Greed, Fraud, Dishonesty
1-5-16 Senator Bernie Sanders
To those on Wall Street, let me be very clear. Greed is not good. In fact, the greed of Wall Street and corporate America is destroying the fabric of our nation. And here is a promise I will make as president: If Wall Street does not end its greed, we will end it for them.
As most people know, in the 1990s and later, financial interests spent billions of dollars in lobbying and campaign contributions to force through Congress the deregulation of Wall Street, the repeal of the Glass-Steagall Act, and the weakening of consumer protection laws.
They paid this money to show the American people all that they could do with that freedom. Well, they sure showed the American people. In 2008, the greed, recklessness, and illegal behavior on Wall Street nearly destroyed the U.S. and global economy. Millions of Americans lost their jobs, their homes, and their life savings.
Meanwhile, the American middle class continues to disappear, poverty is increasing, and the gap between the very rich and everyone else is growing wider and wider by the day. But the American people are catching on. They also know that a handful of people on Wall Street have extraordinary power over the economic and political life of our country.
We must act now to change that. Our goal must be to create a financial system and an economy that works for all Americans, not just a handful of billionaires.
There are eight points to my plan, and I want to go through each of them here because I think it's important for our campaign to discuss specific policies with our supporters. Some of this may seem a little in the weeds, but I trust our supporters to be able to handle this kind of policy discussion.
Here's my plan for what I will do with Wall Street when I am president:
Break up huge financial institutions in the first year of my administration. Within the first 100 days of my administration, I will require the Secretary of the Treasury to establish a “Too Big to Fail” list of commercial banks, shadow banks, and insurance companies whose failure would pose a catastrophic risk to the U.S. economy without a taxpayer bailout. Within one year, my administration will break these institutions up so that they no longer pose a grave threat to the economy.
Reinstate a 21st Century Glass-Steagall Act to clearly separate traditional banking from risky investment banking and insurance services. It is not enough to tell Wall Street to "cut it out," propose a few new rules and slap on some fines. Under my administration, financial institutions will no longer be too big to fail or too big to manage. Wall Street cannot continue to be an island unto itself, gambling trillions in risky financial instruments. If an institution is too big to fail, it is too big to exist.
End too-big-to-jail. We live in a country today that has an economy that is rigged, a campaign finance system which is corrupt, and a criminal justice system which often does not dispense justice. The average American sees kids being arrested and sometimes even jailed for possessing marijuana. But when it comes to Wall Street executives — some of the most wealthy and powerful people in this country whose illegal behavior hurt millions of Americans — somehow nothing happens to them. No jail time. No police record. No justice.
Not one major Wall Street executive has been prosecuted for causing the near collapse of our entire economy. That will change under my administration. “Equal Justice Under Law” will not just be words engraved on the entrance of the Supreme Court. It will be the standard that applies to Wall Street and all Americans.
Establish a Tax on Wall Street to discourage reckless gambling and encourage productive investments in the job-creating economy. We will use the revenue from this tax to make public colleges and universities tuition free. During the financial crisis, the middle class of this country bailed out Wall Street. Now, it’s Wall Street’s turn to help the middle class.
Cap Credit Card Interest Rates and ATM Fees. We have got to stop financial institutions from ripping off the American people by charging sky-high interest rates and outrageous fees. In my view, it is unacceptable that Americans are paying a $4 or $5 fee each time they go to the ATM. And it is unacceptable that millions of Americans are paying credit card interest rates of 20 or 30 percent.
The Bible has a term for this practice. It's called usury. And in The Divine Comedy, Dante reserved a special place in the Seventh Circle of Hell for sinners who charged people usurious interest rates. Today, we don't need the hellfire and the pitchforks, we don't need the rivers of boiling blood, but we do need a national usury law.
We need to cap interest rates on credit cards and consumer loans at 15 percent. I would also cap ATM fees at $2.
Allow Post Offices to Offer Banking Services. We also need to give Americans affordable banking options. The reality is that, unbelievably, millions of low-income Americans live in communities where there are no normal banking services. Today, if you live in a low-income community and you need to cash a check or get a loan to pay for a car repair or a medical emergency, where do you go? You go to a payday lender who could charge an interest rate of over 300 percent and trap you into a vicious cycle of debt. That is unacceptable.
