Fraud and Cronyism Under Neoliberalism - A Feature, Not a Bug

In the comments section, Uncle Milton suggests that the massive fraud perpetuated under the Bush regime (I would add under Reagan too) were antithetical to a free market system. A true free market system is supposed to make fraud illegal.

By any definition of classical economics, what happened to the real estate market was fraud on a massive scale. PS No bid contracts in Iraq as you might guess as nothing to do with free market economics. Crony capitalism and corruption are in conflict with free market economics. If you take a turd, paint it white, and call it beautiful.. it's still a turd.

By your definition, Unc, free market economics hardly occurs anywhere. This seems to be the problem. Once these neoliberal systems are put in, they are very prone to corruption and crony capitalism. Extremely prone! Everyone wails about it, but it seems to be almost an inherent part of the system. A feature, not a bug.

And the proponents of the free market tend to be very tolerant of massive fraud to the point of not even tolerating it. The more free market the system, it seems the more fraud and cronyism.

As more socialist leaning groups come in, they tend to reign in the fraud to some extent. Europe has very low levels of fraud (it's considered to be a safe place to do business) and it has high levels of socialism in its system.

China moving from socialism to capitalism was followed by massive fraud and cronyism. Same with Russia and to a much lesser extent Eastern Europe. The neoliberal revolution in Latin America coincided with a tremendous amount of crony capitalism and fraud as state enterprises were sold off to friends of the state in a cronyist fashion for pennies on the dollar.

The way to reduce fraud and cronyism in a capitalist system is to empower the state more (social democracy). Culture also plays a role though.

As an aside, I would point out that the free market ideologists spreading the gospel of neoliberalism had almost nothing to say about the massive cronyism, fraud, graft and out and out theft associated with their neoliberal revolution.

While the billionaires looted Russia bare and bled the country dry, the Jeffrey Sachs (the mastermind of the plan and yes, he is Jewish) of the world said nothing. The corporate media mostly just cheered.

The Friedmanites out of the Chicago School have for the most part been fashioning a free market vision in which fraud, graft, cheating, lying and even out of out theft seems to be legal when done by big capitalists wearing suits under a legalistic veneer. There were few persecutions for the massive fraud that occurred under Reagan and now under Bush.

If, as Unc notes above, the financial crash was predicated on massive amounts of out and out crime, it should be clear to us in the next year or so that almost no one is going to go to jail over it.

The FBI looked into investigating the financial crash and seems to have decided that there were far too many criminals committing far too many crimes for the FBI to even begin to get involved at current staff levels, especially with the needs of the War on Terror, so it looks like most of the criminals are just going to get away with it.

As I note above, increasingly, it seems as if mass cronyism, fraud and financial crime in general under neoliberalism is more of a feature than a bug.

Great Video About Socialism

The latest death toll figures from Hurricane Katrina can be seen on this website here. The famous Russian neo-Nazi video is on this blog here.

Updated October 24:

This is a video of a lecture by Richard D Wolff, Professor of Economics at the University of Massachusetts Amherst, on the latest economic chaos and recession in sweeping the world.

Wolff is a Marxist, and the lecture is from a Marxist POV. However, it is interesting in many ways.

One thing that is clear to most sensible folks with an understanding of economics is that Marx's analysis of capitalism is one of the greatest ever done by anyone. For a long time, it was taught in all economics departments. With the advent of crazy Friedmanite neoliberalism in the past 30 years or so, Marx may not be being taught so much, but that's a mistake.

It's sometimes said that Marx is great for analyzing either what capitalism does well or poorly, but not the opposite. Not true. Marx is great for analyzing capitalism both when it is doing well and when it is doing poorly.

In my opinion, where Marx has problems is in proposing alternatives to capitalism, and history has born this out to some extent. Capitalism, with all of its chaos and problems and horrors and deaths, may just be the only way forward for the time being. Like death, disease and taxes, it may be a necessary evil.

Wolff describes how US workers saw 150 straight years of growth and improvement in their living standards, from 1820 to 1970. This is correct. He doesn't lay out how this happened, but there are many explanations for this. He also says that this scenario was rare to unheard of in the rest of the capitalist world.

After 1970, things changed. Productivity kept going up, but wages went flat or even went down. A US worker in the late 1970's made more per hour than a worker working today. As productivity rose and wages went flat, capitalists began raking in incredible profits.

This is what has happened to the US economy over the past 35 years, as neoliberalism took hold and 80% of the population saw its wages stagnate or go down. The top 20% of the population, and especially the top 1%, saw its income explode. But the vast majority of workers of every race got screwed.

As workers got more and more screwed and the capitalists, the owners, those who lived off the labor of others, saw their incomes skyrocket, confused workers began advancing all sorts of explanations about why this was happening. Anti-Semites, as usual, blamed the Jews. White nationalists and White Supremacists blamed Blacks and Browns. Lots of middle class and working class Whites blamed Big Government.

The truth was that the culprits were the business owners who were reeling in superprofits while workers got the shaft.

As this process continued, capitalists found more ways to keep the cost of labor down. They began importing massive amounts of legal and especially illegal immigrants as labor to drive labor costs down even further. They began moving many enterprises offshore and later, began offshoring work via the Internet.

Confused workers scrambled to keep up their standard of living. Others in the family, often the wife, began taking a job, bringing in a second income. Then one or more persons in the household began to work second and third jobs. Americans worked more and more hours, setting new records for workers in the West.

The despicable US media extolled this fact, and praised US workers for working themselves nearly to death, taking pains to point out how tough and hard and slaving-away Americans are compared to pampered, wussy, "soft" Europeans kicking back under socialism.

It's true - part of the US war against European social democracy has been to declare that Europeans are soft, wimpy, sissified and woosy. How did they get this way? Socialism turned hard self-reliant European men into soft, pampered girlymen. Americans were hard, tough and macho. They didn't need no nanny state to help them out. They could do it on their own. The American worker as Marlboro Man.

Wolff points out that that extra workers did not necessarily fix matters, as when the wife started working, it turned out that she needed many things, for instance a vehicle to get to work in.

Working more than one job didn't seem to work very well, nor did having others in the household go out and work, but it did the trick for a while.

After some time, Americans would have to turn to some new tricks to try to keep up their standard of living. They turned to loans. At first they ran up their credit cards. Americans were setting records for going into debt on credit cards and were among the Western world's poorest when it came to saving money.

This isn't really very good personal economics, but the vile media cheered it on nonetheless. Silly, wimpy Europeans and Japanese saved their money for a rainy day, presumably because they were too neurotic to enjoy life. Americans went for the gusto! They spent ever nickel they earned and then went in debt up to their waders! Cheers, cheers, cheers!

After the credit cards were maxed out, there was an explosion in US housing prices. Call it a housing bubble. This came at a propitious moment, for it enabled Americans to use as collateral the biggest asset they owned, their homes. Americans borrowed on their homes, refinancing them, taking out second mortgages and using the money like a credit card to continue to pursue the standard of living to which they had become used.

The capitalists continued to reel in the dough from the leveling of wages, now via outsourcing and use of immigrant labor, and now the capitalists found a new tool - debt.

They loaned money to their own workers! It was like the old days when you lived in a company town, bought at the company store and ate at the company diner, all deducted from your check. Not only will we pay you a crap wage, we will snag every dollar you spend on food, rent and shopping too.

These same capitalists were now swimming in ultraprofits with the money they were making off loaning money to workers and home mortgages (just another type of loan). They had so much money they did not know what to do with it. They threw it into the stock market, and the market for high-end goods of all sorts went through the roof.

Conspicuous consumption came back with a vengeance, and the scummy media once again sang and danced the praises of the most idiotic and obscene ways the rich chose to blow their unneeded and often unearned cash.

A whole new financial industry, a parasitic industry on the economic body of the nation, sprung up, an industry that created no products and no real wealth. It was nothing but a gigantic casino on Wall Street.

All sorts of funky instruments that no one understood were dreamed up - derivatives, CDO's, mortgage securities and all sorts of other stuff that probably shouldn't even be legal. Almost no one understood these things and no one seemed to understand what they were worth.

The inevitable bubble came and the party crashed, as it always does when capitalist bubbles go bust.

The root causes were the destruction of the regulations put in in the 1930's, during the Depression, in order to prevent another Depression. As soon as these regulations were put in, the capitalists began plotting and working to get rid of them.

