Speaking specifically about the oil industry he said:
Of course, the profit was privatized and now the consequences will be socialized, as in so many things these days.
Taxpayers -all of us - are paying for the messes left by the people who got rich off exploiting the environment (aka "natural resources").
That the American captains of industry also got rich off of exploiting people can also be argued, but it is an argument that would probably have us retreating into ideologies instead of discussing the facts.
Dave Fairtex, you did a great job of listing the pernicious industries that profit the most from the red caprpet that our government rolls out for them. I agree that taking away that red carpet would be a good thing.
Are you content to sit back and allow the uber-rich to grow wealthier (leading to further concentration not only of wealth but also power, which BTW is corrupting the political system and weakening the economy), at an increasing rate of acceleration, without contributing anything to society? That more and more wealth is going into the hands of fewer and fewer people? While the overall wealth-pie is shrinking? Hard to envision a good ending for such a scenario. Remember, this is about people with incomes so high they were unthinkable 25 years ago, incomes that are solely the result of stratospheric net worths that are not a reflection of whatever contribution they've made to society. It is NOT about neighbors that have bigger houses or newer cars than I do.
Monopoly (the game) is a form of capitalism in its most basic and simple form. What inevitably happens when you play Monopoly? We are seeing that happen in real life (a few get insanely rich, and contrary to trickle down theory, it does not lead to a "rising tide" for all others but rather comes at the expense of all others).
Don't know the specifics of a best strategy of reducing the concentration. Higher capital gains tax and much more progressive property taxes seem like good starting points. Capping luxury taxes and social security payments, along with breaks on sales of secondary homes are the opposite of what needs to be done. But those are the types of policies enacted–and difficult to change–when people are rich enough to buy politicians.
Maybe I'm too small-minded or unknowingly selfish, but I cannot see how the current concentration of wealth is good for the country in any way. And short of major tax reform (or market meltdown), I can't imagine how the concentration won't get more extreme.
I don't think anybody opposes reducing the concentration of wealth. What I oppose is the idea that it can be done through government, i.e. taxes/regulation. The 'disease' of wealth inequality is largely a result of previous "cures". For example, the income tax, now over a hundred years old, was originally proposed as a tax on millionaires. Now, we have everybody who earns a buck paying those taxes, and having to endure an out of control IRS to boot.
The cronyism (falsely labeled 'capitalism") is empowered by an overarching government presence, without which the concentration of wealth would wither. The monopoly that you decry could only exist with the government running interference for it.
"Don't know the specifics of a best strategy of reducing the concentration"
When everything is broken you just push all the chips in and begin again with a new set of ideas. So why not program the same into the mix for this next go around? And please please do it with a bit of humor and playfulness. Debt jubilee is a fun word to get the creativity flowing.The actual ideas behind society engineering are not as important as getting started and what you learn along the way. Like all games its okay to have winners and losers. What's not okay is after the winners and losers have been sorted to not have a new go at things. The aspect that makes games so appealing and fun is that they have beginnings middles and ends.
So, just as our masters organise into their power groups, it seems we must do the same and organise into ours. And so he saw it all coming; the Council of Foreign Relations, the Bilderberg Group, the Trilateral Commission… clever man that Smith. So what can we do as we approach our Marx inspired Neo-Feudal shit-hole? Create an independent counter-culture would be my suggestion.
So who is holding the gun to your head to make you pay for those things? It's the same entity that handed them an unfair advantage in the first place.
[quote=chipshot]
Are you content to sit back and allow the uber-rich to grow wealthier (leading to further concentration not only of wealth but also power, which BTW is corrupting the political system and weakening the economy), at an increasing rate of acceleration, without contributing anything to society?
[/quote]
As earthwise and others have pointed out, it's not contentment with the current system, rather it's the solution you and other's propose. Giving more power over your life to others is going to help how? While you complain that power is too concentrated then how is giving more power to the same corrupt group going to help? How about looking out for yourself. Don't like the way things are going how about taking away the force that keeps you locked to the corrupt system? Take away the governments ability to interfere with your choices.
And stop worrying about the few (yes very few) paper billionaires. It's a complete distraction. First - a vast majority of their supposed wealth is all paper. Also, there is this fantasy that we can just tax those evil bastards and solve our problems. Sorry not going to work. Even if you confiscated all the wealth of those billionaires in the US, not their income, all their assets - you get about what the government spends in 1 year! And the second you try to sell all those assets, they drop to maybe 1/10 their value because there is no one to buy them.
