By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Cross posted from New Economic Perspectives.
Eduardo Porter began by studying physics but decided not to complete his studies and pursue a career in that field in favor of becoming a journalist. He worked for the Wall Street Journal before joining the New York Times, where he writes a periodic column. His primary interest is now economics. I was intrigued by a recent column he did entitled “The Folly of Attacking Outsourcing.”
I reviewed a number of Porter’s NYT columns to get a feel for his views. Defending outsourcing and minimizing the criticisms of undocumented immigrants are his twin passions. He has written roughly a dozen columns on each of these topics. Porter’s starting point is neo-liberal economics. As I will show, he does so despite knowing that neo-liberal economics dogma has proven disastrously wrong. He often sees the errors, but he remains incapable of developing an alternative perspective.
“Free trade” is the foundational neo-liberal creed. It is closely associated with a belief in the Schumpeter’s ode to “free markets” as a means to achieve “creative destruction.” These creeds define orthodox, neo-liberal economics and it is virtually impossible to be a member of the guild if one rejects these dogmas. The central difficulty with these beliefs is that they are labels that often have little to do with reality. Markets are not “free.” Indeed, the definition of “market” is a vague construct that is often defined circularly to produce “free” markets. When neo-liberal economists (rarely) try to provide a real definition of “free trade” actual trade is rarely “free” under that definition. Neo-liberal economists almost always simply assume that destruction is “creative,” when a business fails and workers lose their jobs even when the circumstances indicate that the destruction was the unproductive result of unlawful conduct or subsidies provided to less productive rivals who maximize their rents by destroying more productive competitors.
Porter knows that the neo-liberal creeds have been repeatedly falsified by reality even though he does not understand that the falsifications invalidate the creed he uses as the starting (and often ending) point for his analysis. On July 11, 2012 he wrote to decry “The Spreading Scourge Of Corporate Corruption.”
Perhaps the most surprising aspect of the Libor scandal is how familiar it seems. Sure, for some of the world’s leading banks to try to manipulate one of the most important interest rates in contemporary finance is clearly egregious. But is that worse than packaging billions of dollars worth of dubious mortgages into a bond and having it stamped with a Triple-A rating to sell to some dupe down the road while betting against it? Or how about forging documents on an industrial scale to foreclose fraudulently on countless homeowners?
Porter is distressed that our most elite banks repeatedly engage in control fraud against their customers. But such frauds are impossible under the neo-liberal creed. The pervasive frauds make a mockery of “free markets,” “free trade,” and “creative destruction.” Assume a hypothetical honest Wall Street bank that must compete with systemically dangerous institutions (SDIs) that cheat so that they can turn losing trades into wins (the Libor frauds), or sell to their customers collateralized debt obligations (CDOs) they know to be (not effectively) “backed” by endemically fraudulent liar’s loans (the financial “green slime”) as purported “AAA” credit, or lie hundreds of thousands of times on affidavits in order to foreclose on their customers’ homes. The honest bank cannot compete with its dishonest competitors. It will fail. That failure is profoundly uncreative and harmful. The dishonest banks that should fail will prosper. Honest banks will fail. The dishonest banks routinely misallocate capital and destroy wealth, yet they dominate the financial system. The fraudulent CEOs who run those dishonest SDIs dominate our real economy and our political system. They use their political power to create crony capitalism, which again makes a mockery of “free markets” and democracy and destroys the most productive firms.
This perverse dynamic has a name that is well known among good economists, white-collar criminologists, and financial regulators – a “Gresham’s dynamic.” That phrase was used in the economics literature over forty years ago in a famous 1970 article that led to the award of the Nobel Prize in Economics to George Akerlof in 2001.
[D]ishonest dealings tend to drive honest dealings out of the market. The cost of dishonesty, therefore, lies not only in the amount by which the purchaser is cheated; the cost also must include the loss incurred from driving legitimate business out of existence.
Akerlof’s 1970 article discussed control frauds aimed against customers. His title used the term “lemons” because he explained the fraudulent sale of poor quality cars passed off as high quality cars as his most famous example. Perceptive observers recognized the same perverse dynamic centuries ago.
