Posts tagged ‘capitalism’

Watching the Republicans Rape America

The Republicans were in a feeding frenzy last night. All of a sudden they found themselves at an all night buffet where they could gorge themselves on all the goodies they ever wanted. I am talking about the Senate passage of the Tax Bill last night. I watched it on CSPAN and I am still sick this morning. Even if you did not know what was in it, and most Republicans or anybody else does not because they were writing it on the fly, it was a scene of pure chaos and bad government. One could not even read the hand written mark ups. And Republicans were adding their favorite pet project to a bill that will change everyone’s lives and not one hearing, not one real examination of the results. And make no mistake. It was a mass transfer of wealth to wealthy while gutting government.

But a feeding frenzy it was. I watch as Ted Cruz entered an amendment to expand tax free savings plans for college to a tax free savings plan for private schools. How is that paid for? By cutting money for public schools. Who benefits? Rich kids who go to private schools. Who suffers? Kids who can’t afford those schools. It took Mike Pence to come in and break a tie vote on the amendment (50-50) (even some Republicans could not stomach this one) to pass it. I watched as Democrats entered amendments to try to bring some sanity to the process by trying to take out the free pass to drill in the arctic wildlife refuge, reduce the reduction in corporate tax cuts to make it not cost $1.5 trillion, make the tax cuts for the middle class permanent, all to fail at the hands of the Republicans.

And now what they have nobody knows except it is dreadful. It rapes America. Republicans have been dying for years to cut Medicare and Medicaid and in this bill they got the tools to do just that, “Pay as you go” which when all the magic asterisks do not add up (and they won’t), they can gut the programs that help the old and poor to pay for their massive tax cuts. It was a brutal rape of everything America stands for and there is so much in this bill that has nothing to do with tax reform/cuts that nobody even knows is there yet. Now you can bet they will be in a rush for a reconciliation bill with the House Republicans so people don’t find out how bad it is until it is signed by the Moron in Chief. Gotta hurry because his days are numbered.

It was a sad, sad day for America. Republicans, except Bob Corker, showed they are nothing but bought fools. Don’t give me John McCain and his regular order. If he stood for anything, last night was a time for a no vote. Don’t give me Lindsey Graham, he is a kook to he is normal (comments about the President right after the election and now) or Susan Collins, who “cares about the sick” and then let them gut Obamacare (Yep that is in it too). They all voted to rape America and steal from the poor to pay off the wealthy. The party has no morals and what we saw was the very worst of America bought by capitalism. Government does not control capitalism, capitalism controls America. That is what Republican government now represent.

Democrats fought a noble battle, offering amendment after amendment to show the hypocrisy and depravity of the Republicans and those Republicans rose to the bait voting each one down. They now have the sledge hammer they need to bring down the Republicans. They need to wield it. I am sure I am one of the few who watched the debacle last night. People in America have forgotten that freedom, liberty, and the pursuit of happiness is hard work. But I can guarantee you one thing. This one will hurt and hurt badly. There is no flow down, and as the fools that voted this Republican nightmare into office start to suffer (it will be a slow burn), maybe for once, they will see the problem. Voting third party when they don’t have a chance, has consequences.

Last night I watched the verification of what I have been saying for years. The Republican Party of “old” does not exist and the one we have left is evil. I watched the failure of democracy as the majority of Americans are against this bill. I watch the greed of capitalism at its very worst where government became its tool. And now there is no doubt in my mind any more, Republicans and those who vote for them are evil. We must root this evil out of our country if we have any hope for the future.

Republicans and Economic Conservative Confusion

Republicans and almost half of Americans are really economic conservatives.  They think they are being prudent.  They are wrong.  They no longer, if they ever did, understand how the economy really  works. They confused what works for them with what works for the country.  I thought I would use the words of MSNBC’s conservative political analyst and a top advisor to the Ted Cruz campaign, Rick Tyler, to show how what they believe, and sadly believe as a religion, is total nonsense.  Well, not total nonsense, but I will get to that in a few minutes.  Rick was discussing Hillary versus the Donald on the economy.  Here is what he said:

Everything she (Hillary) is proposing is a government solution, the government is going to take care of you, somehow the government is going to make everything better, and we need somebody on the Republican side that can articulate how the free market has created the wealthiest society in all of human history. Not even close in such a short period of time…

But if he (Trump) could articulate that the free market works, it is best for the Middle Class. It’s best for the poor. It’s the equalizer in terms of economic opportunity, and if you don’t have, the government is not going to make everything equal for everybody, and they can’t create wealth, and they can’t invent, they can’t innovate, they can’t create, and that has its consequences.

