Centralization's Slide Into Oblivion

Tyler Durden's picture

Authored by Charles Hugh-Smith via OfTwoMinds blog,

When something no longer works, it goes away: it costs more to maintain than its output is worth.

The fragmentation of political consensus (i.e. the consent of the citizenry) is presented by the Powers That Be and their media servants as being a disaster. The implicit fear is real enough: how can we rule the entire nation-empire if it fragments?

As I noted the other day, fragmentation terrifies the Establishment of racketeers and insiders, for when the centrally-enforced rentier skims and scams collapse, those who own and control the rentier skims, scams and rackets will lose the source of their wealth and power.

To understand why fragmentation is the solution rather than the problem, we have to look at how power is leveraged in centralized government. Let's take the recent increase in a common pinworm treatment from $3 to $600: Pinworm prescription jumps from $3 to up to $600 a pill (via J.F.).

In a top-down, centralized hierarchy of political power (i.e. the central state), the pharmaceutical company only needs to lobby a few authorities in the central state to impose its rentier skim/scam on the entire nation.

Lobbying/bribing a relative handful of federal officials and elected representatives is remarkably inexpensive: a financier or corporation only needs to focus on these few key players, and smoothing the PR pathway via a highly concentrated corporate media.

A mere $5 million spent in the right places guarantees $100 million in future profits-- profits earned not from open competition in a transparent market, but profits plundered as rentier skims: the product didn't get any better or effective when the price leaped from $3 to $600, and competition was squelched by regulatory capture and high barriers to entry.

Now imagine if the pharmaceutical company had to lobby/bribe officials in each of America's 3,142 counties to impose its rapacious rentier skim on the populace of each county. The lobbying/bribing effort will be orders of magnitude more costly and complex, and the national corporate media is less effective at the local level, where community groups and local media have some influence.

If we look at the source of the 2008 Global Financial Meltdown, we find that the centralization of capital and power were the primary enablers of the meltdown. If the financial system were composed of 1,200 local banks, each of which had to comply with local and state regulations instead of five behemoth banks that had the capital and klout to buy Washington D.C.'s approval of their leverage and shady dealings, some hundreds of the smaller banks might have failed--but the system would have survived.

Those banks that played fast and loose with derivatives and subprime mortgages would have reaped what they had sown and been liquidated. Investors in those banks' bonds and stocks would have been wiped out. Losses would have been taken by those who had taken the risks, bad debts would have been written off and lessons would have been learned.

Instead, the five big banks and a handful of other monstrous financial entities were able to cry, "If you don't save us, we'll take the entire system down with us!" A system that prohibited the concentration of centralized capital and power would never have been in a position to be blackmailed by the Too Big To Fail predatory parasites.

We live in an incredibly diverse nation and world. Fragmentation serves this world better than centralized power, which as I explain in my short books Inequality and the Collapse of Privilege and Why Our Status Quo Failed and Is Beyond Reform, is breeds corruption, self-serving bureaucracies, insider rackets, cronyism and rentier skims as the only possible output of the system.

If we want a resilient, flexible, low-cost system, we must replace the centralized system of enforced consent and artificial consensus with a fragmented, transparent one of smaller scaled, competing organizations of governance, capital and enterprise.

The intrinsic limits of a corrupt, inefficient and rigged-to-serve-the-few-at -the-expense- of-the-many centralized pyramid of power and wealth is why centralization is the problem rather than the solution:

Transparent fragmentation is the solution. Only those who will lose their share of the rentier skims, scams and rackets are afraid of history's trajectory away from centralization. When something no longer works, it goes away: it costs more to maintain than its output is worth.

As its defenders tax the system to protect what no longer works (except for them, of course), the slide to oblivion accelerates as the system breaks down under the collective weight of all the skims, scams and rackets benefiting the few at the expense of the many.

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BrutusTheBomber's picture

Nice illustration. Sums it up well

hedgeless_horseman's picture

 

Good article! 

I had not considered this might be a positive aspect of decentralization...

A mere $5 million spent in the right places guarantees $100 million in future profits-- profits earned not from open competition in a transparent market, but profits plundered as rentier skims: the product didn't get any better or effective when the price leaped from $3 to $600, and competition was squelched by regulatory capture and high barriers to entry.

    

Now imagine if the pharmaceutical company had to lobby/bribe officials in each of America's 3,142 counties to impose its rapacious rentier skim on the populace of each county. The lobbying/bribing effort will be orders of magnitude more costly and complex, and the national corporate media is less effective at the local level, where community groups and local media have some influence.

Nothing gets fixed until we make bribery of a public official illegal for both parties, and actually enforce it.