We need to stop payday lenders from ripping off millions of Americans. Post offices exist in almost every community in our country. One important way to provide decent banking opportunities for low-income communities is to allow the U.S. Postal Service to engage in basic banking services, and that's what I will fight for.
Reform Credit Rating Agencies. We cannot have a safe and sound financial system if we cannot trust the credit agencies to accurately rate financial products. The only way we can restore that trust is to make sure credit rating agencies cannot make a profit from Wall Street. Under my administration, we will turn for-profit credit rating agencies into non-profit institutions, independent from Wall Street. No longer will Wall Street be able to pick and choose which credit agency will rate their products.
Reform the Federal Reserve. We need to structurally reform the Federal Reserve to make it a more democratic institution responsive to the needs of ordinary Americans, not just the billionaires on Wall Street. It is unacceptable that the Federal Reserve has been hijacked by the very bankers it is in charge of regulating. When Wall Street was on the verge of collapse, the Federal Reserve acted with a fierce sense of urgency to save the financial system. We need the Fed to act with the same boldness to combat the unemployment crisis and fulfill its full employment mandate.
So my message to you is straightforward: I’ll rein in Wall Street's reckless behavior so they can’t crash our economy again.
Will Wall Street like me? No. Will they begin to play by the rules if I’m president? You better believe it
Obama, Clinton and Regan
Early in 2015 President Obama spoke before the Cleveland Club. After the speech 7th grader Alura Winfrey inquired, “If you could go back to the first day of your first term what advice would you give yourself?” Obama reflected for a moment and then blithely explained he would have worked harder to sell his economic policies.
Ms. Winfrey asked the right question but might have elicited a more revealing response if the question was given more context and phrased more insistently. Something like this: “Given that under your watch your party lost the country, in retrospect what would you have done differently?”
The data clearly would have supported her. When Barack Obama took office Democrats controlled the White House, both houses of Congress and had outright control (both houses of the state legislature and the governorship) of 27 states. Republicans controlled 17. In 2010 Democrats lost the House and the number of Democrat to Republican-controlled states almost exactly reversed. In 2014 Republicans won the Senate and the score regarding state control now stands at an astonishing 32 to 7 in favor of Republicans. And Republicans could complete the federal trifecta in 2016.
Nothing Obama could have done would have avoided the tsunami of vicious racist and xenophobic hatred that washed over him and the country, aided and abetted by the savagely partisan and vitriolic FOX news. Nothing would have stopped obscenely rich and intensely self-interested individuals like the Koch brothers from pouring hundreds of millions of dollars into campaigns to discredit and defile the President and the government in general.
But Obama might well have stunted the emergence of a rightwing populist movement if he had pursued an aggressive populist strategy of his own, one that demonstrated government could effectively challenge giant corporations and unbridled private greed on behalf of small business and the average family.
Obama certainly had the opportunity. The economy was in free fall. Millions faced the prospect of losing their homes. Millions more were losing their jobs. After freeing itself of most government restrictions and oversight the financial sector had become dysfunctional. Even stalwart defenders of laissez faire capitalism were confessing the error of their deregulatory ways. “Do you feel that your ideology pushed you to make decisions that you wish you had not made?” Representative Henry A. Waxman (D-CA) asked Ayn Rand acolyte Alan Greenspan, Chairman of the Federal Reserve in October 2008. “Yes, I’ve found a flaw,” Greenspan reluctantly conceded, and added, “I’ve been very distressed by that fact.”
The crisis in the health care sector was less visible but the sector’s inefficiencies and callousness were manifest. At a cost 30-100 percent higher than other nations were paying for universal health care, the America health care “system” left over 40 million uninsured. As many as 45,000 people died each year because they lacked health insurance. Medical expenses caused 60 percent of all personal bankruptcies and had been rising by twice the inflation rate for several decades. Shrinking numbers of companies were offering employees adequate health care insurance and those that did were requiring more of the premium to be paid out of the workers’ paychecks even while insurance companies increased the level of deductibles.