I am sure he believes all this too and will get to the details in a minute, but there is a basic assumption here that goes unsaid, implicit in everything they believe, and totally wrong.  It is that business, left on its own, will create jobs and demand.  It is called Supply Side Economics.  You supply it, they will buy it and the income will generate business expansion, jobs, and more demand.  This works if there is pent up demand, and the savings/earnings to support it.  But we don’t live on that planet anymore and business and markets are driven by demand. Once a business detects a demand, they will expand to fill it regardless of regulations.  Profit is profit and they go where they can maximize short term profits.  That is their only goal.

But we live in a world of growing economic inequality where all the money from business profits is going to fewer and fewer people, and so demand is static or growing so slowly that it won’t support expansion of supply in any major way.  So the money goes elsewhere, and not into jobs.  Flow down does not exist.  That whole reality is lost on them.  And there is tons of data out there to support this, but for Republicans, all of the above is a religion based upon faith, and facts don’t count.

Now what is right in his analysis is that “the free market has created the wealthiest society in all of human history.” There is no question that capitalism, operating through the “free market” is the fastest and most efficient way to build wealth in a nation and raise living standards.  Look at China.  But here is where the devil is in the details:  Tyler and his cohorts do not understand what a “free market” is.  Think about it. Just about everything that constitutes the free market is based upon legal definitions (read government definitions) and the institutions to enforce those laws:

  • PROPERTY: what can be owned
  • MONOPOLY: what degree of market power is permissible
  • CONTRACT: what can be bought and sold, and on what terms
  • BANKRUPTCY: what happens when purchasers can’t pay up
  • ENFORCEMENT: how to make sure no one cheats on any of these rules
  • TAXATION:  what is collected to pay for the institutions to perform all the above

The point here is that there is no “free market” where business just acts without rules.  The rules are what allows the “free market”  to operate without chaos and determines who profits and protects those profits.  Without government, there is no “free market”, just chaos just chaos and abuse.  Almost all of the rules and regulations we have today were and are responses to protect someone’s interest within the free market, to make it predictable and safe.

The Republican’s real meaning is that “free market” means the rules and structure in place today with no changes in who really benefits.  And make no mistake, they don’t want to do away with the rules, well most of them anyway, they just want to reinforce the ones that benefit them or make new ones that will.  It is a choice we maked on how the “free market” works and who it benefits.  So far we have chosen the wealthy and corporations to benefit the most in the assumption that flow down works.  The result is economic inequality rivaling historical all time highs.  In the history of mankind, this kind of inequality usually ushers in decadence and revolution.

So let’s get on to his other beliefs. “…the free market works, it is best for the Middle Class. It’s best for the poor. It’s the equalizer in terms of economic opportunity, and if you don’t have, the governments not going to make everything equal for everybody.”  Okay, I grant you the “free market” works, but only when the rules are set up to protect those without power and ensure and equitable distribution of the spoils (profits).   

In the first part, “its best for the Middle Class and it’s best for the poor“, we know that is a lie.  Start with the poor. Think child labor and how goverment had to prevent it.  Remember the Robber Barons?  They used their economic power to enslave workers.  Remember the crushing of labor?  We removed the rules controlling banks and who paid the price?  Wasn’t the banks who got bailed out, it was the Middle Class and the poor.  Today, with Wall Street stocks at record highs, earnings for corporations at all time highs, and both are awash in cash, what is happening to the Middle Class?  They are stagnant.  It couldn’t be regulations because the big corporations are profiting. Must be uncertainty, right?