The Lilliputians look upon fraud as a greater crime than theft. For, they allege, care and vigilance, with a very common understanding, can protect a man’s goods from thieves, but honesty hath no fence against superior cunning. . . where fraud is permitted or connived at, or hath no law to punish it, the honest dealer is always undone, and the knave gets the advantage (J. Swift, Gulliver’s Travels).
When a Gresham’s dynamic persists bad ethics drives good ethics out of the markets and fraud becomes endemic. The Gresham’s dynamic so distorts market incentives that that they become perverse.
While Porter appears to be unaware of the term “Gresham’s dynamics” we know that he is acutely aware of the concept because it is the subject of his most embarrassing column. He published it on the 4th of July in 2004, and titled it “Corporate Greed? The Other Guy Started It.”
Porter structured his column discussing the Gresham’s dynamic around an interview with the Harvard economist Andrei Shleifer. The column was substantively incoherent and the choice of Shleifer was deeply embarrassing to Porter. It showed that he was not plugged into the world of economists. I begin with the incoherence.
WHAT drives executives to cook the books seems painfully obvious: it’s greed, isn’t it? That cupidity — well oiled by stock options — would appear to be the principal cause for the spread of creative accounting during the 1990′s, provoking executives from Computer Associates to Enron to inflate sales, mask debts or embellish profits, enhancing their own incomes along the way.
Despite the moral tidiness of greed as a motive, there is another powerful incentive helping to spread mischief in the executive suite. Competition, a primal force of capitalism, can steer even the nongreedy executive down an unethical path.
Andrei Shleifer, an economics professor at Harvard, argues that if unethical behavior drives down corporate costs, rivals will be compelled to do the same just to stay in business. In other words, companies will find the cost of ethical behavior too high.
”I really don’t believe the saints-and-crooks theory,” Mr. Shleifer said of the tendency to demonize business executives who engage in creative accounting. ”Evidence tells us very clearly, even the most saintly C.E.O.’s were involved” in such accounting because of market pressure.
So, if you are “even the most saintly C.E.O.” you will commit accounting fraud because of “market pressure” – not “greed.” If you respond to “competition, a primal force of capitalism” you are not motivated by “greed.” No CEO can resist a “primal force?”
Let’s review the bidding. Porter concedes that accounting control fraud occurs when CEOs “inflate sales, mask debts or embellish profits.” He also concedes that accounting control fraud is a sure thing that invariably leads to the CEOs “enhancing their own incomes.” But these explanations require us to examine why Shleifer claims that accounting fraud produces a Gresham’s dynamic.
Andrei Shleifer, an economics professor at Harvard, argues that if unethical behavior drives down corporate costs, rivals will be compelled to do the same just to stay in business. In other words, companies will find the cost of ethical behavior too high.
Here’s the problem. The anti-purchaser control fraud that Akerlof described does “drive down corporate costs” because the used car dealer can purchase lemons far more cheaply than its honest competitors can purchase a good quality car. If the fraudulent used car dealer can exploit his asymmetrical information advantage to deceive the purchaser and sell the lemon for the same price as honest dealer can sell the good quality car then honest dealers will be driven into bankruptcy. Most forms of control fraud produce real (albeit unethical) profits for the firm.
But “inflat[ing] sales, mask[ing] debts or embellish[ing] profits” does not reduce overall costs. Indeed, the accounting control fraud “recipe” that makes accounting fraud a “sure thing” and optimizes a lender’s (or purchaser’s) fictional reported income, maximizes the CEO’s compensation, and increases the firm’s costs and causes catastrophic losses and the firm’s failure. The recipe has four ingredients.