Over the next 80 years, the capitalists created a Gramscian cultural hegemony that attacked socialism, government and regulation and exalted free market capitalism. Socialism, government and regulation were described as possibly good ideas, but doomed to failure. The only way to avoid the inevitable failures of socialism, government and regulation was to completely deregulate the economy. Anything less was the road to ruin.

With their money, the capitalist interests bought up all the media and most of the politicians. They used this to get rid of the Depression-era regulations and create the manipulate US culture to where your average worker thought that was a great idea, if he understood it at all.

There are various proposals for how to deal with this economic mess. As discussed in a previous post, conservatives, reeling and increasingly discredited, have tried to blame the catastrophe on too much regulation, not too little. Even the slimy media that normally goes along with this crap is finding this too much to buy.

White racists are promoting the racist notion that liberals (via affirmative action and anti-discrimination laws), niggers* and beaners* are the ones that destroyed the US economy. The Republican Party has to some extent bought into this, as has the business press, their amen corner in the mass media, and their academic hacks, but the argument is too slimy and racist for most decent people, plus there isn't an ounce of truth to it.

Steve Sailer, an excellent writer who is widely read, is the latest to promote this racist travesty, much to his shame. Sailer is looking more and more like a Republican Party hack than a really deep-thinking, independent and empirical author.

Furthermore, Sailer has been skating on the edges of racism for some time now without really going over. More often, he seemed to be giving the racists lots of nice talking points. Now he's finally pushing an explicitly racist discourse, and it's not even true. Too bad.

Rate of subprime mortgage defaults by race:

Whites       19%
Blacks       19%
Hispanics    19% 

End of discussion!

Liberals, Leftists and social democrats have proposed re-regulation, but the problem here is that we are probably going to re-do the 1930's experience all over again. We will put in a bunch of great regulations and as soon as we put them in, the capitalists and their mass media machines will start plotting to get rid of them.

Then the capitalists and their media machines will launch a jihad, for as many decades as it takes, to reverse all these regulations and get back to total deregulation again. In time, workers will forget why they put the regulations in in the first place, and they will go along with it.

The capitalists will buy most of the politicians all over again, and the politicians will vote to deregulate again. The capitalists will work to recreate their Gramscian cultural hegemony, and the average worker will once again think deregulation is the smart thing to do. The economy will blow up again and we will be right back to 1929 and 2008.

Wolff suggests that there is a third alternative. He describes a paper done by a colleague that describes Silicon Valley workers who hated their jobs. They had to dress up, sit in a cubicle and take orders and crap all day from a bunch of assholes. Can they pay anyone enough to put up with that? With the destruction of the Silicon Valley workforce, these workers were laid off.

A number of them got together and formed IT worker-run cooperatives, a non-capitalist form of ownership along the lines of anarcho-syndicalism. The study found that these workers said that they had never been happier. They were manufacturing software, selling it to buyers and dividing up the profits among themselves. The workers themselves were the new owners.

Wolff said that as a condition of the bailouts to the financial industry, we should mandate that they staff their board of directors with workers, not management, as a first step towards workers democracy.

Wolff also said that he had been giving speeches like this for 25 years now and he has had more interest in the past five weeks than in the previous 25 years.

That's ending on a hopeful note for now. Enjoy the video.

*Used sardonically

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Worst Day in a Century For US Financial Markets

Well, Merrill Lynch, one of the biggest, if not the biggest stock brokerages in the US, has gone under. Bank of America bought them out for $50 billion, but if they would not have, Merrill Lynch would have had to file for bankruptcy. At the same time, the huge, 158 year old Lehman Brothers financial firm, the fourth largest in America, has filed for bankruptcy. This venerable firm is apparently history.

30,000 have been laid off around the world and the company has $600 billion (WTH!?) in outstanding debt. There were negotiations between Lehman and Barclays and Bank of America to buy out Lehman, but without guarantees of the US government (taxpayers) taking responsibility for the soaring peaks of bad debt on Lehman's books, no one wants to touch this bad apple with a ten foot pole and an eleven foot extension.

Some are calling the crash of Lehman Brothers the worst day in a century for global financial markets. That was what Alan Greenspan called it.

At the same time, AIG, one of the nation's largest insurance firms and at one point the largest insurance company in the world, is in serious trouble, and its stock is being pounded into the ground. I am not sure what it is up, but apparently they are caught up in the subprime bad housing loans catastrophe.

The Bank of England injected $5 billion into markets to keep them going, and the EU Central Bank pitched in $30 billion for its share.

Some call AIG, Lehman Brothers and Merrill Lynch thetop three names on Wall Street.

If these three go under, billions in pension funds will be zeroed out and banks and financial firms all over the world will be hammered. Washington Mutual, one of the US' largest banks, is also seeing its stock beat up badly, and it is in danger of going under.

Wall Street hemorrhaged an unbelievable 500 points on Monday, September 15. I'm amazed they didn't stop trading. I'm terrified at what tomorrow holds.

The Bush Administration seems to be taking a hands off approach and saying to let these huge firms go under. This is the classic free market evangelical fundamentalist approach and it is one that John McCain is advocating.

McCain is taking the apparently completely insane position that the cure to this chaos and Hell caused by deregulation is even less government. He proposes more tax cuts for wealthy persons and corporations, and this is going to fix the mess up just fine. Even Ayn Randist objectivist and ultra-reactionary Alan Greenspan says that's nuts. Obama promises more socialist regulatory measures as a nostrum, which is what this crisis needs.

McCain also seems to edge towards calling for privatizing Fannie Mae and Freddie Mac. He and Palin wrote an editorial a week ago that called for "downsizing" the two institutions. That's probably a completely disastrous notion. It was wild privatization of everything in sight, including oversight, that caused this whole mess. The Bush Administration's takeover of Fannie Mae and Freddie Mac was a socialist move, but it was right and proper.

It arguably should have been done long ago. The reason the two institutions got into too much trouble was because it was too private and not public enough, and in the process of becoming more and more private and less and less public.

Both Obama and McCain oppose a bailout of Lehman Brothers. I don't know enough to comment on that. However, Paul Krugman, whom I deeply respect, says that the US government is playing Russian roulette with the financial system.

After Bear Stearns went down six months ago, socialist regulations should have been put in immediately to try to stem the hemorrhage. Instead, the Bush Administration did nothing at all. At the time, Krugman called that move foolhardy. He is looking more and more right, and I don't want him to be.

McCain opposed the Bush Administration's socialist bailout of Bear Stearns. It was painful, but arguably necessary, and inaction would have been much worse. It certainly slowed this crisis down and bought it some time.

At the time, McCain called for less regulation of financial institutions, not more. McCain and Palin both seem to be resolutely and reflexively opposed to more regulation of the financial sector, or even of regulation period. In this way, they are even further to the right of ultra-reactionary George Bush.

McCain-Palin's economic plan, what little we learn of it, sounds really frightening. They would continue the insanity and idiocy of Bush economics and have vowed to actually make things even worse.

I'm no economist, but I'm not sure that's such a good idea. Government bailouts are nasty, but the alternative may well be worse. Anyway, I'm a socialist, and bailouts can be seen as a kind of socialist intervention.

The Bush Administration, and frankly, Republicans for the past 30 years, have created this whole mess. I must admit sadly that "free market Democrats" like Jimmy "Atari Democrat" Carter and Bill "Eisenhower Republican" Clinton had their mitts in this mess too. This is because Democrats have increasingly been adopting radical neoliberalism over the past 30 years, with the predictable results.

But the biggest players have always been Republicans and one of the biggest culprits of all is one of George Bush's and John McCain's best buddies, Phil Gramm of Texas.

Now retired, Gramm is probably responsible more than anyone else for dismantling regulations set up in the wake of the Stock Market Crash of 1929 in order to prevent it from happening again. Many reforms were enacted during the Depression and afterward. It's best to call these socialist reforms because that is what they were.

These socialist reforms tamper the insanities of the free market like lithium smooths the moods of a psychotic bipolar patient. Or another analogy could be a fog layer and an ocean along a seacoast that moderates the weather and produces a nice Mediterranean climate for much of the year.

True, if you love wild swings, you can go inland to the deserts where there is no moderating weather and it's 120 in the daytime and 30 at night.