Okay, let’s take the next part, “It’s the equalizer in terms of economic opportunity, and if you don’t have, the governments not going to make everything equal for everybody, …”  It is easy to demonstrate this is nonsense.  The market place is only fair in terms of economic opportunity when the government is there to see that economic power does not get too great and is wielded to disadvantage others.  See Monopoly laws.  ComCast anyone?  Amazon? Microsoft? Apple? Is Congress controlled by the wealthy donors? How is that “free market” working for you?

The Supreme Court in Citizens United ruled money is speech and corporations are people, and you and I are cut out of the political dialogue.  Oh, and on the “governments not going to make everything equal for everyone,” it’s a strawman.  Government is not trying to make everything equal.  Even we liberal left progressives know that without meritocracy, the system will not operate and there has to be rewards commensurate with risk.  On the other hand how high do the rewards need to be, and does the system give everyone the same starting point to compete for those rewards?

Of course not.  That is why wealth is consolidating with a few and their offspring.  If you are poor and cannot afford college, do you have the same opportunity as the legacy of a Yale alumni?  You think the rich and poor get the same education opportunities, tutoring, parenting, police protection, preventative medical care, ability to travel for a job, access and connections,  and it goes on and on?  Republicans actually believe that all that is determined by how hard you work so they can justify all the injustices and their share of the bounty.  What the “free market” as Mr. Tyler envision it does is create massive economic inequality that becomes inequality in everything.

Finally let’s evaluate his last piece of nonsense:  “…and they [government] can’t create wealth, and they can’t invent, they can’t innovate, they can’t create, and that has its consequences.” Really?  I guess all those dams and canals built out west that allowed the economy in the west to grow and thrive didn’t create any wealth.  I guess all the roads and transportation nets, sanitation facilities, and water treatment plants had nothing to with an expanding economy.  Oh, and investing in the education and the welfare of our workforce (sadly neglected today) had nothing to do with our competitive advantage since WWII?  Of course we are now losing it.  Thank you Republicans.

I love the part about “they can’t invent, they can’t innovate, they can’t create.”  Who went to the moon?  Who funded the basic research that corporations have leveraged to create the internet?  Who funds (or did till the Republicans have decimated it) basic research that corporations won’t participate in because it’s too risky or the returns are to far in the future to spend share holders dollars looking for near term profits?

If you really want the facts, try The Entrepreneurial State:  Debunking Public vs. Private Sector Myths by Mariana Mazzucato, the RM Phillips Professor in the Economics of Innovation at the University of Sussex, England, who really did look into this B.S.  It turns out without government/industry partnership, our businesses fall behind other nations because they won’t pay for basic research that might not prove profitable in the short term. It is Government that does it and corporations then leverage it into new products.

So what’s the take away? Rick Tyler in 20 seconds of dialogue gave us the Republican mythology or maybe it is their theology because it is faith based, not fact based. It has become the conventional wisdom throughout America. But with a little digging it all falls apart.  The reality is Republican economic policies are based upon fantasies to keep the system unchanged and serving those that presently benefit from it.  Their “free market” is really a set of rules that benefit them (copy rights, intellectual property, bankruptcy, tax policies), and they simply don’t want them changed. There is no free market without government and rules and who the market benefits is determined by how the rules are written, and government makes it all possible.

Republican economic policies are counter productive because they are reducing demand while they aggregate wealth.  The truth is government builds the very framework that allows capitalism to work.  We decide through the rules who it benefits and the choices the conservative Republicans and economic conservatives have made are dragging down our economy and our future.  We need smart rules and regulations* and we need government working in concert with industry on R&D to be competitive with other governments that are doing that.  And of course we need government to invest in people and infrastructure which makes the economy thrive. Then capitalism works best for all the people.  It really is that simple.

*Rewriting the Rules of the American Economy

Let’s Talk Socialism

Since one possible scenario in the Presidential election is a heated debate about capitalism versus socialism, and socialism conflated with communism and Greece, let’s talk some sense here.  We already have socialist elements in our society.  What do you think Social Security and Medicare are?  What do you think  unemployment insurance or free high school education are?  Pure capitalism was and is a disaster.  It is a cruel system that is ripe with abuses of power.  Having said that, it can be one of the best ways to innovate and raise our standards of living.  So we are not talking about one or the other, as it will be falsely framed, but a marriage that makes both better.