To his credit Obama did try to make systemic changes in both the financial and health care sector. To his everlasting discredit he tried to make these changes without actually structurally changing the system. Instead of confronting power he bribed the powerful: $700 billion in direct support and trillions in low cost money for the banks, $500 billion for the health insurance companies. He enlisted the support of giant pharmaceutical companies, among the most profitable of all manufacturing firms, by refusing to cap drug prices. He enlisted the support of giant insurance companies by embracing an individual mandate he had opposed during the campaign, thus guaranteeing the companies millions of new mostly healthy younger customers, whose premiums would be heavily subsidized by the government.
At one point Obama met with the CEOs of the nation’s 13 largest banks. He accurately warned them, “My administration is the only thing between you and the pitchforks.” But rather than make demands, he pleaded with the bankers: “Help me help you.” They were only too glad to do so.
Those with the pitchforks were enraged. Anti-government activists were delighted. The American public needed someone to blame and if Obama wasn’t willing to blame those who deserved it, the Koch brothers and Fox News and others were more than willing to step into the vacuum and blame the government.
What Obama Could Have Done
Obama could have chosen a different path. But doing so would have required that he tell the American people who really deserved blame for the crises and why the system that allowed them to do so must be changed.
In 1933 in his first Inaugural Address Franklin Delano Roosevelt identified the cause of the economic collapse and declared war on Wall Street. “Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men,” he declared. “They only know the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish…the money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.”
Forty-five years later Ronald Reagan came to office in the midst of another economic crisis but unlike FDR he declared war on government. “It is no coincidence that our present troubles parallel and are proportionate to the … unnecessary and excessive growth of government…. government is not the solution to our problem; government is the problem.” Reagan’s narrative eventually became the guiding philosophy of both political parties. Recall Bill Clinton’s famous declaration, “the era of big government is over.” Indeed one might argue that it was not Ronald Reagan who undid the New Deal. It was Bill Clinton.
In his Inaugural Address Obama needed only to change two words of Reagan’s to begin to change the narrative and foster a new populism: “It is no coincidence that our present troubles parallel and are proportionate to the … unnecessary and excessive growth of giant corporations…. corporations are not the solution to our problem; corporations are the problem.”
The time was propitious for taking on corporate capitalism. A month before the election, responding to popular outrage, Congress had rejected the first no-strings-attached bailout bill despite warnings that it had to act within hours or risk a total financial meltdown and against the wishes of the White House and leaders of both parties. The American people wanted public money used for the public good rather than to satisfy private greed. A revised bill directed the use of bailout money to increase lending and prevent foreclosures.
The banks responded by thumbing their collective noses at the American public.
But by the time Obama took office bailout recipients were actually reducing lending and simply parking their money at the Federal Reserve. As Matt Taibbi notes, in August 2008, before the bailout, banks deposited $2 billion in excess reserves at the Fed. By January 2009, that sum had ballooned to an astonishing $843 billion. A few days before Obama’s inauguration the giant insurance company AIG, the largest bailout recipient paid out bonuses totaling $160 million, more than $1 million each to 73 employees of the department whose financial manipulations had bankrupted it.
In the early days Obama promised to take on the banks. A few weeks after taking office he told Congress, “I intend to hold these banks fully accountable for the assistance they receive, and this time, they will have to clearly demonstrate how taxpayer dollars result in more lending for the American taxpayer.”
He had the tool to make that happen, and more. Congress had given the White House authority to own the banks. Indeed, support for government ownership had surprisingly broad support. In February 2009 Mr. Greenspan told the Financial Times, ”It may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring,” The Financial Times reported, “policymakers across the political spectrum appeared to be moving towards accepting some form of bank nationalisation.” Senator Lindsey Graham (R-SC) told the FT. “We cannot keep pouring good money after bad…If nationalisation is what works, then we should do it.”
By early 2009 the federal government had effectively taken control of Fannie Mae, Freddie Mac and AIG and it also acquired equity shares in the nine largest banks. In late February the US government took a 36 percent equity stake in Citigroup, gained control of half the seats on the Board of Directors, and gained the right to fire senior management. The government acquired a more modest share in the nation’s largest bank, Bank of America, but only because they refused to bargain with the banks the way banks bargained with their customers. The government had provided $40 billion to Bank of America. The Wall Street Journal noted that at the time the entire market value of Bank of America was about $25.5 billion.