This is what the capitalists want. Capitalists are basically sick people - they behave like the mentally ill or sex or drug addicts. They are like untreated psychotic bipolar patients who live for the wild manic rides. Capitalists are like a pathological gambler in a casino with a no-limit credit card blazed on coke and downing cocktails. There's no limit to the runs.

The capitalist wants the ability to run up huge profits in crash and burn, live fast die young, boom and bust economics. Neoliberal free market economics is just great for the boom and bust crazies. Like the wasted gambler with the stolen credit card in the casino, the capitalist thinks there's no limits to the run-ups. He keeps going to new tables and doubling down.

You tell him his manic episode is going to crash hard at some point and he turns around to punch you in the face and charges at you like a buffalo as you race out of the building for your life.

With capitalism, as with boys on a playground, adult supervision is necessary. Capitalists need to be supervised by adults called government and socialism. Even Adam Smith himself acknowledged that the unregulated free market was one of the worst evils known to man. He said the free market had to be regulated by the state to prevent total economic chaos. The heirs to Smith's throne seem to have forgotten his books.

They got rid of almost all of the progressive socialist legislation we put in that prevents wild run-ups and Gold Rush style booms but at the same time also dampens down the inevitable free-fall busts that always follow the booms, like day follows night.

It used to be, you went to get a mortgage and if your income was about 1/3 of the mortgage and your credit was good, you got the loan. The bank wanted to make dead sure you were going to pay back the loan so they vetted you carefully. Those days are gone.

In recent years you could get a loan for 7 times your income, and the lenders assumed you would not be able to pay it back. But they didn't care anymore because you weren't even going to pay it back to them.

They took your bullshit loans and packaged them into some bullshit thingies called CDO's, which were some weird investment vehicles made up of thousands of home mortgages, many of which were known to be bad loans. Then they got crooked accountants to mark these crap securities with AAA ratings when all they were were turds with fancy paint all over them.

They then hocked this ripoff fraudulent packages to suckers in the financial world, while claiming they were worth their weight in gold. The deregulations had gotten rid of the notion that investment banks should be separated from consumer banks. There was supposed to be a solid wall between the two, so if one went down, it would not take down the other.

If a financial bank went down, it would not take down consumer banks. When banks were allowed to be both financial and consumer banks, they failed in 1929, causing the Great Depression. This wall, called Glass-Steagall, has been progressively whittled away for many years now to the point where it is about gone.

Republicans, especially Mr. Gramm and his diabolical Dragon Lady Korean wife, were the worst offenders. The destruction of Glass-Steagall is an important reason why we are seeing these financial meltdowns right now. Another reason was the whittling away of standards for home loans. The lending industry has always hated regulations making it so that those who took out loans to buy homes could pay back their loans.

By the 1960's, regulations were in pace that enabled banks to make vast numbers of home loans, very few of which went bad. As the banks itself ate it when the loan went bad, applicants were vetted religiously. This was progressively gutted over the years to the point where loans were given out gleefully to folks who in no sane world should have gotten a loan.

White nationalists have posited a theory (and now pro-business freemarketeers havejumped in) that the subprimes and other bad loans were ordered by the US government eager to get Hispanics and Blacks into home ownership, hence the niggers* and the Mexicans are responsible for the devastation of our economy! Wow, what a breathtakingly audacious theory.

There appears to be little evidence to back this up. For many years, banks had different standards for Whites versus non-Whites and many Blacks found it almost impossible to get a home loan no matter how good their credit was. The Feds started cracking down on this under Clinton 10-15 years ago, and there was no housing crisis then.

The notion that PC Feds pushed poor, innocent, mortgage banker criminals into making bogus loans to irresponsible non-Whites appears false.

The mortgage bankers made lots of money on every loan, so they would practically sign up a German shepherd if one walked in and asked for a loan. The criminals quickly sold the loans in fraudulent packages to poor suckers in financial institutions, so it was out of their hands they didn't care whether it was paid back or not.

True, people took out loans they could not afford, but in a sane society, those loans never get made in the first place. Loan officers criminals were con artists who slickly pitched the loans to ignorant people who had no business being there. They got them in at very low teaser rates and didn't really explain well that the rate was going to go up later on.

The lenders were as low as Nigerian email scammers.

But it's not up to the borrower to determine if he qualifies for a loan, and a borrower is not irresponsible for taking out any loan.

The burden of responsibility in a sane society lies on lenders. If lenders eat it when loans go bad, then they are unlikely to loan to the undeserving, who are shown the door. Blaming Blacks and Browns for this housing collapse is an appalling exercise in White racism.

When the loans went bad, as any idiot knew they would, they pounded financial institutions all over who had bought huge quantities of these crazy things without really knowing what they were getting into. Financial houses poured billions into fools gold securities that disintegrated in front of their eyes to pennies on the dollar.

Soon they were out billions with bills coming in continuously and frankly no money in the drawer to pay any of them. You can only go on for a while like that.

John McCain has had his mitts in this bullshit for about 30 years. He's supported just about every crazy deregulation package that came down the pike. If he ever opposed one, let me know.

Furthermore, McCain was in very, very deep in the same horrible Savings and Loan collapse. He spent much of the 1980's, while prophets were screaming in the wilderness about the doomsday looming S&L mess, barking about the need for fewer and fewer regulations on S&L's. Look what happened.

McCain hasn't learned a Goddamned thing. Here it is, 20 years later, and he's back doing it all over again. He's like a sociopath impervious to punishment.

McCain, the Bush Administration and Republicans in general are overwhelmingly responsible for the collapse of the housing market and the resulting failures and collapses in the financial market, banks and insurance companies. Democrats are also responsible, but much less so, and hardcore liberals like Obama probably have little dirt on them.

John McCain now says he's coming in as a "maverick" and he's going to flip and change 30 years of deregulation mania as he becomes some kind of born-again reformer. Just as Bush ran as a "compassionate conservative in 2000, when he had many years in office proving the opposite, McCain's record speaks for itself. McCain the socialist big government regulator? Get real.

*used sardonically

Bush Administration Adopts Socialism

The government just seized control of Freddie Mac and Fannie Mae. I guess some on the Left might be complaining about this. Surely there will be squeals on the Libertarian Right, but that's to be expected.

I'm not that good at economics, so I don't know what this precisely bails down to, but my understanding is that this is actually a good idea. It should have been done a while back, but the Bushies dawdled and kept on speaking in free market tongues and handling free market snakes like the cultists most conservatives are these days.

What is it with this "market" crap anyway? It reminds of a some Doomsday Koolaid cult. That's right, it's called capitalism.

"The pure, free market is one of the most evil systems ever designed by mankind." Adam Smith, The Wealth of Nations, 1776.

Smith was actually a very strong advocate of strict state control and regulation of the market in order to prevent this "most evil system". Bet you never knew that, did you? Learn something new here every day.

Revealed Unemployment Versus Revealed Death

The latest death toll figures from Hurricane Katrina can be seen on this website here. The famous Russian neo-Nazi video is on this blog here.

Our very smart Leftist Brit commenter Lafayette Sennacherib notes in the comments section:

Among the buzzwords on the collapse of the Soviet bloc was 'revealed unemployment', meaning that communist industries were employing people to do nothing useful apart from living and breeding. The capitalists are bit by bit feeling their way to getting us to accept the idea of 'revealed death' i.e. the idea that it's ok for lots of people to starve to death because there wasn't really a place in the economy for them.

We already accept that the 3rd world are used to starving to death, and so it's no big deal for them; and I've even seen the starvation in Korea in the 90s (though there's some doubt about whether that actually happened - see Bruce Cummings) described as a 'leveling of the population to what is its natural optimum level (loosely)'; the next thing is to get Europeans and N. Americans to accept that 'we can't carry passengers, if we show too much compassion for the weak then they'll drag us down with them...etc'.

America has always been pretty close to that anyway, but Europe's heading that way with ample help from the capitalist propaganda machine - we can't afford welfare anymore etc. You know - capitalism works because we're all much better off than they used to be, but we'll all have to work harder and longer with fewer benefits because of globalisation... So are we better off or worse off?

Even supposed leftists like George Galloway come out with this stuff - " immigration is a good thing; that's why the US is the richest country in the world..." He really says that, while also arguing that the capitalists are screwing us harder and harder.