1. Grow exceptionally rapidly by
2. Making (purchasing) bad quality loans at a premium yield, while
3. Employing extreme leverage, and
4. Providing only grossly inadequate allowances for loan and lease losses (ALLL)
So, the Gresham’s dynamic that Shleifer and Porter cite does not explain the accounting fraud their article seeks to explain. “The principle works equally to explain accounting fraud, bribery or the use of child labor, Mr. Shleifer says.” But that is not true. If Washington Mutual (WaMu) makes hundreds of thousands of fraudulent “liar’s” loans pursuant to the fraud recipe its competitors can sit back and cheer while they watch WaMu’s managers make loans that will cause the bank to fail. Indeed, they can gleefully send their worst loan applicants to WaMu to speed its failure. The accounting fraud recipe causes the firm to fail. Accounting control fraud may, as Shleifer argued, temporarily reduce some financing costs, but its net effect places the firm at a competitive disadvantage vis a vis its honest rivals so crippling that it typically causes the firm to fail.
Accounting control fraud is a very old fraud scheme, but the fact that it does not directly produce a Gresham’s dynamic explains why accounting control fraud was used to be far less likely to become epidemic. It is the Gresham’s dynamic that is essential to cause market incentives to become so perverse that they cause the frauds to dominate the industry. There is a different, newer Gresham’s dynamic mechanism that has arisen in the modern accounting control fraud context and has become more intense. Its rise is one of the key reasons why we now suffer from recurrent, intensifying financial crises. Shleifer and Porter would have known about that newer Gresham’s dynamic if they had read and understood the best of the economics, criminology, and regulatory literature that began to be written in the early 1990s. Shleifer was well aware of Akerlof’s 1970 “lemons” article and George Akerlof and Paul Romer’s 1993 article (“Looting: the Economic Underworld of Bankruptcy for Profit”). The Akerlof & Romer article (and our work as regulators and criminologists) explained why modern executive compensation drove the Gresham’s dynamic in the accounting control fraud context. Porter is familiar with the article, but does not understand it.
A 20-year-old study by the economists Paul Romer and George Akerloff [sic] pointed out that the most lucrative strategy for executives at too-big-to-fail banks would be to loot them to pay themselves vast rewards — knowing full well that the government would save them from bankruptcy.
Well, no. Akerlof and Romer explained that whether or not banks were “too-big-to-fail” their controlling officers could find it maximized their wealth to loot the bank. As their title makes clear, their analysis of the CEO’s incentive to loot the bank he controlled was not based on any assumption that the bank would not fail and be placed in receivership. Akerlof and Romer stressed that the bank’s failure was not a failure of the controlling officers’ fraud scheme. The controlling officers became wealthy by following the accounting fraud recipe that caused the catastrophic losses that caused the bank to fail.
Shleifer also failed to understand the portions of the fraud literature that he read. The average tenure of a CFO is roughly three years, but CFOs who are inclined to be honest rightly fear that if WaMu reports record earnings by following the accounting fraud recipe (and the CFO and CEO receive massive bonuses) while their banks report only modest earnings that do not trigger the CEO’s massive bonus their tenure may be three months (one reporting period) rather than three years. The pressure to trigger the CEO’s maximum bonus and the desire of CFOs to maximize their own bonuses push in the same direction to commit accounting control fraud. Similarly, high bonus income for more junior officers based largely on short-term (fictional) reported corporate income creates perverse incentives for such officers to engage in accounting fraud and not blow the whistle on the fraud.
Modern executive and professional compensation makes it possible for CEOs to suborn “independent” professionals and induce officers, employees and agents (e.g., mortgage loan brokers) to assist accounting control fraud and produce “echo” fraud epidemics in other professions and industries. Collectively with the three “de’s” (deregulation, desupervision, and de facto decriminalization), modern executive and professional compensation have produced the powerfully perverse Gresham’s dynamics that have shaped the criminogenic environments that are driving our recurrent, intensifying financial crises.