The government, however, went out of its way to structure its equity investments in ways that would not permit it to dictate, but that was a policy path that wasn’t inevitable. The business world would have understood if the government had called what it was doing a “hostile takeover”. These were common. And often a hostile takeover was followed by firing senior management and breaking up a company to raise its share price. Obama could have looked to do the same as well as demand rather than beg for an increase in lending and a modification of mortgage terms to reduce foreclosures.
If he did so, Obama would have earned undying hatred from Wall Street, as FDR had. But the American public likely would have supported him. Public opinion polls at the time consistently show that Americans wanted to break up the banks.
Public opinion polls also showed a deep suspicion of health insurance and pharmaceutical companies. Between one third and half supported redesigning the medical system to significantly reduce the role of private profit oriented insurance companies.
Obama succeeded in dramatically expanding one public insurance program, Medicaid. During the campaign he had supported a broader public option. The Public Option Act would have allowed all citizens and permanent residents to participate in the nation’s largest single payer insurance program, Medicare.
Expanding Medicare would have given the American people the ability to choose public over private, non-profit over profit. Would there have been any role for private insurance companies? Possibly. Many nations with excellent universal health plans do rely on private insurance companies. But these companies are so tightly regulated as to make them essentially public utilities. Their profits are capped. The menu of basic services mandated is extensive. Drug prices are strictly regulated. The companies compete less on price than on service.
In both the health care and financial sectors Obama could have educated Americans about how the profit motive provides a powerful incentive for corporations to do the wrong thing. To maximize profit for shareholders, health insurance companies deny services to policyholders. Even conservative federal Appeals Court Judge Richard Posner observed that the “incentive [of some insurers] is to keep you healthy if it can but if you get very sick, and are unlikely to recover to a healthy state involving few medical expenses, to let you die as quickly and cheaply as possible.”
In early 2009 an investigation by the House Subcommittee on Oversight and Investigations concluded that over a five year period three large health insurers had denied payments to 20,000 customers in order to increase profits by $300 million. An investigation by Senator Jay Rockefeller found that just 74 cents of every premium dollar for individual health insurance actually went to pay for health care. One company paid out only 66 cents on the premium dollar. Medicare, America’s largest (although not the only) single payer system, spends 95-98 cents on the dollar it receives in taxes for medical expenses.
The same dynamic infected the financial sector. Bonuses were based on selling products, toxic on not. Banks pushed no-down-payment mortgages on people without jobs setting payments artificially low for the first few years. After putting together millions of little ticking time bombs banks then bundled mortgages and offloaded their fiduciary responsibility to investors. Rating agencies fraudulently gave the securities high ratings. Appraisers fraudulently inflated the market value of the properties.
Just before the 2008 election Bank of America agreed to pay $8.4 billion to 400,000 defrauded customers to settle a suit filed by 11 states. One trader at Barclays more recently summarized the ethics of the financial sector, “If you ain’t cheating you ain’t trying.”
To accomplish a systemic restructuring of the health and financial sectors Obama would have had to mobilize the American public. He was and is an excellent communicator. And he could have taken a page from the right wing playbook by putting a human face on his message. Ronald Reagan had a gift for doing so. He repeatedly talked of a Welfare Queen who used multiple identities to defraud the welfare system in order to substantiate his point that the poor were freeloaders taking advantage of bleeding heart liberals.
Obama would have had no problem putting a human face on unbridled greed. The CEO of the giant insurance company United Health was given stock options worth $1.1 billion and then had the arrogance and gall to fraudulently backdate these options to allow him to reap another $500 million. Now that’s a welfare queen!
Obama would have had no trouble offering the American people horror stories from both the financial and health sectors. In early 2010 a Google search for the term “health insurance horror stories” generated 419,000 hits. Former Cigna insurance company executive Wendell Potter observed, “If you’re not outraged, you’re not paying attention.” Obama’s job should have been to make Americans pay attention.