But I think there's room for hope; I get the feeling that even the most indoctrinated and unreflective among our poor are now finding the contradictions in the media bullshit just too blatant, and the hard realities just too hard to ignore.

It really is 'socialism or barbarism'; just because it hasn't worked perfectly so far is no reason to give up.

There just isn't enough discussion of this, anywhere; there is obviously the problem that under capitalism private accumulation of wealth makes excluding corruption impossible...Discussions of how an effective democracy could work should take up about 50% of the discourse on 'the left', but they take up effectively zero, though there are isolated academics and think-tanks, I occasionally hear of, who do some interesting work.

" I think the free market if galvanized by the government and the media, can solve problems like global warming far better than a soviet style socialist economy." huy

Come on, huy! What's the solution likely to be - the 'revealed deaths' of 4 to 5 billion people. The 'free market' will starve them, and the media will put a positive spin on it.

Anyway, there is no 'free market'; capitalism operates like a vacuum cleaner, sucking all wealth and power to the top - it is a mechanism, which is effectively self-perpetuating - mammon, money reified and deified, which can only create despots, slaves, death and destruction of the environment.

This was an excellent comment by LS, a very smart guy. Let me translate a bit:

Above, LS compares the revealed (hidden) unemployment in Communism to the revealed (hidden) death in capitalism. He also notes that conditions in the capitalist world are getting observably crappier and crappier for workers in recent years. The capitalists don't even deny it, but they say that things have to get worse due to globalization.

At the same time, capitalism is the best system on Earth and is making us better all the time. Except that we're getting worse. Or something. Or whatever.

LS notes the idiocy of a Leftist like George Galloway singing the praises of US super-capitalism, while attributing it's success to the very immigrant flood that has devastated US workers. This Leftist offers more of the same tidal wave for British workers.

"The US success model".

But the US is a rich country (not nearly the richest on Earth - check Luxembourg - kicking our ass for years now) on paper only. The bottom 80% has been getting screwed off and on for the last 30 years, just like everywhere on Earth radical neoliberalism has been implemented.

The immigrant hurricane surge will devastate British workers the same way it did America's.

Failure is success. Getting worse is getting better. The cognitive dissonance is Earth-shattering.

LS also notes that terrible corruption is always going to be a problem in any capitalist society due to wealth accumulation. In the 3rd World, it's nearly set in stone. Note the horrible corruption and mass theft that accompanied the moves from socialism to capitalism in Russia and China.

If capitalism is the greatest engine on Earth for making money - and maybe it is - it's also the greatest engine on Earth for theft from petty to grand. Wherever you find capitalism, you will find an orgy of thievery. It's nearly built into the system.

LS' last paragraph has some good points. Huy is a British social democrat who is much enamored of whatever snake oil New Labour is pushing these days. He thinks that the market can definitely fix global warming.

Clearly, the market alone is incapable of resolving the global warming problem. By standard market economics, it's economically rational to devastate the planet with global warming (with unknown consequences) and it's economically irrational to try to stop global warming with mass government intervention.

There's tons of money in global warming and tons of red ink in stopping it. Knowing that, the market is going to take the biggest write-off in history and fix this problem? Get real!

Yet the last 30 years of the rap song blasting, "Market! Market!" in our ears nonstop has mutated Americans. There can be no solutions to anything outside of the market.

The government, or state, is dead, except for blowing shit up, conquering tinpot dictators, putting cuffs on every other American and throwing millions in the hole. The state's for killing people and busting your ass. Soldiers and cops, and there's little else. No wonder Americans hate the government so much.

Even Mother Jones, a "liberal" US magazine, stated in a recent issue on global warming that any solution would have to be a market solution. Why? Because that's just the way it is nowadays. The state is dead, the market rules. The libertarians won the Culture of Economics War.

Yet the market is incapable of fixing global warming because there's no money it and it involves massive losses. So the magic hand is essentially on track to blow up the fucking planet, using weather and Mother Nature as the thermonuclear device.

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The Market Virus

The latest death toll figures from Hurricane Katrina can be seen on this website here. The famous Russian neo-Nazi video is on this blog here.

Updated September 2:

In the comments section, huy notes that, while he is a social democrat, he still sings the praises of the free market system. He points out drug companies and IT as two great industries.

I disagree:

Private drug companies are crap! Have you ever seen a more horrid bunch of gangsters and criminals? Here in the US they are all just crooks.

They keep harmful drugs on the market and refuse to pull them. The only way to pull them is to sue them over and over, and even when we do that, they still keep them on the market a lot of times. These people are just flat out murderers. And when they get too pissed about being sued, they get their bought and paid for Congressswine to legislate "tort reform", which means no more suits.

Or SLAPP suits, in which you get sued for suing the POS corporation! They fake their studies, lie on their data, and buy and pay for doctors to lie for them. The whole medical field is becoming seriously corrupted by the big money behind these scum companies, and the # of doctors going corrupt as a result is really frightening. It's a serious problem as even our best medical journals are in danger of being corrupted.

Furthermore, it has been conclusively proven that we pay much higher prices for the same drugs that other nations in the West get for much cheaper. What advantage do we get from these high prices? Much higher profits for drug companies on US sales! I'm sure your average US consumer is delighted by that! Or maybe, if his mind is truly market-infected, he is delighted by that.

The IT companies? It's hard to say. Microsoft is an illegal monopoly, was one, and will be one into the foreseeable future. It's hard to imagine how much damage they have caused to computing.

Intel is a monopoly on CPU's with similar major issues for consumers, notably outrageously high prices and forced install of Intel chips by computer makers.

On the ground, there is no competition in broadband. The glorious days of dialup competition are gone forever. You have the cable monopoly or the phone DSL monopoly. They are both evil, and neither has any competition but the other.

The cable monopolies are not regulated at all, and cable is insanely overpriced.

The phone monopolies are barely regulated at all anymore, but some are better than others. The worst of all are the huge ones like ATT, which desperately needs to be regulated.

An unregulated private monopoly is pure evil and needs to be smashed or at least heavily regulated.

Capitalism in the US has created a Gramscian hegemony whereby a vast number of folks identify with the capitalists and the market. Once you do that, all regulation and control by the state is out the window. Very rightwing capitalists own all of our media and use it try to slam pro-corporate, pro-monopoly bullshit into our heads 24-7.

A lot of workers and consumers, especially once they start getting some money, "go corporate" in their minds and essentially support the whole human-hating, society-hating, worker-hating and consumer-hating agenda of the corporations.

Our lack of government involvement in broadband and cell phones has meant that we spend outrageously high prices for shit service.

Other nations have involved the state heavily in their cellular and broadband systems. They pay dramatically lower prices than we do and get dramatically faster speeds and more features.

We're just sitting here in the US getting screwed because we worship these corporate pigs who are reaming us. Why? Because the ideology of "the market" has infected every aspect of American life. Even the people who should be protesting getting screwed by these corporations are singing their praises even while they are getting reamed.

Their minds have been colonized by a virus. The market virus.

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Socialism Wastes Money, Capitalism Wastes Humans

The latest death toll figures from Hurricane Katrina can be seen on this website here. The famous Russian neo-Nazi video is on this blog here.

Updated November 16:

There has been a lot of talk, even by socialists, of the profound "wastefulness" inherent in various Communist economic systems. As I'm not an economist, I don't really understand what they are talking about.

However, I can give you a few ideas.

In recent years, Cuba has revolutionized organic agriculture to where they probably have one of the most highly developed organic ag systems on Earth. For starters, Cuba has more agronomists per capita than anywhere else on Earth. During the Special Period, they were put to work devising organic solutions to problems that were previously solved by industrialized agriculture.

Right now, in the intensive organic farming collectives all over Havana, crop yield has reached some of the highest levels on Earth per unit of land. And that's with a 100% organic system. Now, who ever said that socialism could not produce?

However, interviews with collective farmers reveal that the system could not be replicated on a capitalist model. It is "wasteful", that is, it has to either spend too much money to get that yield, or it pays too many farmers as workers to get the yield. It's pretty much the same argument.

A similar complaint has been leveled at Cuban enterprises. In some office jobs, it seems as if there are four or five workers for every real job. They rest are screwing off or shuffling papers or engaging in make-work.

I suppose all of these examples are of "waste", right? Waste of money! Well, Cuba is a poor country dedicated to 100% employment.