Right now we do not have to look back to the days of the robber barons for bad examples of runaway capitalism.  We have the largest economic inequality we have ever experienced, stagnation in middle and lower income wages, and a rather lack luster economy as a result of that.  We have had massive failures due to a lack of regulation when capitalism ran wild.  Let’s not forget the banking crisis of 2008, the gulf oil blow out, or the latest crisis in Flint to see how government’s role* in regulating commerce, or in the case of Flint Michigan, running government like a business.

There is other evidence.  We like to think of ourselves as leaders in innovation and social mobility, but data tells a different story.  Countries in Europe, especially where they have strong safety nets, beat us out, and they are happier.  Instead of the famous hammock analogy of Republicans, a safety net makes innovation less risky and people are freed to try new things.  On the other hand, these benefits need to be paid for, and we need an entrepreneur class that is sufficiently rewarded to take the risks of spending their capital.  It is a giant balance, not a choice.

So what is the socialism that Bernie sees and so do I?  Well it is fairly simple.  First we have to get money out of politics or none of this stuff will happen.  Second, we have to look at how we protect wealth and wealth accumulation and make sure that when wealth is created, workers share in it.  That includes trade policy, patents, intellectual rights, and tax policy.  Tax policy includes subsidies, tax rates, tax breaks, and a myriad of other things that the status quo rich will fight tooth and nail hence the need to get money out of politics first.

Then let’s start with one of Bernie’s passions, free public universities.  Since other countries do it, it can be done.  Second Bernie’s best argument is that for hundreds of years we have seen a high school education as a benefit to society and provided it free of charge.  So now that we have entered the Information Age, what is wrong in investing in our work force by extending it to make sure they can get a college education?  Why is this such a leap and it could pay giant dividends in a more productive and trained workforce?

Second is universal healthcare.  Again other countries do it and lo and behold they do it for almost half the cost of our system, and that does not factor in the cost in treating illnesses only when they become acute and someone shows up in one of our emergency rooms.  From a principled point of view, healthcare is a natural right and from a practical point of view, it could finally end the burden we put on our own businesses to provide it while providing more security to our individual citizens to change jobs without the fear of losing healthcare.

Okay, what about expanding Social Security?  Once again we are not taking into account how employer based retirement plans basically do not exist anymore.  Social Security also is a system based upon how much you pay in so there are built-in incentives to work and work longer.  Think about it.  If your healthcare and retirement are secure, would you not be more likely to try new jobs and create businesses if the risk of failure is offset by these safety nets?  That is exactly what is going on in many European countries.

How do we pay for all this?  Well we all pay more taxes.  But if the economy, because of our investment in it and its resources grows, these investments will be much cheaper than first envisioned.  And we still make sure that there is plenty of incentive in the system for innovation and risk taking.  But right now it has become obscene and the incentives are in wealth accumulation, not investing that wealth in creating a more industrious and productive society.

Bottom line here is fairly straight forward.  Capitalism gets tamed and we actually create an environment where tamed capitalism can grow and make things better for all of us. In a word, it operates more effectively.  The idea that we will have one or the other, or that it is pie in the sky and we can’t afford it is ludicrous.  These are simply claims of those who want to keep things just the way they are because they got theirs and screw you.  Oh, and comparing it to Greece is also nonsense.  We own our own currency and these solutions will have to be paid for through growth and a fair sharing of the tax burden.  That is what Progressives and  Bernie stand for.  That is what “socialism” is all about.

*In the Republican view of capitalism, government is bad because it just gets in the way.  And that is true, sometimes in very detrimental ways, but mostly it does just the opposite to keep capitalism from destroying us.  Had safety regulations in the gulf oil spill been enforced, that blow out probably would not have occurred.  Had politicians not lifted the restraints on banks, we would not have had the crash of 2008.  Think about why a Republican administration created the EPA or why there is a minimum wage: To protect us from a rush to the bottom for short term gains.

