit the shortage to the fullest advantage?

Is human vulnerability something to take advantage of?

Is poverty a profit opportunity for your company, the deeper the poverty the greater the profit?

Is someone else's helplessness part of your business model? When you see helplessness do you feel sympathy or greed?

Is helpfulness a naïve and foolish custom? Is it unbusinesslike to include generosity or humane consideration in your business plan?

Let’s imagine you manufacture flotation devices, lifesavers they’re called. It costs money to make them, so you sell them for a price. Naturally.

But here’s a business model: you provide flotation devices to lifeguards. Call these lifeguards sales agents and pay them a small commission. Then when someone is drowning don’t have your agent throw them a buoy free of charge, let the market set a price. Dicker with the floundering. Or rent the device to the person fighting for his life, loan the use of the buoy at so much per second. They’re really eager to rent, so set that rate as high as you can. Plus interest, compounding every second.

This is what’s known as a killer business model.

Niall Ferguson is Nasty, Brutish and Tall

Niall Ferguson believes that Keynes didn't care about future generations because he was gay and didn't have children. That's the reporting from Tom Kostigan from the Altegris Conference in Carlsbad, California.

"[I]n front of a group of more than 500 investors, Ferguson responded to a question about Keynes' famous philosophy of self-interest versus the economic philosophy of Edmund Burke, who believed there was a social contract among the living, as well as the dead. Ferguson asked the audience how many children Keynes had. He explained that Keynes had none because he was a homosexual and was married to a ballerina, with whom he likely talked of "poetry" rather than procreated. The audience went quiet at the remark. Some attendees later said they found the remarks offensive. ...

"Ferguson, who is the Laurence A. Tisch Professor of History at Harvard University, and author of The Great Degeneration: How Institutions Decay and Economies Die, says it's only logical that Keynes would take this selfish worldview because he was an "effete" member of society. Apparently, in Ferguson's world, if you are gay or childless, you cannot care about future generations nor society."

Meanwhile Ferguson's heroes have spent the past 30 years stealing the livelihoods from working people and beggaring their children... Why are right wing pundits such nasty, selfish, self-serving, ill-informed bigots? And what does it say of their "moral" universe? That it ends at their property line, perhaps. That it's as large as the inside of their safe deposit box on Grand Cayman. Among today's investor class there is very little regard for Burke's social contract ideas, so why did Ferguson make the comparison?

Speaking of swinish right wing punditry... There is a useful summation of the bully boy world of the late Andrew Breitbart by James Wolcott in the new Vanity Fair. The title of the piece is apt. The right wing in this country has all the human kindness of a Roman emperor watching Lions vs. Christians at the Coliseum.