Capitalism v Crony Capitalism

Occupy protesters have been mischaracterized by many people as being opposed to "capitalism." Based on my conversations and observations, I have not encountered protesters who oppose "capitalism." Rather, they oppose what has been described as "crony capitalism." Compare the  follow definitions, from Wikipedia:

Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category. There is general agreement that elements of capitalism include private ownership of the means of production, creation of goods or services for profit, competitive markets, and wage labor. The designation is applied to a variety of historical cases, varying in time, geography, politics and culture.

In the above definition, you won't see, as an element of capitalism, that players are allowed to rig the system.  Compare to Crony capitalism:

Crony capitalism is a term describing a capitalist economy in which success in business depends on close relationships between business people and government officials. It may be exhibited by favoritism in the distribution of legal permits, government grants, special tax breaks, and so forth. Crony capitalism is believed to arise when political cronyism spills over into the business world; self-serving friendships and family ties between businessmen and the government influence the economy and society to the extent that it corrupts public-serving economic and political ideals.

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Or maybe we could say, “Good for the Chinese”

When someone from another country does something impressive, Americans are well-trained to be threatened. We are teaming with ressentiment. Here's an example from the July 18, 2011 edition of Time Magazine. Notice the photo on the right. It is an image of a brand new extremely long bridge, the longest sea bridge in the entire world. It is more than 26 miles long. It's extremely impressive. It is something that reminds me that the Chinese people have excelled in many ways. But notice the text under the photo. Especially notice the line: "The Jiaozhou Bay Bridge is yet another Chinese nose thumbing." Where does this writer get the idea that the Chinese have built the world's longest bridge to make the United States look bad? I hear this attitude all the time, exemplified by statements like this: "America is the world's greatest country." Despite the fact, of course, that there is much room for improvement in modern day United States. Many of these comments I hear uttered by Americans are aimed at the Chinese; for many Americans, anything impressive done by Chinese people is a threat to America. More disturbing, I fear that this ressentiment of outsiders builds into paranoia about outsiders and fuels the "need" for exhorbitant and irresponsible warmongering by the United States. I remember that in the months prior to 9/11, there was intense building hostility aimed at the Chinese. Then we got distracted by the Middle East. It seems that Americans intensely need an enemy, and that if they don't actually have one, they invent one. That is a destructive technique most of our politicians use to maintain power and obeisance of the governed. I'd recommend that Americans, especially those involved with the American media industry, work harder to keep their ressentiment in check. Time should have reacted to this amazing bridge by saying something like: "That's amazing engineering and construction! Well done, Chinese people." I'm afraid, though, that this attitude of being happy for the successes of others has become thoroughly un-American.

Continue ReadingOr maybe we could say, “Good for the Chinese”

The purported “free market”

Glenn Greenwald's comments regarding the vague terms that control our public policy provoked me to revisit the extremely vague term, "free market."   “Free market” is a prime example of a vague term that is used for formulating anti-public policy. It is routinely suggested by our alleged leaders that “free market” refers to the freedom to choose where to spend one’s money. On a day to day basis, this idea seems reasonable.  It evokes the image of people selecting fruits and vegetables at an open-air produce market. Modern "free market” policies extend far beyond individual buying decisions, however. In practice, government policies favoring the “free market” prohibit government from “freely” governing.  “Free market” policies allow those with large amounts of money to usurp government policy.  Policies that favor a wide-open "free market" take political power from ordinary citizens and hand that power to govern to large private for-profit corporations and wealthy individuals. “Free market” is a clever phrase for those who want an economic market that amounts to a baseball game without umpires, a market where corporations “freely” monopolize entire industries by scooping up the competitors, immunizing themselves from liability by buying favorable new laws, jacking up the prices and then giving the consumers the “freedom” to buy from among limited high-priced options.  Modern "free market" policies give financially powerful entities the "freedom" to operate free of any government oversight, and the "freedom" to tell consumers to take-it-or-leave-it. [More . . . ]

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The inherent danger of complex laws and regulations

We often hear big businesses complaining about regulations, but if those regulations are complex enough, they turn into giant opportunities for big business. All you need is a smart team of lawyers in order to drive a big truck through a tiny loophole or exemption, as explained by Kevin Drum of Mother Jones:

[N]o one should take too seriously Republican complaints about burdensome regulations strangling the economy. The truth is that most reformers prefer fairly simple rules. In the tax world, they'd prefer to simply tax all income. In the environmental world, they'd prefer to set firm limits for pollutants. In the financial world, they'd prefer blunt rules that cut off risky activity at its knees.

