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Radical Concentration of Wealth is Destroying Both Capitalism and Democracy
Note: If you wish, feel free to substitute the word "republic" for "democracy".
As I wrote in 2008:
The
economy is like a poker game ... it is human nature to want to get all
of the chips, but noted that - if one person does get all of the chips
- the game ends.
In other words, the game of capitalism only
continues as long as everyone has some money to play with. If the
government and corporations take everyone's money, the game ends.
The fed and Treasury are not
giving more chips to those who need them: the American consumer.
Instead, they are giving chips to the 800-pound gorillas at the poker
table, such as Wall Street investment banks. Indeed, a good chunk of
the money used by surviving mammoth players to buy the failing
behemoths actually comes from the Fed.
No wonder billionaire George Soros says
that the way US Treasury Secretary Henry Paulson was handling the
situation was "very reminiscent of the way the central bankers talked
in the 1930s", the time of the Great Depression.
And no wonder Nobel-prize winning economist Joseph Stiglitz stresses putting poker chips back in the hands of the little guy ...
This is not a
question of big government versus small government, or republican
versus democrat. It is not even a question of Keynes versus Friedman
(two influential, competing economic thinkers).It is a question of focusing any government funding which is made
to the majority of poker players - instead of the titans of finance -
so that the game can continue. If the hundreds of billions or trillions
spent on bailouts had instead been given to ease the burden of
consumers, we would have already recovered from the financial crisis.
As FDR’s Fed chairman Marriner S. Eccles explained:
As
in a poker game where the chips were concentrated in fewer and fewer
hands, the other fellows could stay in the game only by borrowing. When
their credit ran out, the game stopped.
As I pointed out last August, and again last month, fewer people have more of the chips than at any time since before the Great Depression. And see this.
When most people lose their poker chips - and the game is set up so that only those with the most chips get more - free market capitalism is destroyed, as the "too big to fails" crowd out everyone else.
And the economy as a whole is destroyed. Remember, consumer spending accounts for the lion's share of economic activity. If most consumers are out of chips, the economy slumps.
And our very democracy is destroyed.
Everyone knows that politicians are bought and paid for by the financial service giants. And the 800 pound gorillas just keep getting bigger and bigger.
Two leading IMF officials, the former Vice President of the Dallas Federal Reserve, and the the head of the Federal Reserve Bank of Kansas City have all said that the United States is controlled by an oligarchy. And Moody's economist Mark Zandi has said "the oligopoly has tightened."
As Supreme Court Justice Louis Brandeis said:
We may have democracy, or we may have wealth concentrated in the hands of a few, but we can't have both.
Dennis Kucinich said in January:
There's
nothing liberal about the bailouts. There's nothing liberal about
standing by and watching banks use public money to get their executive
bonuses. There's nothing liberal about giving insurance companies carte
blanche to charge anything they want for health care... Since when did
that become liberal?***
Every area of the economy is still about taking wealth from the great mass of people and putting it into the hands of a few. If you don’t have an economic democracy, you don’t have a political democracy.
Indeed, when wealth and power become too concentrated, capitalism becomes virtually indistinguishable from socialism or fascism.
Of course, antitrust laws were enacted
to protect the economy and democracy, but - like the Depression-era
laws separating depository banking from investment banking - are not being enforced.
And the government could use existing laws to force ill-gotten gains to be disgorged (see this and this), fraudulent transfers to be voided and - perhaps - even bonuses gained at the expense of taxpayers clawed back.
Such actions would make the 800 pound gorillas a little smaller,
helping to reduce concentration of wealth somewhat. But that would
assume that America is still a nation governed by the rule of law.
Currently, it's not. Only courageous prosecutors and brave judges can restore the rule of law to America.
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Merry Cons
Let me tell you what would go a long way.
Democracy and money do not mix.
If they start to mix, the game is over before it starts.
Here is what needs to happen.
It must be mandated by the govt. constitution that taxes cannot exceed 15% of the prices of goods and services.
The democracy gets to play with the 15% anyway that they want by democratic , local state by state/fed mandates.
This means that by default, govt. cannot trump the private sector in any way.