In most of the Third World, college grads just don't have any jobs. The state has no jobs for them and the private sector doesn't either. So there are vastly more applicants than positions. A lot of these places have much more wealth than Cuba.

Cuba's not going to go that route. It has enough money to hire workers even for jobs that barely even exist, and it wants everyone to have a job, figuring that's better than sitting on your ass. 3rd World capitalism creates armies of over-educated young unemployed men with no income to start a family. In the Muslim World, lots of them are going in for radical Islam and blowing themselves up.

I suppose that Cuba has a similar problem, but they just dealt with it by creating make-work jobs and at least giving folks an income and something to do with their time. There's waste of humans in one case (3rd World capitalism) by lack of jobs for them, and waste of money in the other case (Cuba) for creating make-work jobs.

I would point out that the Cuban organic collectives are run by the workers themselves. They hire other workers to join on. If you don't pull your weight and slack off, you're fired. They have to sell some of their produce to the state, but there's plenty left over for farmers' markets. There are many people clamoring to get into these collectives, as it's seen as a good job with a good income.

As a collective economic form, it's also non-capitalist. Right now, only 6% of Cuban agriculture is in state farms. Most is in farming cooperatives. Much is made of the very high productivity levels of the private farms (they are limited to 150 acres), but they do this by using vastly more than their share of labor, so perhaps they are not so productive after all.

Here in the US, a lot of very smart people are just completely wasted by capitalism. I'm not talking about myself here, because I'm not healthy enough to work in a regular job, so I just live off a meager trust fund.

But I know two people with IQ's over 140 who are not doing much productive. One works at low-level jobs and the other is on disability, but could work if they wanted to. What puzzles me is why this wonderful market is not beating their doors down trying to hire our most valuable citizens (cognitive elite)?

If the stupid market can't utilize their brains in any way, why doesn't the state? The very same thing happens in 3rd World capitalism. Very bright people, with degrees and advanced degrees, have nothing to do.

If aliens landed on the Earth and saw a bunch of the smartest people around being wasted by society, wouldn't they say that was insane? The capitalists would explain to the aliens that these folks are useless for making money, so they are a waste of air, and that capitalists don't give a damn about talent or brains or anything.

I guess that's what it boils down to? Capitalism is good for creating wealth, that's it. Hell, even Marx said that. Read The Communist Manifesto. He praises this greatest wealth-creating engine to the skies.

What else is capitalism good for? Nothing. It ain't good for fuck-all else. I assure you that Cuba would find something to do with everyone in the land who had a 140-150 IQ.

I guess the market feels it can't use the smartest people in society to help it make cash, so it has no use for them. Capitalism and the market is just a fucking money-generating machine. It's in business to make money, nothing else.

That's what all this crap the market-fetishists go on about in terms of "generating wealth" is all about. Making money. "Generating wealth" means making money. Big deal. Since when is that a value worth anything of importance?

I hate capitalism and the damned market. Looking at the failure of socialist models (For example, when Albanian leader Hoxha died in 1985, there were shortages of even the most basic foodstuffs.) I'm willing to acknowledge that it may be necessary, but it sure sucks.

Have you ever noticed the contempt that capitalists have for professors in universities, our finest minds at work in various sciences and fields, advancing the knowledge of our species? They sneer and call them eggheads and talk about how their tax dollars are wasted on these guys. They brag about how they never went to college.

There's no money in a lot of these fields of study at the university (probably, or at least at the moment, or from what we can tell), so capitalists figure it's all a total waste. If there's no money in it, it's worthless. That's your glorious market.

Fuck the market.

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The 14 Points of Fascism

The latest death toll figures from Hurricane Katrina can be seen on this website here. The famous Russian neo-Nazi video is on this blog here.

Updated August 23:

Excellent article.

I'm usually the last person on Earth to throw the word, "fascist" around promiscuously, but this article lays it out pretty clearly that the Bush Administration is what I would call a pseudo-fascist or quasi-fascist regime (pseudo-fascist is more like it).

This shit has actually been going on since Reagan came in. I'm not usually one to dog on my fellow Whites, but the US movement towards fascism can be laid directly at the feet of US Whites. Not only that, but I think that this whole movement by US Whites is related to racism and their fear of losing their demographic majority.

As Euro-Whites decline to 65% (61% if you don't include Jews, and many White nationalists don't wish to include them) of the population, note that the US Whites have been getting more and more fascist as their majority shrinks ever more.

We went through a similar thing here in California when Whites were on the verge of losing their majority. Now that Whites a definite minority here in the state, the nasty, ugly and reactionary tendency of Whites has faded as a movement, but we still see traces of it in Arnold Schwarzenegger.

For instance, in order to "balance the budget", the CA Republicans have called for cutting Medicaid below its already incredibly low figures. CA's schools are at about 29th in funding, but have the largest teacher-to-student ratio in the US, because CA schools are flooded with students. The reason for this is simple. Whitey is still in just-enough in charge here in California.

Whites look out and see schools full of non-Whites and say, "Fuck you *niggers and Mexicans, we aren't giving you one thin dime." What's sad about this is that California's schools are still full of lots of White kids, especially in certain regions like the Sierra foothills. They're getting screwed too.

In Oakhurst and Coarsegold, where I spend a lot of time, a large percentage of the local poor Whites are on Medicaid. These Whites are getting the shaft by wealthier Whites in the cities, all because these Whites want to "cut off the niggers* and the Mexicans."

Right now, the Legislature is mostly non-White and liberal, and the governor is in the hands of a fake-progressive Republican who was put in by a fraudulent lie of an election. So we have gridlock to the max, but really it's just non-violent race war played out at state government level.

It was amazing that the Republicans managed to scam one of their own into the governor's seat, but here's how the scam worked:

The Republicans deregulated the electricity industry in California, which nearly ruined the economy and pocketbooks of Californians. They pretty much knew this was going to happen, and Schwarzenegger himself attended these meetings and helped to plot this scam.

A pro-business, extremely fake-liberal Democrat, Gray Davis, was in power, and he got screwed by the resulting skyrocketing bills, power outrages and wild profiteering by Enron and the rest. Californians being idiots like most humans, they (mostly White Californians) turned around and blamed Gray Davis for the energy crisis that he had absolutely nothing whatsoever to do with.

He kept appealing to the Bush Administration to shut off the disastrous experiment, but Bush refused. It's true that Davis diddled and fiddled. As a pro-business Democrat, he was determined to craft a solution that benefited the various energy companies that were maxi-profiting from the whole mess.

The "final solution" ended up raising California homeowners' energy rates by three times over the long term. California businesses, especially big businesses, more or less got rate cuts, as you might expect.

Nevertheless, White homeowners and small business owners (at least from my asking around) were still 100% supportive of energy "deregulation"! I tell ya, free market ideology is more insane than religion. If your religion is actually killing you or fucking you over, most even religious nuts will get a bit less religious.

Free market fundamentalism is an odd beast. The more it fucks over Whites, the more they support it. I think it is because free marketeerism in Whites is rooted in racism.

"Free market", "deregulation", "privatization", and all that crap means "less government". US Whites hate government because government takes hard-earned White money in taxes and gives it no-good, worthless, criminal, gangbanging niggers* and Mexicans for various welfare schemes.

This is the only sense I can make of US Whites' lunatic dedication to extreme freemarketeerism. Either that or someone has done a damn fine job of brainwashing.

Anyway, the Republicans then engineered a recall election which was one of the sleaziest elections in California history. Even though the Republican Party is on its last legs here in California, they picked a very popular actor who is especially popular with Hispanics to run for governor. I am convinced that this clown got a majority or close to it of the Hispanic vote.

Hispanics here normally vote pretty liberally, but they are unbelievably uneducated, and vastly less sophisticated politically than even Blacks. Hispanics and even a lot of young, fairly liberal, know-nothing Whites marched off and voted for "The Terminator", who ran as some kind of fake-liberal.

It's true that the state's present economic crisis is partly rooted in the massive invasion of illegal aliens that has turned much of our state into Tijuana Norte. But the California Republican Party and Schwarzenegger are 100% pro-illegal alien all the way. Forget the California Democratic Party. They're long lost to the illegals and their traitor Hispanic-American politicians.