Once we understand the actual Gresham’s dynamic variant active in accounting control fraud (the subject of Porter’s article) we can see why Shleifer’s claim that greed and ethics are not important to the decision to commit accounting control fraud is specious. The CEO could shape the bank’s executive and professional compensation in the manner recommended by every professional. Executive compensation would be based on real, long term earnings and the officer’s actual contribution to those earnings. Loan officers and brokers would be compensated on the basis of the sound loans they made in a manner that was also likely to be good for the borrower. Professionals would be compensated on the basis of their demonstrated expertise, independence, and professionalism. These forms of compensation would prevent a Gresham’s dynamic from arising. CEOs know this – they choose to adopt perverse executive and professional compensation. They choose to create Gresham’s dynamics so they can suborn professionals and cause others to implement the accounting fraud recipe. They choose to do so not because they have no choice – they are not subject to the “primal force of capitalism.” CEOs that engage in accounting fraud are the ones who deliberately create the “primal force” to coerce others to assist their frauds. The primal force they create and rely on most commonly is greed. Substantively, Shleifer and Porter proved they do not understand accounting control fraud’s special Gresham’s dynamic.
Porter demonstrates another aspect of his analytical incoherence in this passage:
Greed, of course, is a very powerful motive. It is no coincidence that the boom in earnings manipulation during the 1990′s coincided with a surge in equity-based executive compensation packages, as business gurus recommended that corporate boards award managers big lumps of stocks and options to align their incentives with those of other stockholders.
Porter makes two key concessions. Greed is a very powerful motive and modern executive compensation increased accounting control fraud. All this is spoiled, however, by his fundamental failure to understand the nature, purpose, and effect of modern executive compensation. The persons that run control frauds are typically CEOs and they dominate the board of directors and the compensation committee. The executive compensation firms exist to boost CEO compensation massively. The purported rationale for massive compensation is to remedy a severe “agency” problem in corporate governance. “Agency-cost” theorists recognized that the CEOs dominated large firms – not the shareholders or boards of directors. They stressed that the CEO did not run the firm for the benefit of the shareholders, but rather for the CEO’s benefit. What kind of “business gurus” would recommend “that corporate boards award managers big lumps of stocks and options to align their incentives with those of other stockholder?” Again, review the agency’s theorists’ key analysis about the problem:
1. The CEOs dominated the firms and the boards of directors
2. The CEOs did not act to benefit the shareholders
3. The CEOs acted to benefit the CEOs
Under that analysis what must happen if the CEOs’ compensation was vastly increased? It is not in the interest of CEOs to align their interests with those of the shareholders. A CEO wants a “sure thing.” He wants to get wealthy. Accounting control fraud is a “sure thing.” The compensation scheme that will maximize an abusive CEO’s income is clear – huge bonuses dependent largely on short-term reported income (which is easy to inflate). Modern executive compensation can dramatically increase the misalignment of CEO incentives. Accounting control fraud is the ultimate “agency” problem and modern executive compensation both prompts the fraud and provides a means to convert firm assets to the controlling officers’ personal benefit while minimizing the risk of prosecution. Porter must know much of this, but he presents the “alignment” justification for modern executive compensation as if it were a fact.
Porter ends his column about the Gresham’s dynamic with a series of embarrassing apologias for accounting fraud as a means to reduce a firm’s cost of capital. Porter repeatedly minimizes the ethical content of the crimes. He uses the word “fraud” only once; and that in a paraphrase he attributes to Shleifer. Instead, Porter provides a stream of euphemisms for fraud and ridicules those who criticize fraudulent CEOs by relying on the “moral tidiness of greed.” Porter’s apologias and euphemisms for CEO’s accounting fraud include:
• “cook the books”
• “creative accounting”
• “mischief in the executive suite”
• “books are massaged”
• “earnings manipulation”
• “accounting sleight of hand”
• “a specific manipulation — propping up profits by changing the expected rate of return of a company pension fund”
• “surge in pro forma accounting and similar shenanigans”
The embarrassing part of Porter’s article is discussed in an “editor’s note” that the NYT published a week after it published his article.