Government has a vital role to play in a market based economy because markets maximize the efficient use of investments going to those enterprises most likely to maximize profits.  It picks winners and losers based upon short-term profits.  Right now the most profitable industry is the oil and gas industry and yet further expansion will destroy our living environment.  The most profitable investment is in financial instruments that do not create jobs or industry.  So government has a role to play in setting incentives that take the long-term welfare of all of our citizens into account.

Finally, government plays a vital role in basic R&D because markets and industries find this too risky and will invest in short-term less risky ventures which curtails innovation from new research.  Government’s investment in infrastructure not only provides good jobs that stimulate the economy, but builds the necessary infrastructure from which industry can leverage, thrive, and compete in the future.  So again small government is not the goal, smart government is.  Welcome to the world of Progressives.

Why We Should Fear Wall Street:  Drug Prices

We have the highest drug prices in the world and Pharmaceuticals make outrageous profits.  We all know the story of how Turing Pharmaceuticals acquired the American marketing rights to a 62-year-old drug to treat a devastating parasitic infection and raised the cost of one pill to $750 from $13.50. That brought the cost of a course of treatment for some patients to hundreds of thousands of dollars. Turing’s founder, Martin Shkreli, was on the TV explaining to us that that was just business and the marketplace will tell us whether that is the right price.  Incidentally he was indicted on Thursday on charges of securities fraud unrelated to his drug dealings.

But my point is not the high price of drugs, but the mentality that allows us to screw our fellow-man.  It is the price the market place will bear.  If you can make a living at that price, it must be fair.  There are two things going on here.  First is the money thing.  Worth is determined by the amount of money you can make.  You are obviously worthy if you make lots of money.  See how many people equate Donald Trumps wealth to him being admirable. Second is that the ultimate decider of worth is the market place which bestows that wealth.  Nothing else is really important.  The Market Place becomes the arbitrator of good and bad.

This is the mentality that seems to drive our financial class.  It is why short-term profits are all that matter even though long-term disaster is somebody else’s problems.  Least we forget the financial collapse in 2008 where inflated housing prices based upon packaged loan securities that were worthless which was the logical conclusion of this type of thinking. At some level they knew the repackaged loan securities were worthless, that it was a house of cards, yet for the most part, it provided prodigious returns so what the hell.  And the sad thing is, most of them did not do the suffering when their house of cards failed.  How is that what we expect of capitalism?

That is the mentality you see in drug prices.  It is what the market place will bear to turn the maximum profit, not a reasonable profit so the most people can benefit.  People who do that are seen as losers, and guys like Shkreli buy them up seeing their product “under valued”.  In the drug price example we have anything but a free market place where competition would drive down prices.  Instead we have a market place rigged through patents and tax law to favor maximizing profits and favoring certain companies.  Once again it is all part of the idea that wealth and acquiring it is to be admired.

And this kind of thinking has flowed down until it infects our entire society.  Acquiring wealth is the goal in life and if I can get away with it, then it was okay to do.  It drives short-term thinking like ignoring global warming or demanding low taxes when our infrastructure is rotting under our feet.  It legitimizes ignoring what it does to our fellow-man because, well the market place is the unbiased arbitrator.  We see it in Donald Trump and his latest outrageous statements as an extension of this logic.  This is what the people demand (latest polls of the base or his market place) therefore it is the right thing to do.  People want it.

Does this then say that capitalism has rotted our soul.  Not at all.  What it says is capitalism is an ideal and unless it is carefully regulated, well then it does rot our soul.  If you really study the market place what you find is that the winners do everything in their power to make sure real capitalism does not work.  They lobby Congress for special privileges and do what they can to hobble their competition.  While capitalism has shown itself to be the best system to raise standards of living and advance wealth in a nation, it has also shown how it concentrates power in the wealthy who then use that power to make sure they have all the advantages, in effect muzzling capitalism.

Bottom line is that we should recognize how capitalism is a boon and a curse and use government to control it.  The issue is not should it be regulated, but to do it smartly. This is anathema to Republican small government, little regulation, but quite frankly we have seen how that works.  This is what Bernie Sander’s has been trying to say about being a democratic socialist.  We need to make sure that capitalism is working for all of us, not just a few.  And the Masters of the Universe have shown us what the ugly side of capitalism looks like.  It is why maybe we should rethink all that deference and respect we give to those who have accumulated wealth.  Maybe that isn’t everything. Maybe it is not an indication of wisdom.  They are not synonymous.  That would be a new idea.