I like to say that here in California, we have two political parties, the California Illegal Alien Republican Party and the California Illegal Alien Democratic Party. There's no political party here in California to represent actual American fucking citizens in this state.

Anyway, check out the article. The author compared Hitler, Mussolini, Franco, Suharto, and Pinochet to come up with his analysis. I'm glad he included Indonesia and Chile.

It would be nice for an intelligent person to look at this list and point out differences (and similarities) between Communism and fascism, but this post is a bit long as is. Maybe another time.

Secular Humanism Magazine is pretty cool, by the way, if you don't mind in-your-face atheism.

*used sardonically.

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More on Laissez Faire Economics

In the comments section, James Schipper makes some interesting comments about laissez faire economics and libertarianism in general. His comments are in italics, mine are follow in normal font.

JS: Laissez-faire usually means short-term gain for a small minority and short-term pain for a large majority, medium-term gain for a larger minority and medium-term pain for a smaller majority and only long-term gain for the majority.

RL: I don't agree with this at all. The case of neoliberalism seems to show us that the gains never do filter down to anyone below the top 20%. This is what the neoliberal advocates keep saying - "Give it time, give it time." But no matter how much time you give it, it never seems to work. We are now 28 years into a neoliberal revolution in the US, and have things gotten any better for any larger majority?

Of course not. Things just seem to get worse and worse. Neoliberalism only accomplishes massive wealth transfers from the bottom 80% to the top 20%. It's designed to do that in perpetuity, since class war never ends in capitalism, even in fascism.

JS: The Chicago boys are actually right in that speculative bubbles are only possible if the government engages in massive monetary expansion or allows the banks to do so. This means that the most essential part of government regulation in a modern economy is the regulation of credit and the currency. Too much money and credit = inflation and speculation.

RL: The problem here is that these Chicago Boys characters have been cheering on every single speculative bubble that ever existed, and they created quite a few of them themselves. Their libertarian project in Chile ended in massive failure such that even Pinochet had to step in with major government intervention to save the economy. Huge intervention by the state was the only thing that saved the economy.

In Russia, the Boys succeeded in looting the nation, transferring the money out of the country, engineering a Depression 3.5 times worse than the US Depression and killing 15 million Russians. The Chicago Boys and their acolytes were behind the Asian Flu crashes in the late 1990's too.

The only way to prevent speculative bubbles is through government regulation of an economy, and the Chicago Boys apparently oppose all such. The business sector, whom the Chicago Boys represent, always supports a loose money policy during the good times in order to facilitate the cheap money necessary for economic expansion and of course speculation.

Furthermore, the US capitalist class, nor any other capitalist class, would never support the Chicago Boys' apparent prescription here - getting rid of the Fed's regulation of the money supply. Business loves and needs the Fed, despite all of its rants against socialism. Anyway, the role of a central bank is overestimated. Even in a state without a strong central bank regulating money, you can still get massive speculative inflows. This was the case with the nations harmed by the Asian Flu.

The Fed itself is run by economists who are themselves working hand in hand with Big Business and are generally followers of Chicago School Economics. The only thing the rich care about is inflation, and business everywhere on Earth has cheered on every speculative bubble that ever existed. They can't get enough of them.

To blame these bubbles on a reactionary government institution called the Fed, implying the Fed is some kind of socialist institution (though its recent actions have indeed been socialist) is beyond perverse.

What's deadly to business and the rich is inflation. The rich hate inflation because it cuts into their incomes. Most rich people don't even work at all. They just kick back and live off rents and equities. Nothing cuts into their lazy money more than inflation. Further, inflation engenders demands for wage increases, which is why business hates it so much. It also increases costs for supplies, which they may or may not be able to pass on.

In order to stop inflation from hurting the rich and business, the Fed fights inflation by throwing millions of Americans out of work, since inflation and unemployment are two ends of a scale. As unemployment gets "too low", workers start getting "uppity" and demanding wage increases. This is deadly to capitalism, so the Fed responds by deliberately increasing unemployment and throwing millions out of work.

If you take a university course in capitalist economics, they will tell you that capitalism operates on the premise of "the benefits of mass unemployment". The benefits lie in the disciplining of the worker. The notion that mass unemployment has any benefits at all is enough to turn my stomach against capitalism.

Further, I'm not enamored of any Austrian economist.

JS: Too much money and credit = inflation and speculation.

RL: Problem here probably being that the Fed cares little about speculation (although it does worry about it a bit - witness Alan Greenspan's famous "irrational exuberance" comments a while back) but cares a lot about inflation.

Speculation does not necessarily lead to increases in core inflation, but it surely runs up some prices. Housing market, oil and dot com stock speculation surely created bubbles in those sectors, but in the case of housing and dot com's, did not effect core inflation.

JS: As to the New Deal, it was a colossal failure.

RL: I can't comment on this. The general analysis here in the US is that the New Deal saved US capitalism from Revolution, hence it was painful but worth it. This analysis comes from the more enlightened among capitalist sectors themselves.

Of course Western Europe and the Asian Tigers were not built on laissez faire. Even today that Japan, Singapore and Korea have extreme government intervention in the economy in terms of state planning of the economy. That's often termed corporatism.

It's not like Gosplan where the social economy is planned down to the # of eggs you will eat in a year. Instead this sort of economic guidance actually works. Government works with firms to help them compete against foreign sectors, goosing some sectors while letting others wilt.

No country with a mostly private education system and a poor public education system has ever produced any kind of an educated population.

Up here in the Sierra Nevada Mountains, we have many roads that are private. The country never got around to making them county roads. Without exception, they are horrible. In many cases, there are expensive homes and properties lining these roads. The homes sell for about ~$300,000+ now. Most people living there have some money and they are not poor at all.

Thing is, everyone would have to get together to pitch in to fix the road and maintain it. People, even well to do folks, can never seem to get together to do that, so you have a horrific road. It's really strange to try to drive down a nightmarish road while looking at very nice, fancy houses with new cars on either side.

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The "Benefits" of Deregulated Capitalism

Lack of regulation in capitalism leads to the ability to roll up huge gains in wealth for those at the top of the food chain, and also leads to huge economic disasters on a national scale such as we are experiencing now in the US.

The italicized portion of the previous sentence is precisely why business, the rich, the media and the plutocratic political parties in the US (originally the Republican Party, but now both parties), support the deregulation of the capitalist system in the US and all over the world.

The verdict is in on the deregulation of capitalism that has been the rage all over the world for the past 30 years. Almost everywhere it has been tried, it has caused massive discrepancies in wealth distribution. The top 20% of the income earners everywhere on Earth have benefited, and the bottom 80% have lost out.

That's why Latin America has been voting in leaders who have campaigned on platforms that can be roughly translated as, "The Hell with neoliberalism". Far from being Leftists or Communists, most of the new Latin American Left is simply objecting to the observable failure of 20-30 years of neoliberalism in Latin America and trying to fashion some sort of social democratic alternative.

Even honest proponents of neoliberalism in the US media like Fareed Zakaria have admitted that neoliberalism in Latin America has failed. The usual lie has been, "It hasn't had enough time to work yet."

This is a lie.

Neoliberalism in Latin America is working exactly as planned.

It was designed to enrich the top 20% and impoverish just about everyone else. Everyone on Earth, neoliberalism has devastated the public sector, wages, working conditions, schools, health care, etc. It has probably killed millions of people. In fact, there is good evidence that it is killing millions of people all over the world every single year.

Read about the history of the US economy in the late 1800's as it lurched from one panic to another, with wild run-ups in wealth for the rich in between.

Unregulated capitalism is like a cocaine addict with a trust fund. He can have a real wild blast as long as the money lasts, get high as a damned kite and soar to the skies. There's almost no limit to how high he can get. When the crash comes, he's going to be pounded physically and psychologically, and his trust will be drained. Freemarketeers argue that it's worth it for the fun of the run.

Regulated capitalism is like a middle-aged man who drinks a couple of glasses of wine a night. He's not able to get rip-roaring drunk like he did in his youth, nor is he able to drink his troubles away, but the hangovers are nonexistent, and he's not committing slow suicide anymore either.

Regulation is like a fog layer on the coast in a Mediterranean climate. It takes the extreme heat and cold out of a climate and leaves it at a moderate, some would say boring, middle.