He could have run a series of TV ads similar to the ones the health insurance companies financed that helped derail Clinton’s ill-fated health plan in 1994. Those starred the mythical couple Harry and Louise terrified at the prospect of government health care.
Obama’s could have starred real individuals and couples in real life situations where private profit-oriented corporations are terrorizing them. Like the woman who was denied breast cancer surgery because she had been treated for acne in the past or the man whose policy was rescinded just as he needed costly medical intervention because his insurance agent had incorrectly entered his weight on the application forms.
And Obama could have highlighted some of the many horror stories stemming from the unquenchable greed of giant pharmaceutical companies. Congressional hearings held in 2008 found one company that acquired anexisting drug to treat breathing problems in newborns and hiked the price from $100 a unit to $1500. Another company acquired a decades-old drug for infantile spasms and raised its price from $40 a vial to over $23,000!
Foreclosure horror stories were, and are as common as health insurance horror stories. As Matt Browner Hamlin of Occupy Our Homes told Alternet several years ago, “You can basically throw a dart off a building and hit someone with a foreclosure horror story.” Sarah Jaffe reported how Christine Frazer and her family were thrown out of the Atlanta home they’d lived in for 18 years, at gunpoint in the dead of night. Kathryn Nava wound up on disability and had trouble making her mortgage payments. A friend was willing to help her make her back payments, but wanted to see a payment history. The mortgage company wouldn’t provide that history. In desperation Nava called the president of the company. Here is his coldhearted voicemail, “Let me enlighten you, Kathy. First of all, there’s nothing in your contract with us says we owe you any history, now, next year, five years from now or the next time…I’ve begun foreclosure today. I bet you’re sorry now that you made that phone call. I don’t need to put up with your crap, OK?…Bottom line, I’m doing nothing for you now.”
Even if Obama had done all these things he would still have had to counter those who echoed (and echo) Ronald Reagan’s narrative. Responding to a later State of the Union address, Obama Senator Marco Rubio (R-FL) offered up the Republican trope, “In fact, a major cause of our recent downturn was a housing crisis created by reckless government policies.”
Obama could have noted that in 2006 private lending institutions issued about 85 percent of subprime mortgages. But he could and should have gone much further and performed an ideological jujitsu on the right wing narrative by agreeing with Rubio that the collapse was in large part driven by “reckless government policies” but then explain that the recklessness was in eliminating safeguards that for more than two generations had protected the American economy and households.
In 1999 Congress recklessly repealed the Glass-Steagall Act that for 50 years had stopped Wall Street from speculating with government guaranteed deposits. A year later Congress recklessly deregulated the derivatives market. The next year the new federal bankruptcy act gave derivatives priority for payment. In 2004 the SEC recklessly waived the rules that limited lenders to a maximum debt-to-net-capital ratio of 12 to 1 for five giant Wall Street firms– Goldman Sachs, Merrill Lynch, Lehman Brothers, Bear Stearns and Morgan Stanley. They promptly ratcheted up ratios to 30 and even 40 to 1. Three years later Washington overturned effective state anti-predatory lending laws.
As William Black reports, from 2002-2007 honest appraisers delivered to Washington officials a petition ultimately signed by 11,000 of their colleagues charging that lenders were pressuring them to artificially inflate prices on properties and blacklisted those who refused. The government recklessly refused to act.
But Obama did none of those things. One result is that today if you do a Google search with the term “insurance horror stories” you’ll get over 1 million hits. But now many if not most are horror stories about Obamacare. Another result is that economic power has become even more concentrated as the number of community banks shrinks while the assets of the 5 biggest banks are almost 40 percent larger than they were before the crisis. These five banks now control over 44 percent of the nation’s banking assets and 39 percent of the nation’s GDP. In the health sector, insurance companies, hospitals, drug companies and doctor organizations have engaged in a frenzy of mergers and acquisitions.
The failure of Obama to either rhetorically or operationally adopt a truly populist strategy has, I firmly believe, given rise to the Bernie Sanders phenomenon. His message is resonating because he is clearly saying that will bring real change by restructuring the system and redistributing and democratizing power and resources. It may be one reason he labels himself a socialist. After a speech at Georgetown University Sanders answered a French student who asked why he feels the need to call himself a socialist. “(M)y vision is not just making modest changes around the edge – it is transforming American society,” he responded.