Editors’ Note: July 11, 2004, Sunday The Economic View column last Sunday described the role of competition in spreading unethical corporate behavior. It quoted Andrei Shleifer, an economics professor at Harvard, as saying that if unethical behavior drove down a company’s costs, rivals would be compelled to behave similarly to stay in business. ”I really don’t believe the saints-and-crooks theory,” Mr. Shleifer said of the tendency to demonize business executives who engage in creative accounting. ”Evidence tells us very clearly, even the most saintly C.E.O.’s were involved” in such accounting because of market pressure. The columnist was unaware of relevant background information about Mr. Shleifer. On June 29, a judge in United States District Court in Boston found in a civil suit that he conspired to defraud the federal government in the 1990′s by investing in Russia while working on a federally financed project to help develop Russian economic institutions.
We can conclude that while Shleifer is weak enough on understanding fraud mechanisms to get caught in the act, he is richly endowed in chutzpah. Five days after the judge’s finding of fraud he is the lead “expert” cited by a NYT columnist on fraud. Porter was “unaware of the relevant background information about Mr. Shleifer.”
We can now bring this discussion back to an analysis of Porter’s claim that it is “folly” for us to be concerned about the outsourcing of U.S. jobs.
Americans’ fear of foreign trade has grown sharply in the last 20 years, in tandem with a rising tide of globalization that has exposed American workers to overwhelming competition from laborers in developing countries.
That admission refutes Porter’s claim that it is “folly” to confront outsourcing. Why would we expose American workers to “overwhelming competition” from laborers in developing countries? If the wages of laborers in developing nations are so low that they must “overwhelm” any attempt by American workers to compete then not confronting outsourcing is a “do-nothing” prescription for national disaster.
Porter, however, embraces hopelessness for the American workers whose jobs are outsourced. They are necessary victims to economic efficiency.
The political debate about globalization tends to get stuck between a couple of propositions: on the one hand, globalization tends to reduce prices of goods and services and bolster economic growth, helping companies become more efficient. On the other, it hurts the workers who are brought into direct competition with cheaper labor overseas.
Yet the debate often ignores an essential fact: regardless of who wins and who loses from the process, it is pretty much irreversible.
Well, no. This does not follow at all. It ignores Porter’s column on the Gresham’s dynamic. Recall what he told the readers in that column.
Andrei Shleifer, an economics professor at Harvard, argues that if unethical behavior drives down corporate costs, rivals will be compelled to do the same just to stay in business. In other words, companies will find the cost of ethical behavior too high.
The principle works equally to explain accounting fraud, bribery or the use of child labor, Mr. Shleifer says. For instance, if a company gains a cost advantage by hiring children, and can thus offer lower prices to consumers, its rivals have a powerful incentive to hire children, too.
If a company can lower costs by paying bribes to government officials in exchange for a permit or to avoid a tax, other companies may be tempted to do the same to stay in the business. ”The keener the competition, the higher is the pressure to reduce costs, and the more pervasive is corruption,” Mr. Shleifer said.
It cannot be assumed that the firms that win contracts through the outsourcing of American jobs are more efficient than U.S. firms. Instead, the winners often succeed through corruption, fraud, and other unethical conduct. If they are allowed to win such contracts, illegality and inefficiency will increase.
Porter’s assumption that outsourcing increases economic efficiency also ignores his very recent article about “The Spreading Scourge of Corporate Corruption.”
Company executives are paid to maximize profits, not to behave ethically. Evidence suggests that they behave as corruptly as they can, within whatever constraints are imposed by law and reputation. In 1977, the United States Congress passed the Foreign Corrupt Practices Act, to stop the rampant practice of bribing foreign officials. Business by American multinationals in the most corrupt countries dropped. But they didn’t stop bribing. And American companies have been lobbying against the law ever since.
Porter knows better. CEOs structure their own compensation and they generally ensure that they will become wealthy. They are not “paid to maximize profits.” Banks, for example, often maximize reported (albeit fictional) profits – and the best way to do that is often to maximize real losses through the accounting control fraud recipe. But consider the implications for outsourcing of Porter’s admission that CEOs “behave as corruptly as they can” if unconstrained by an effective rule of law. (He implicitly assumes that a concern for reputation constrains fraud. It can constrain or motivate fraud. Because accounting control fraud is a “sure thing” and produces extreme wealth and because wealth tends to bolster reputations, a concern for reputation can encourage fraud.) He knows that American workers lose their jobs to outsourcing overwhelmingly to firms based in nations that are highly corrupt and have weak rules of law. These nations may have laws against unsafe work conditions, failure to pay overtime, pollution, bribery, and securities fraud but if these laws are not enforced (and they typically are not enforced in these nations) then the result is not increased economic efficiency. The result is a race to the bottom that harms many workers in both nations.