During the Roaring 20's, people forget 80% of the US population actually lost money. It was only "roaring" for the top 20%. Nevertheless, most Americans think of this as a time unlimited prosperity. As we can see, not only is America governed and reported on exclusively by the Rich, but even our very history is the History of the Rich.

The Great Depression was directly caused by unregulated capitalism in the US, despite the desperate efforts of rightwing economist Chicago School professional liars to lie their way out of the facts. In the 1930's, a huge regulatory structure was put into place in part to prevent a second Great Depression from occurring.

It's worked well, but now a lot of the regulations that were put in post-Depression have been whittled away, such as the Glass-Seagall Act, that attempted to build a wall between commercial and investment banking. That way, if high-risk investment banking goes under (as it is prone to) it doesn't take down the commercial banking sector (where Mrs. Jones has her nest egg) with it.

Deregulated capitalism quickly leads to a state of affairs where you have wild economic growth and bubbles followed by bubble deflations and panics.

It's no way to run an economy, but this is the way every capitalist on Earth wants it.

Every capitalist on Earth is like a gambler in a casino with a credit card with no limits. Sensible nations do not listen to what the capitalists want - they never want anything good for the nation in the long run. The capitalist perennial children need to be continuously regulated on a short leash by regulatory adults in government in order to have any semblance of a decent society under capitalism.

Since 1980 and the beginnings of massive deregulation, the wages of 80% of the US population (nonsupervisory workers) have declined by 1% in constant dollars. They should have been going up in tandem with productivity increases, and productivity has gone up a lot in 28 years. 100% of the productivity increases in the last 28 years went to the top 20%, and 0% to the bottom 80%.

Before anyone screams race, this is the way unregulated capitalism works in any society - even an all-White one. The bottom 80% of the US population that got screwed massively in the Roaring 20's and resulting capitalist hangover called the Great Depression was overwhelmingly White.

A regulated capitalism would look a lot like what we had in the US in the 1950's and especially 1960's and 1970's. It works pretty well for a capitalist system. It's true that it tends to stifle massive wealth run-ups and bubbles (almost always caused by massive fraud anyway) but it also makes for a smoother ride and much fewer crashes, panics, recessions and depressions.

The Taoists discuss the Middle Way. So it is in capitalist economics as in the rest of life. "Live fast, die young and leave a pretty corpse," sounds romantic at 18, but a 50-yr-old who makes such a statement is a moron. Our economy has been run by 18-yr-olds for decades now. As long as we have a capitalist economy, it's time for some adult supervision.

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World O' Crap, Meet World O' Lies

Super-commenter James Schipper responds to the Problems of Democracy Under Capitalism post with this insightful comment. My comments follow:

James Schipper: There are two serious restraint on capitalism: competition and the need to make a profit.

Competition between capitalists insures that the power of capital over consumers and labor is limited. Capitalists have a common interests in the preservation of the capitalist system, but at the same time, capitalists compete against other for the favors of the consumer and to get the best employees.

Always remember that what makes capitalism work is not so much private property but competition. Private property without competition combines the worst of socialism and capitalism.

The need to make a profit sets a limit on what the corporate media can do. Newspapers have to find readers and radio and TV stations have to find listeners and viewers. This implies that they can't be too overtly propagandistic, otherwise the readers, listeners and viewers will stay away.

Commentators like Rush Limbaugh have a large following but only because they primarily discuss non-economic issues. If they spent most of their time defending business, their popularity would quickly plummet. Imagine the reaction of Limbaugh's fan's if he started to extol CEO's who make stratospheric incomes while their companies lay off workers. It is far safer to extol the uniformed heroes in Iraq and Afghanistan.

Plutocracy is a cause that can't be truthful about its aims. That's why the Republicans want ordinary working Americans to worry about college professors who have an elitist lifestyle rather than about executives and capitalists who have an elitist income.

It is ridiculous to suppose that latte-drinking, opera-watching, Volvo-driving eggheads who read foreign novels and watch foreign films are somehow a danger to working stiffs. A party that represents the rich has to be deceitful or else condemn itself to insignificance. The Republicans are such a party.

Robert Lindsay: James makes some excellent points above, especially about how "pointy-headed intellectuals who can't even park their bicycles straight", as George Wallace famously put it, into a sort of populist enemy by the Republican Party, and also about how conservatism is always, by its very nature and necessarily, dishonest.

Here the Republican Party is playing into the anti-intellectual nature of US populism. We have never been a European-style cafe society, and probably never will be.

Also Republicans are taking an increasingly popular critique of their own sure elitism into a critique of fake elitists called "limousine liberals". Problem with limousine liberals being, I guess, that they are hypocrites. Similar diatribes have been launched against something similar called the "Hollywood Left".

This point is superbly made by Philip Agre in a seminal 2004 essay, What Is Conservatism and What Is Wrong with It? As Agre succinctly and immaculately:

Q: What is conservatism?

A: Conservatism is the domination of society by an aristocracy.


Q: What is wrong with conservatism?

A: Conservatism is incompatible with democracy, prosperity, and civilization in general. It is a destructive system of inequality and prejudice that is founded on deception and has no place in the modern world.

Increasingly here we have what are more or less monopolies, James. We have cable and telephone monopolies that were supposed to be regulated, but the government has basically given up regulating them. We have computer monopolies in the form of Intel on chips and Microsoft in apps and OS's.

Starbucks comes into a town, sells at a loss to drive all competition out of town and then jacks up prices. Walmart comes into town, sells at a loss to drive everyone out of business, and then keeps on selling at low cost. However, Walmart mostly sells crap. Here Walmart is violating the monopoly principle of driving up prices while adhering to the monopoly principle of selling crap.

We are now having higher-end stores opening up that charge a lot more than Walmart but at least do not sell crap. As long as there is competition in a market, prices and quality are typically relatively good.

However, the government now operates in the interest of monopoly capital, and, insanely, "free market" economics is opposed to all antitrust regulation. Traditionally, there was bipartisan support for antitrust legislation.

The new bipartisan opposition to antitrust legislation is one of the legacies of Milton Friedman's "Chicago School of Lies" free market fundamentalism snake oil that has created a Gramscian cultural hegemony in US economic thought in the past 35 years.

The Friedmanites published all sorts of nonsense, lies and BS. They went down to Chile, used it as a testing ground for their insane theories, blew up the economy, and then covered their tracks and lie about it to this very day.

They published papers and books on antitrust that overturned nearly 3/4 of a century of perfectly valid economic and legal scholarship that showed unequivocally that prices rise and the quality of services and goods nosedives as markets become more consolidated. These works made up a bunch of fancy-sounding crap that made a dishonest case that all of this proven science was not true.

Monopolies do not produce high prices and crap service and goods. Everything we know is wrong. Instead, reality is inverted and monopolies cause low prices, great products and superb services.

What we are seeing in the US is the move to more and more consolidated markets and more and more monopoly-type markets. The moves by Yahoo and Google and Microsoft on the Internet foretell an Internet that is increasingly monopolistic.

The one good thing about capitalism is competition.

Capitalists love to talk about how much they love competition, but the truth is that they hate it. Competition only benefits the consumer. All businessmen secretly want to be monopolists. All of those businesses dishonestly taking Microsoft to court for being a monopoly actually want to be monopolies themselves.

There are natural monopolies. In the US, those include phone, cable, power, water and some others. Those natural monopolies must be regulated by the state, other wise they will turn into natural unregulated monopolies, which are disastrous for consumers and society.

It's highly dubious that corporations compete for the best workers anymore in the US, except at the highest levels. Corporations and business are perfectly happy to replace good workers with illegal aliens and H-1B and H-2B guest workers from other lands.

Both types of workers are usually much inferior to native US workers, but business no longer cares about quality in the US. Computer companies and homebuilders are perfectly happy to produce crap code and homes that fall apart in a few years. No one really cares about quality anymore in the US, and no one cares about workers either.

The whole culture is centered around getting rich, and that usually means being an employer and hiring labor. To be a worker is to be a schmuck, soon to be taken out by illegal aliens, machinery, a computer program or guest workers from India or Ecuador.

Fordism is progressive type of capitalism named after Henry Ford.

Ford found out his own workers could not even afford to buy his cars, and he was outraged. He resolved to pay his workers enough to buy his cars. This became a progressive strain in capitalism - to pay workers enough so that they would be well-heeled consumers able to buy plenty of products, while at the same time preserving high profits for business. Fordism is done and gone; it's history.