Then what? Now it's going to be those rotten evil millionaires? Say everyone who has more than $30M (HNWI) in assets, that get's you maybe another 2 years at most - with the same caveat that you can't really sell their assets for anywhere close to their valuation.
So then after maybe 3 years, your down to your neighbors. Yes, you would probably be surprised by how many of your neighbors have $1-30M (it's not that much money) many professional households (doctors, lawyers, engineers, small business owners, or anyone in NY, LA, or SF who own their home) - or do all those people make up the list of people who don't contribute to society?
The problem is really really big. It's complete denial to think the promises can be kept and all the talk about taxing the rich is just a side show.
That shows how well trained (brain washed) we are to believe that government is the solution to all problems… Voluntary cooperation and freedom of choice never seems to be an option…
So the majority of the wealth concentration doesn't come from legitimate value creation, but rather from the excess returns from control over government.
Monopolies are very profitable. So are enterprises that do not have to pay the actual costs of doing business. So is the "control fraud" that Bill Black talks about. That's how most of these guys are getting rich.
Do we really object to people like Gates, who built Microsoft, or Jobs, who built Apple, being rich? I don't. I object to all the bankers who made billions making fraudulent loans and got to keep the proceeds. Angelo Mozilo, he's an example. I don't want him to pay more taxes, I don't want his wealth redistributed - I want him in jail, and the illegal proceeds seized.
We don't need massive wealth taxes on rich people who got their money from building something worthwhile. What we need is government that gets rid of cartel behavior, prosecutes theft, and enforces the laws. If we can get that, we can seize the illegal profits, deter future bad behavior, and bring back the rule of law.
Taxes aren't the answer. Impartial, fair law enforcement - that's the answer. Transparency helps too.
I was not aware of this movie by Larken Rose. Rhare mentioned it above. I just watched it and found that it was very well done and intelligently presented. I highly recommend it to others. https://www.youtube.com/watch?v=u2ebudnWlh4
And if you accept Man is of Nature the 80/20 rule applies meaning 80% of wealth will be with 20% of population in a snapshot of time. This makes sense since entrepreneurs are a minority in a society and not all are successful at same time due to competition and over time all fail in a project at some point.
hey, chipshot, you are right that extreme wealth disparity is, and has historically been, de-stabilizing to society and a recipe for disaster and revolution.
however, i don't think you've clearly looked into the reason for extreme wealth disparity.
in the usa, it is primarily due to government cronyism and the federal reserve system.
the federal reserve, a private for-profit corporation which is not a federal agency and is not audited, has a monopoly on the nation's money supply, with the blessing of the federal government and the us treasury. the fed's member banks create money out of thin air, at no cost, then loan it to the us treasury, and make interest on trillions of $usd. so it's no surprise then that the lloyd blankfeins of the world, who caused the last financial crisis and much of the current suffering of the american people, are now billionaires.
however, your proposed solution is completely backwards - the government is in cahoots with these large financial institutions. to favor increased intervention by the government, which is completely bought and paid for, will only cause more harm. it's as though your house is being burglarized, and the police and the burglars are both in on it, with the police inside your house passing your tv, stereo, and all your valuables through the window to the burglars - would you in this situation call for more police to come?
"tax the rich" proposals actually work out this way:
new tax proposal gets drafted
lobbyists get their grubby hands on it and build in loopholes
the truly rich use these loopholes to avoid the new taxes
new taxes end up falling on the middle and upper-middle class and thus destroying jobs and opportunity
a more direct approach to ending the increasing wealth disparity would be to end the federal reserve system, there is no reason for the nation to cede power to coin its own money to a private banking cartel which drains the nation's wealth like a vampire squid.
It seems to me that the fundamental problem with capitalism is that it only operates best when it is completely "free," yet when it is free monopolies, Uber-corporations and cartels eventually form. These, in turn, will destabilize the freedom of the market as the Big Players drive out the small dogs and manipulate market forces to their own advantages. So the drive to alleviate the transgressions of large monopolies, cartels, and trusts - things Theodore Roosevelt feared greatly, by the way - through government intervention (socialism) is an understandable and well-intentioned thing. However, through too much government intervention, or rather governmental intervention in an age when the wealthy elite have learned how to make the government cater more to their wishes than to the masses, the same results have occurred. We now have too much central control and not enough "market forces freedom" in the system; however, knowing what I know about the depravities of the free-market capitalism industrialization era, I would not want to return to a laissez-faire system either. Rather, we seem to have done best with a mild socialism while we still had a gold/silver-backed currency - the 40s, 50s, and 60s. There were other factors to be sure, but…
Conclusion: Fiat is the biggest single contributor to why things are so fucked up, not "socialism" or "government meddling." These two things only become a systemic problem when you introduce a Fiat system, since it eliminates all limits to government action and spending and causes government to extend its reach beyond normal limits.