Think about it....
Economic concentration can only take place with the compliance or direction of the politicians.
The notion that wealth can be concentrated without government protection is ludicrous.
Correct. Correct. Correct. Correct.
And thus, the problem is not economic concentration. It is the state.
It is going to destroy itself, but maybe not before it destroys all of us.
Yep. Most monopolies are state-sponsored now a days. As companies get too big, they necessarily will fall apart because they cannot be efficiently managed. Then as they begin to fall, they buy some crutches named the US Treasury and the Federal Reserve.
all 'non-defacto' monopolies MUST necessarily be state supported. otherwise they are still beholden to their customers. (A defacto monopoly, in this case is the first and only comer to a field)
i'm not convinced. i think capitalism tends to concentration of wealth and power in fewer and fewer hands. it can be aided by the state (as now) or opposed by the state (as under either roosevelt). look at the great industrial trusts of the late nineteenth century. these were not creatures of the state but of private enterprise. standard oil was not created by the state. it follows from the essence of capitalism: profit builds up capital which earns more profit which builds more capital. the successful firms grow larger and eventually control markets and reduce competition (see microsoft, etc.). capitalism has great strengths and benefits but to refuse to see this is willful ignorance or ideological blindness, imo.
The thing is, we have a perverted form of capitalism where some groups are 'more equal than others'. A perfect example are the 5 TBTF banks vs. all the other banks.
As Ron Paul said the other day, Obama is not a socialist, he's a corporatist. Like Bush, his administration has been captured by the powerful banksters. I would argue that the only real difference between the two is that the neo cons have been kicked to the curb.
To try to address Jeff's point, this needs to be a country of laws, not that of men and women. The Justice Dept. is supposed to represent the people, but where are they? Seen any prosecutions except for Madoff? When the laws only apply to the little people, it does not take too much insight to realize the game is rigged.
Some people will always try to vomit ideological speech. Because it is their way of being part of the winning gang.
Concentration of the wealth is independent of the State. The State is not a variable here.
The two main variables are competition and the capability to hand down the result of competitiveness.
Firms (like human societies) are enduring entities that can reap benefit from the past. An earlier poster even spouted the fallacy that a monopoly should crumble because of its own weight. This point of non lasting dominance is deeply influenced by the staged competition scene commonly known as sports in our part of the world. Sportspeople age and with age comes an irreversible loss of competitive edge. They are put out of competition by a natural law that cannot be bypassed so far.
Firms do not suffer from the same flaw. They can endure much longer than any people on the world.
A point though. Confusion between competition and concurrence.
Microsoft did not reduce competition. They reduce concurrence. Reducing concurrence (in casual words, reducing the number of candidates to the champion title) is part of a competition process. If you want to win a competition, kicking out concurrents is a compulsory stage.
People reducing competition are people who are going against this trend by trying to maintain concurrence with anti trust laws and stuff like that.
They are the ones who reduce competition. Not people like Microsoft.
"and for the >Republic< for which it stands..."
George, where do you see a "Democracy" as our espoused form of government?
This is a very common misconception.
Agreed. We have mixed the terms for too long. The 17th Amendment made us closer to a democracy than a Republic, sadly.
As anyone who has studied history knows, a democracy inevitably turns into a totalitarian state.
Bondage to Spiritual Faith;
Spiritual Faith to Courage;
Courage to Freedom;
Freedom to Abundance;
Abundance to Selfishness;
Selfishness to Complacency;
Complacency to Apathy;
Apathy to Fear;
Fear to Dependency;
Dependency to Bondage
200 years of politics and a shorter but intense bout of indoctrineducation has converted our republic into a democracy in practical terms, even though the bulk of the Constitution has not changed. And a mobocracy at that.
As the freedom index so bluntly puts it, democracy isn't necessarily correlated with human rights and other values that most of us ZH readers hold:
http://www.freeexistence.org/freedomindex_faq.html
"and TO the Republic, for which it stands..."
Only courageous prosecutors and brave judges can restore the rule of law to America.
that will cost a million in a brown paper sack .
p.s.. sacks
LOL