Everything is now globalized, and no one worries about whether or not people can afford to buy your stuff. If labor in one place costs too much, just outsource, move the plant overseas, hire illegals or bring guest worker scabs from India. If workers in one land can't afford your stuff, ship it to some rich people overseas. As long as enough people somewhere can afford your stuff, there's no need to pay workers enough to buy your stuff.

Furthermore, James misinterprets the degree to which Rush Limbaugh is a reactionary. I believe he does extol high corporate salaries. You now have the phenomenon of the low income, working class or middle class, White, usually younger, male, who will defend plutocracy and the politics of the rich to the hilt, despite the fact that it is against his interest.

In this way, the plutocrats have actually been honest about their project and have created a Gramscian cultural hegemony of "plutocracy is good" whereby tens of millions of suckers swallow this crap whole and spout it right back at you without thinking. They did this by saturating the media with pro-plutocrat messages and making it seem reasonable.

They also did it by creating a Lottery mindset, which was unfortunately always a part of US culture (see the Horatio Alger books). Your average White male working stiff will tell you that he too is going to become rich one day. Anywhere from 25-50% of Americans say that they will be millionaires one day. Fully 25% of Americans already describe themselves as "rich". Almost all of these people are White.

The problem with James' media model - that media outlets must compete for readers - is that there is no competition.

There is no Left alternative to Time, Newsweek and US News and World Report. On TV, there is the ultraright Fox News and MSNBC and the rightwing CNN, ABC, CBS and NBC. All of these are corporate-owned and spout one pro-corporate line.

It is true that CNN now has Lou Dobbs, who spouts a sort-of progressive populist line. It really is against CNN's interests to keep Dobbs on there, but I guess he is there because enough folks want to hear the message.

What you get instead is a pro-corporate message increasingly draped in fake populist clothing. On Fox News today, they went on and on with a fake populist message about lowering gas prices. Incredibly, they denounced speculation in oil prices, but of course, they did not offer the reasonable thing to do to remedy this - regulation of commodity markets.

Instead, they argued for massively increasing domestic oil production - in the ANWR, in the oil shale of the US Rockies and in offshore deposits. They said that the increased production would so glut the oil market (!) with new supply that this would force the commodity market to drive oil prices downwards, and this would "beat the speculators".

What is interesting is that Fox News was forced to admit that the problem in oil prices is almost entirely due to speculation. What they left out is that increased oil supply probably would not do anything to drive down prices, because the price is not being set by supply-demand anyway. So here you see the fake populism of the Republican Party - sell a fake populist but actually wildly pro-corporate message - "Open up the oil fields!"

Even if this project passed and we able to drill in all these new deposits, it would not put a dent in oil prices. But the US public is so stupid that they would have forgotten about that long ago. If a bunch of Republicans got into office on this fake promise, this is all that matters.

The US public is like a kid with ADD - no attention span. Politicians are never held accountable to promises or projects because no one ever follows promises through for years to see if they come through or not. Politicians get elected on a pile of bull, and then no one is ever there to call them on it later on.

Bush has substantially caused these oil prices by failing to regulate commodity markets (and they will never regulate those markets), but the Repubs are going to stick Obama with it. Bush caused the Iraq mess, but Obama will be stuck with that too. And both of those things are catch-22's with few non-painful ways out.

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Illegals, Unions, TINA and National Sovereignty

Excellent commenter Uncle Milton notes presciently about illegal immigration. Comments at the end:

Uncle Milton: Unions didn't gain any real power in this country until the immigration doors were slammed shut in the 1920s. In the modern era (the last three decades) you don't have to look very far to see how cheap Latino labor has suppressed the wages of meat packers, janitors, construction workers, etc.

When critiquing illegal immigration, I find it much more productive (and appealing or at least tolerated) by a wider audience when you bring up what it has done to wages and how employers have profited.

Now with the globalization of computer technology many things can be done overseas: accounting, programming, tech support, architecture. In theory, this is done for lower costs, but I know multiple cases were companies brought labor back to the US.

We hear all the time about how the US isn't producing enough engineers. What you don't hear as much is that the average engineer only stays in the field for about a decade instead of a 30 to 40 year career. Quite a bit of ageism in the field.

Our country's currency is being debased, our technology distributed (and frequently "borrowed" with no recompense in the process) to other nations, and unrestrained immigration (and attendant high birthrates of "migrants" subsidized by US taxpayers) are straining resources.

It's generally profitable to those in top 1/10 of 1% of wealth but not so great for everyone else. The concept of national sovereignty being the source of ones wealth seems to have been tossed out the window. At least Japanese and Chinese people seem to have a better grasp on the concept that a stable cohesive nation is your most important source of wealth.

Uncle makes a fantastic point here! The US labor movement only really got going after we seriously restricted immigration in the mid-1920's. We then massively loosened up immigration in 1965, at least racially speaking. At some point after that, we began to experience mass immigration.

Frosty Wooldridge notes that the 1965 Immigration Act resulted in immigration going from 170,000 - 1.1 million per year. That's a damn good reason to oppose it right there, even if you care nothing about the racial angle.

Mass illegal immigration from Mesoamerica started under Reagan in 1980, picked up tremendous speed after 1990 and has exploded since 2000.

The US union movement began to go into a serious decline around 1973 (Any relation to the 1965 immigration act?), about the same time that US wages started to seriously stagnate and wealth began being distributed upwards. Yes, even the Jimmy Carter "Atari Democrats" were in on this bullshit. We've now had 35 years of this insanity.

Plunging wages have combined with wildly increasing inequality, a flood of illegal immigration, an evisceration of our social democracy and what little Social Contract we ever had to produce 28 years of varying degrees of reactionary politics, with a brief intercession for a Eisenhower Republican Democrat named Clinton (actually, Ike was much more progressive than Bill Clinton).

Does any of this make sense? Of course not.

Why does a population where the bottom 60-80% are getting eviscerated march off and vote for the eviscerators every year? Well. They do it in the 3rd World. They used to do it in Latin America. Can you see where we are headed?

The ageism in IT is disgusting. You get about 10 years and then no one will hire you anymore because you are too expensive. 90% of new IT hires are going to H-1B job thieves anyway, and one of the Senate's paragons of Democratic liberalism, Barbara Mikulski, recently introduced a bill to greatly increase the number of H-1B job thieves to the US in order to destroy even more US jobs and lay off even more US workers.

Does that make sense? Of course not.

It only makes sense in a Democratic Party whose liberal wing has utterly abandoned US workers.

I disagree that the illegal immigration flood is only beneficial to the top .1%. Sure, they love it, but I think the entire top 20% benefits, and further, the entire US business class, from small business all the way to corporations, just loves it to death. Hispanic-Americans generally don't benefit a bit, and I insist that most of them are actually harmed by illegal immigration, but they line up on racial grounds anyway.

One of the worst things about Reagan-Thatcherism's TINA (There Is No Alternative) neoliberalism is that everywhere on Earth it has been tried, it has generally benefited only the top 20% of the population. The bottom 80% gets screwed no matter what. From 1980-1992 in the US, the top 80% gained a lot of money and the entire bottom 80% of the US population lost money!

It's been this way everywhere and as regular as clockwork. That's why Latin America is turning their back on this shit. They've had a couple decades of this poison and they are not buying anymore. These "dumb Latinos" are not as stupid as Gringos think they are! Hell, they are smarter than most White Americans.

Anyway, this nasty 20% bastard class has been created everywhere, and everywhere it has done quite a bit of damage. This class is deeply invested in neoliberalism and makes up the overwhelming majority of the professionals and movers and shakers in society. They seek to keep neoliberalism in place forever by whatever means they can.

Even in the UK, a nasty 20% elite has been created since Thatcher. They have nice new foreign cars and second homes in the country. The result has been the rightwing Labor governments of Blair and Brown. In Latin America, the masses actually voted these professional and business elites out, but it hasn't happened everywhere.

The notion of national sovereignty being the source of a nation's wealth is an interesting one, but I do not know where to start on that subject. Maybe someone else can chime in.

It's clear that in Corporate World, there is no national sovereignty anymore. The corporation is the ultimate traitor - it has no national allegiance whatsoever. How do drive around that nasty speed bump is a pretty difficult question.

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