Second conclusion: I'm not submitting this as truth, but rather a thought experiment…
While I think fiat currencies are a poor choice, and I agree that our current monetary system is the root cause of our problems, it's not because it's fiat. It's because it's forced fiat. Without legal tender laws you would be free to use whatever you wanted to as currency. It's the forced participation, a government granted monopoly on what is money rather than the form of money that matters. Forced use of a commodity (gold/silver/etc) by a government could be just as bad.
Coke and Pepsi.
Verizon and Comcast. (There was an article on PP about this recently. I'll try to find it)
Bank of America and the Too Big To Fail banks.
Microsoft.
Pfizer.
Walmart.
And these are just off the top of my head. Maybe not outright monopolies, but rather conglomerates of companies with so much wealth and power that they sway the markets and political system to boot.
snydeman-
I believe fiat money is the symptom, not the cause. We had a gold standard, and we decided to print too much money, so we had to leave it. Going back on a gold standard (besides making the creditors who hold all our record-breaking debt really happy - they were going to get repaid in fiat, and now they're going to be repaid in gold!! What a gift!) would drop us right back into where we were in 1971.
Its irresponsible spending that got us here, not the lack of a gold standard. Leaving the gold standard was just a symptom of the disease, not the disease itself.
Agree with the rest of your points, however. Largely, capitalism operates relatively well when the rule of law is strong, there is a vigorous free press, the government enforces the rules to maintain competition, the people take an interest in the outcome, and transparency exists. When those things fade, then we end up with crony capitalism like we have today. "No bankers go to jail", etc.
That's very likely a better explanation than just leaving the gold standard, which ultimately just allowed us to do what we had already been doing, just to bigger and bigger extremes. I find your last paragraph fundamentally fulfilling, as it hits on all the reasons why I oppose my more liberal friends' beliefs that capitalism is to devil as equally as I oppose my conservative friends' assertions that socialism in every form is Satanic. The answer, it seems, lies more in the middle (as with so many things)…but our ability to maintain a wise middle path is dubious at best.
I'll also beg forgiveness for my broken thoughts: I am helping my students review for their French Revolution test while I'm pondering these things, so it does not allow me the time to maintain the required depth of thought for long.
Oh, and don't think I missed the opportunity to draw parallels between France in 1788-89 and us today. Way too many similarities!
Hmm, not a single one of those listed is a monopoly. Being a big company doesn't make it evil. However I will conceed that many of those have unfair advantages, but not due to their size, but due to government involvement in eliminating their competition.
Not even remotely a monopoly. Lots of competition in that space, the only real government involvement is probably from the FDA placing ridiculous requirements that the big guys can more easily meet. That's one way big business gets an advantage via onerous regulation that kills the small player.
Again not a monopoly, but anything that is regulated like a utility is often very close to a monopoly. However this is generally the fault of local government, although the fact that many of these entities got free spectrum handouts for years allowed them to stifle competition. Wired has this article describing how state and local governments stifle competition in the telecommunications arena. However, there is also a huge bureaucracy by the FCC as well that helps large players stomp out the competition.
Not a monopoly but a large cartel entirely created by the government, primarily through legal tender laws that force participation in the central banks game. Bail-outs, FDIC, massive regulatory structures, the GSAs and other government involvement keep the big guys winning.
At least they make something that some people find useful. It's been highly supported through government purchases of their products and the lock in by not forcing use of open document formats. They also get lots of support from onerous copyright and patent laws and legislation like the DMCA.
Just like all of the medical field, it's given power by the FDA, AMA, and other licensing entities that effectively set up cartels. They also benefit from the government being 70+% of healthcare spending. You don't have to compete when your customer can simply steal from it's citizens to pay the bills (you know this as taxes). Outside of money, healthcare of all kinds is probably the most manipulated of all markets by government.
Not a monopoly, but they do get lots of government support, through welfare programs that both support lower pay and a revenue stream and they have benefited greatly from our monetary system that has allowed for cheap oil and cheap shipping of products from the other side of the planet and huge trade deficits. I suspect they would still win because they are highly competitive in a global market. I don't find that a problem. If you don't like it don't shop there - lots of competition.