So how might President Obama have answered 7th grader Alura Winfrey? Perhaps this way: “Frederick Douglass once declared, ‘Power concedes nothing without a demand. It never did and it never will.’ I was challenging two unethical and inhumane systems dominated by giant private corporations whose sole aim was to maximize corporate and individual profits. I should have realized that I needed to convince a skeptical public that government could act on their behalf. And I could do so only by clearly acting on their behalf, which meant confronting power with power.”
Paul B. Ferral 10-30-15
Happy Halloween! America’s been having fun dissecting and transplanting body parts onto Adam Smith theories since 1776, molding a Frankenstein monster into an economy for narcissist billionaires. It worked for a while. Now its a serial killer on a rampage, turning against the soul of the nation that gave it birth, into a coliseum for political, economic and cultural zombies tearing each other apart.
Cue music. Dense fog rolls in. The drumbeat of Michael Jackson’s “Thriller” pounding, fills the graveyard of economic horrors draining America’s GDP of its lifeblood: “Darkness falls across the land. The midnight hour is close at hand. Creatures crawl in search of blood.” The crypts in Adam Smith’s mausoleum prepare to receive the remains of a Frankenstein economy. Vampires rise in the dark, now destroying themselves from within, taking the global economy down with it. Listen to the beat, feel the lust for the dark evil of economic blood:
“They’re out to get you ... No one’s gonna save you ... from the beast about to strike ... The foulest stench’s in the air ... The funk of forty thousand years ... Grizzly ghouls from every tomb ... are closing in to seal your doom ... You fight to stay alive ... Your body starts to shiver ... No mere mortal can resist ... the evil of the Thriller.”
Halloween once was the family favorite across America, loads of fun. But this year, it seems zombies, ghouls, vampires all de-materializing, draining all the bloody spirit out of Halloween. America’s Frankenstein economy is in line with Daron Acemoglu and James Robinson predictions in “Why Nations Fail: The Origins of Power, Prosperity, and Poverty”: Nations grow. Wealth concentrates at the top. The elite manipulate to protect their wealth. They close doors that got them to the top. Economies collapse. Nations fail.
This Halloween that same pattern is accelerating across America as wealth rapidly concentrates at the top, GDP growth keeps declining. This time, however, the door is also closing on entrenched zombie capitalists as the inequality gap widens. They are losing the battle to control government, threatening insiders, setting up revolutions. Here are seven signs of this classic pattern:
1. Frankenstein economics is a mausoleum for trickle-down capitalism
This theory that policies that help the rich get richer will “ultimately help everybody,” has been with us a long time. Foreign Policy says it was coined by the great urban philosopher Will Rogers when he commented on Herbert Hoover’s 1928 tax cuts: “The money was all appropriated for the top in the hopes that it would trickle down to the needy,” but the president didn’t “know that money trickles up.”
Since the presidency of Ronald Reagan, zombie capitalists have turned trickle-up into a flood. Forbes Global Billionaires list rocketed from 322 in 2000 to 1,826 in 2015. By 2099 Credit Suisse predicts 11 trillionaires. But for the rest of the world, capitalism is a cancer: A billion live on less than two dollars a day. And as global population explodes to 10 billion by 2050, the widening inequality gap will trigger revolutions, pandemics, starvation, an overheated planet. Trillionaires? Or GDP below 1% by 2099?
2. Frankenstein economy is now America’s new Invisible Hand
Adam Smith was a moral philosopher, believed the Invisible Hand of a divine power would act to the benefit of all. Unfortunately, today’s capitalists took away control of the Invisible Hand, transformed it into a blood-sucking vampire, into “mutant capitalism” as Jack Bogle calls it, an egocentric materialism with no moral compass that justifies America’s obsession with celebrity power and personal wealth.
Nobel Economist Joseph Stiglitz warned of this new “Frankenstein economy” mythology. Lacking any scientific proof of their own ideologies, insiders use computer technology, math and physics to justify their ideological biases, dismissing the economic impact of climate change, research on the predictably irrational, often evil behavior of all humans.