Thank you!

BrutusTheBomber's picture

Very true. It is the root of the wicked tree that is our broken system.

logicalman's picture

There are plenty of 'laws'.

The problem is that they are applied selectively rather than symmetrically.

animalogic's picture

You, & the author are quite right. Oddly enough, the author does not use the most pertinent concepts: MONOPOLY & ANTI-TRUST.

Five big banks, & a number of bloated financial players ARE an effective monopoly. They collude, then lobby as a single entity. (Pharmaceuticals are another social parasite).

Ultimately, neoliberalism is the font of this evil. "Free markets" dictate that government NOT act to protect either society OR the market as a whole, but allow -- indeed facilitate -- the never-ending take over & aggregation of smaller Co's by larger Co's. Social/market utility is an invisible nothing....& thus Capitalism consumes itself...at the expense of 90-whatever-% of society.

Not just Marx, but Adam Smith was aware of this mutant gene in the DNA of Capitalism.

SeuMadruga's picture

Illegality does not render ineffective any illegitimate search for leverage (bribes), but rather the complete removal of marketable power from bureaucrats (specially un-elected ones).

illuminatus's picture

And the sheep won't know they are being fleeced til it's too late. Oh wait....

Elco the Constitutionalist's picture

Centralization was the one historical pattern that the American revolutionaries were determined to avoid, because it always leads to disaster. Banking and fiat money were other main themes they were TRYING to avoid.

We now have a central bank owned by jews, fiat money, and obscene centralization. The country will not survive another 50 years. Gen X is going to watch the younger generations revolt, from our rocking chairs.

are we there yet's picture

The Clinton foundation moved its assets to The UAE, out of reach of US courts for a reason. Skim in one country and store in a safe distant country. Only centralization allows this.

Umh's picture

That is decentralization.

BrutusTheBomber's picture

Offshore money only matters to the regular people, the oligarchs and politicians can do what ever they want. Immunity, because they look out for one another. That's why there is so much money and time spent to divide we the people. They don't want us to have each other's backs. They know We united can defeat them. 

JuliaS's picture

Borders are merely fences preventing the slaves from chasing their free-roaming masters.

logicalman's picture

Countries are arbitrary divisions of humanity used as a herd control method. The handy offshoot of his is the ability to pit one herd against another, thus distracting them from even thinking of chasing their free-roaming masters.

Mr. Carlin sums it up well.

https://www.youtube.com/watch?v=m1RuEZTf5LM

animalogic's picture

Yes, centeralisation is at fault. However, a set of strict international laws on such matters as tax, capital transfer, labour & environmental standards etc could be part of the answer. Stop multinationals shopping round the world to find places to avoid tax, exploit labour etc. 

Don't ask me HOW because I don't know.

Hail Spode's picture

Ask me, because I know. At least on the systemic side. A certian amount of good character in the population is also required for a just self-governing society and there is no systemic fix for that. This easy-read book talks about how the bad guys centralize power and what could be done to stop them.... http://www.amazon.com/dp/B00B0GACAQ

On the question you raise, the answer is that there should be no multinationals. Tax every corporation in your nation on all profits wherever made and no corporations owned by other corporations- just real people. Otherwise these giant global corporations, who are globalist by nature where the average citizen is more nationalist in outlook, will come to dominate your political system. They will also, as you mention, keep shifting accounting so that their profits are taxed in whichever haven is best for them instead of where the profits are made. For the labor exploitation question, tariffs for the products of nations with captive labor forces or who are massive polluters.

Arrest Hillary's picture

We can't even get rid of DST (Delusional State Time) .... how are we going to dismantle socialism ?

animalogic's picture

What socialism ? If you think the Western world has more than a few bits & pieces of socialism left, the YOU are delusional (or using "socialism" in ways peculiar to yourself).

Forgive the speculation, but, you don't actually think Hillary is a socialist do you ? Incidentally, please, DO arrest the vile creature.

Centerist's picture

You ask, "what socialism?"  In the US, it manifests as Social Security, Medicare, Medicaid, WIC, food stamps, TANF, or any government grants or subsidies to corporate or other large private entities.

These are all socialistic systems that involve socialistic redistribution of wealth.  Europe has even more of that.

And for the cowardly little Leftist weasles who red-arrow this, at least have the guts to post a counterpoint to the content of this post if you can conjur one.

Cloud9.5's picture

Detroit shows you how it is done.  Evolution peaks and devolution sets in.

whatisthat's picture

I would observe the pendulum will swing from corrupt central establishment control back to populism similar to the 1950's and 1960's.