The Emperor Has No Clothes

It is rather interesting to watch the panic in Republican circles to the attack on Mitt Romney’s style of capitalism.  What has so terrified them is that the attack has come from within.  In order to understand this reaction you have to understand that the emperor has no clothes.  You remember this fable about a a couple of tailors who were ripping off the emperor by telling him that the clothes he was wearing were the most elegant in the world, but was invisible to those unfit for their positions, stupid, or incompetent. When the Emperor parades before his subjects in his new clothes, the crowd all complements his wonderful outfit and then a child cries out, “But he isn’t wearing anything at all!”  The point is we are blinded by what we believe, or fearful someone will find out we have doubts, and don’t see reality as it is.

For Republicans, their economic faith in the free market system is like a religion.  Get government out of the way and everything will be better, milk and honey for everyone.  Now they expected attacks from the left or what is today called the left and is really the middle or middle right because the right is so far fight.  Those are just heretics or barbarians at the gate and one does not even have to consider their sadly misguided ideas.  But when questions start to arise within the church of Republicanism, it starts to shake the belief system at its foundations.  To even suggest that some kinds of capitalism and greed just might not be good for the country shakes the very foundations of their belief system.  More importantly it shakes the foundation of the edifice that has allowed them to fool most of the people all of the time, not noticing the emperor has no clothes.

What is interesting and you hear it in their own words, is that they are totally out of touch with progressive politics today because they have closed their minds to examining their own fundamental beliefs for fear of finding faults.  I know this may be shocking to them, but Progressives are also big believers in capitalism.  But what you hear from the right is the language of big government interfering with their sacred market place as haters of competition as they describe Progressives.  But what Newt and Rick (Gingrich and Perry) are raising is a healthy look at whether some forms of capitalism, while creating wealth for a few, may be damaging to the economy as a whole.  It is just the kind of attack they would expect from the Progressive heretics, but not from within where people might just pay attention.  People who they believe are believers are questioning some of the tenants of their faith and the terror is that the whole edifice could come crumbling down like the emperor with no clothes.

When you get right down to it and you actually read Mitt’s economic plan, it is lower taxes for the wealthy, less regulation, and major cuts in government spending (read cuts to programs that help the poor).  It is more of the same that has so effectively transferred wealth to the 1%.  The 99% are starting to question the unfairness of the system which has resulted from these policies.  Progressives are pushing for more fairness and spending to build the infrastructure and invest in our human capital to provide the fertile environment for the growth of business and industry.  Pure capitalism as the Republicans define it, which of course doesn’t exist, and which is now thoroughly tilted in the favor of the 1%, is being threatened.  Republicans represent the 1% and have formed this symbiosis between wealth and politicians to keep things just the way they are.  This has all been under the guise of keeping government out of business and interfering with the market place.  This hides the fact that in reality government has been used to tilt the playing field badly in favor of the 1% and the economy is suffering.

Now the very foundation of what has pulled the wool over the eyes of so many conservative Republicans who have voted against their own best interests, the unquestioning belief in unfettered capitalism, is being attack from within.  Maybe we ought to take a more nuanced look at capitalism.  It is actually a very healthy thing to examine ones beliefs and adjust them for the reality of the outcomes.  But in this case, that examination could threaten the whole edifice because the edifice is founded on unquestioning faith in all of capitalism as they define it.  Oh my god, could Progressives be making sense?  It would be nice to think this was actually a healthy look at their economic philosophy, but of course it isn’t.  It is really a reprisal attack on Mitt where he is weakest.  But if it exposes the flaws in the foundation of their economic faith, if it awakens people to the fact that the emperor has no clothes, it could be the end of the conservative right, at least the economic conservative right.  Could Progressives have a point?  No wonder they are terrified and are putting major pressure on Mitt and Rick to cease and desist.  Somebody might wake up and say, “But he isn’t wearing anything at all!”