As a result, today’s capitalists often become climate deniers, ignore social issues, focusing instead on justifying the self-serving behavior of billionaires maximizing profits, accumulating massive wealth, dangerously widening the inequality gap. They pretend their myth-based economy works, even as they drain our GDP’s soul of blood.
3. Frankenstein capitalism is trapped in a Myth of Perpetual Growth
Capitalism’s Frankenstein economics is failing America: by relying on its core Myth of Perpetual Growth. They assume infinite growth of resources and opportunities for profits, income and wealth. Ad infinitum. Though rich and brilliant, American capitalists have a childlike, irrational conviction that they can indefinitely produce, mine, grow, fish, dump and extract resources from the planet’s limited supply, without ever paying a steep price or planning for the day the planet’s resources are exhausted. Hence their bizarre opposition to all carbon pollution-taxation and regulation.
4. Frankenstein capitalists have short-term-thinking brains
Wall Street bankers, corporate insiders, and other capitalists tend to focus on today’s stock prices, quarterly earnings, annual bonuses. Most of these Frankenstein capitalists are alpha-males, aggressive short-term thinkers, says Jeremy Grantham, while America’s next generation needs new leaders for 2050 with a “historical perspective.” But unfortunately our leaders have grown into “an army of left-brained immediate doers” which “guarantees” they “will always to miss” the next big one.
5. Frankenstein capitalism has a conservative GOP political bias
Stiglitz warns that today’s zombies all have a definite conservative bias on political issues. Economic courses taught at Harvard, for example, use a textbook written by a former member of President Bush’s Council of Economic Advisors that pushes “a particular ideological view that markets work perfectly.”
Moreover, they tend to see environmental issues as liberal myths, and back GOP politicians committed to climate-science denialism. And yet, politically biased economic theories, whether conservative or liberal, are dangerous to America’s future. Future leaders need to be flexible, open to compromise, making decisions on broader public policies, not, for example, locked on some rigid version of Adam Smith’s theories. Time to bury that corpse.
6. Frankenstein capitalism is accelerating disasters, famine, pandemics
Flash forward: The planet is incapable of feeding the 10 billion people projected on Earth by 2050, warns Jeremy Grantham, whose firm manages over $120 billion. And yet, most economists today work for banks and businesses that ignore demographics, except as a source of consumer marketing data, trapped in a self-destructive climate-science-denial bubble.
Snap out of it, reread “The Shock Doctrine: The Rise of Disaster Capitalism.” See why this kind of thinking will require a disaster of epic proportions, a World War III, worldwide famine or global pandemic to shock the Frankenstein capitalist mind-set, awaken their conscience, revive the original moral core of Adam Smith’s economic soul.
7. Frankenstein economy trapped between uncompromising ideologies
Today the “Atlas Shrugged” ideology of Ayn Rand is the core of Frankenstein economics, having replaced Adam Smith’s original capitalism. It is now in a war to the death with liberalism. This extremism is now the conventional wisdom of conservative politicians: “When I say ‘capitalism,’ I mean a pure, uncontrolled, unregulated laissez-faire capitalism.” It is “the only system that can make freedom, individuality, and the pursuit of values possible.” Compromise is impossible.
Today Rand’s ideology is not only deeply embedded in conservative economic thought, it has emerged as a conspiracy of a Super Rich elite and the political right, in a dangerous spiral repetition of the historical patterns Acemoglu and Robinson warn we are closing the door to America’s future, setting up the collapse of our economy and our nation’s failure.
Happy Halloween, the good news is that this war will soon come to a predictably irrational end: By the 2020 presidential election when Clinton is reelected. By then the GOP will have been looking at 16 long years out of the presidency.
Plus by 2020, the grim realities of global warming will force Big Oil and the worldwide fossil-fuel industry to wake up and accept the need for controlling global warming. And finally, that will break the conspiracy trapping GOP politicians like Donald Trump, Sen. Ted Cruz, Sen. Marco Rubio, and even Sen. James Inhofe in the mythic greed of climate-science denialism.
Now isn’t that a truly scary thought for Frankenstein capitalists on this wonderful Happy Halloween?
The Four Horsemen
Declaration of Independence