But businesses don't like simple rules, because simple rules are hard to evade. So they lobby endlessly for exemptions both big and small. This is why we end up with tax subsidies for bow-and-arrow makers. It's why we end up with environmental rules that treat a hundred different industries a hundred different ways. It's why financial regulators don't enact simple leverage rules or place firm asset caps on firm size. Those would be hard to get around and might genuinely eat into bank profits. Complex rules, conversely, are the meat and drink of $500-per-hour lawyers and whiz kid engineers. If the rules are complicated enough, smart lawyers can always find ways around them. And American corporations employ lots of smart lawyers.

In an earlier post, I had cited this quote: "One can make money only if there is real risk based on actual uncertainty, and without uncertainty there is no risk.' To the extent that we have simple and understandable rules, it is harder to hide unfair business practices. There is great value to uncertainty--to unwieldy and vague legislation--to those who have teams of savvy lawyers and accountants whose job it is to navigate and circumvent the purported intent of the legislation. That's because most of us don't have the time, attention, energy or political clout to rein in those who create these legislative monstrosities. We're too busy working 8 or more hours per day at the office, then trying to be good parents, trying to fix the house or car, and maybe relaxing for an hour or two per night. How many of us are interested or able of plowing through 2,000 page legislative packages or regulations in our "free time," or trying to make sense of complex court decisions that also struggle with these legislative morasses? As Kevin Drum writes:

We could probably cut the size of agency regulations by 10 times if we wanted to. But business don't want to. Sure, they'd prefer no regulation at all, but they know that's not in the cards. So in public they bemoan complexity, but in private they fight endlessly for more of it. To their lawyers, every single extra page is an extra opportunity to make more money.

It makes one think that we need a law to outlaw complex laws.  We need a law that all laws should be written in plain English and that they must be understandable by high school graduates.  Those who insist that they need something that is not reasonably understandable should be presumed to benefit a special interest and presumed to be opposed to the public good.  Complex laws are huge red flags, regardless of the title of the law or the way politicians assure us that these laws will benefit the public. Indigestibly complex laws almost always signal that ordinary Americans are getting screwed.

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A list of evidence justifying the #Occupy movement

Consider the joy shown by Americans celebrating the Fourth of July. If the Fourth is such a happy time, shouldn’t we now be equally furious that the government has been rigged to ignore the needs and wants of the People? Over the past few years, I've heard dozens of educated middle class Americans admit that Congress has ben bought―federal corruption at the highest levels is now accepted as unquestionable truth. More recently, I’ve run into more than a few people who have become frustrated with the Occupy movement. For instance, last week I heard this from an acquaintance, who was speaking of the protesters:

Acquaintance: “They should get a job.  What the hell are they expecting to accomplish out there?”

Me:  Isn’t it a huge problem that all three branches of our federal government make decisions to accommodate large corporations, often ignoring the needs of ordinary citizens? Isn’t that worth protesting.

Acquaintance: “Still, the protesters are stupid.”

Me: What is your solution?   Ordinary people are barred from participating in a government that is supposedly to be run by ordinary people. Further, the news media is largely under the control of these same interests―they are too often serving as stenographers for the corporations that pull the strings of the federal Government. [Fourth of July flag photo]

Acquaintance: [Silence].

Along the same lines, here’s an excerpt from an email I recently received from a DI reader:

About your note regarding ways to support the Occupy movement... yes, you are right to encourage people to talk about what is going on, but don't you think that it is time for those who are actually doing the "occupying" to go home and do their homework.  It seems pretty apparent that it is mostly the late teen to early 20 year olds that are involved and that they don't seem to have any really intelligent, well thought out ideas or goals.  The media and general public are already bored with the story, and the whole thing will have been an exercise in futility unless they move on in a dignified way.  Their goal should be to have an effect on the 2012 election which is a full year away.  They should go home and get organized and become better informed in order to form a voting block that will further their agenda (that is if they can come to a consensus as to what that agenda is).

In short, this reader wants the Occupiers to return home to do the same thing that millions of people have been doing for the past decade, i.e., doing nothing likely to invoke change. [More . . . ]

Continue ReadingA list of evidence justifying the #Occupy movement