This recent article by Porter must be read in conjunction with his article on the Gresham’s dynamic that shows that if even a few firms are able to cheat with impunity in these highly corrupt nations the result is “rampant” “bribing.” Some firms will be able to cheat with impunity in any highly corrupt nation. We do not want to encourage American firms to “compete” in an ethical race to the bottom with unethical firms in other even more corrupt nations. Recall that the point of a Gresham’s dynamic is that it causes market forces and competition to become perverse and produce greater social ills. The only way to win a race to the bottom is to refuse to enter that race. Instead, it is essential to a race to integrity through international enforcement of minimum ethical norms. Allowing outsourcing under conditions that encourage a race to the bottom is an insane, inhumane, and economically inane policy that will create a nasty, brutish world of extreme inequality and crony capitalism.
But the fact that globalization is here to stay doesn’t mean that nothing can be done for workers, who have come to fear the process of global integration as a zero-sum game, which ends with their jobs moving somewhere where labor is cheaper.
Well, no. American workers, correctly, fear that outsourcing is a negative-sum game that causes net harm. Accounting control frauds are weapons of mass financial destruction. Anti-purchaser control frauds kill and maim tens of thousands of customers. They too produce net harm.
Porter’s most self-revealing passage describes his real concern about what he aptly terms the “scourge” of corporate corruption that he admits is spreading. Porter is not worried or enraged that the dogma of “free markets” has turned into an anti-regulatory creed that produces an environment so criminogenic that it drives our recurrent, intensifying financial crises. Porter does not write his “scourge” article to warn about the rise of crony capitalism, the inevitable impairment of democracy that crony capitalism causes, the tens of millions of victims who have lost their homes or much of their wealth to the frauds, or the Great Recession. He recognizes each of these problems, but Porter’s passion is his fear that American might respond to perverse market forces producing endemic fraud by losing their faith in capitalism. He is afraid that the fact that corporate corruption is a spreading scourge (due to the Gresham’s dynamic) could lead Americans to question “free market” dogmas and not trust the (often fraudulent) bankers.
We should be alarmed that corporate wrongdoing has come to be seen as such a routine occurrence. Capitalism cannot function without trust. As the Nobel laureate Kenneth Arrow observed, ”Virtually every commercial transaction has within itself an element of trust.”
Actually, the problem has sometimes been excessive trust in banks and perverse market forces, which made it easy for CEOs to defraud their customers, creditors, and shareholders.
Porter eventually ends by implicitly admitting that (1) unless we break the race to the bottom dynamic (another example of the Gresham’s dynamic) the results will be disastrous in certain contexts such as regulation and taxation and (2) the U.S. must counter the race to the bottom by creating internationally enforceable minimum standards.
Multinational companies’ freedom to move their money across borders, to wherever the return is highest, raises new issues. Corporations can relocate to escape taxes and regulation, setting up shop where the rules are easiest. Investment in machines and high-technology plants abroad erodes the productivity edge that American workers hold over workers in China or Brazil.
Multinational companies’ freedom to move their money across borders, to wherever the return is highest, raises new issues. Corporations can relocate to escape taxes and regulation, setting up shop where the rules are easiest.
The challenges call for a more sophisticated debate about trade. American policy makers might consider global taxation treaties, to reduce the scope for tax competition. They could engage foreign countries in a debate on global standards — overcoming mistrust of American protectionism to develop rules protecting workers from abuse by footloose corporations seeking the cheapest labor. And they could think about the kind of safety net needed to protect workers from the dislocations that the relentless onslaught of globalization is sure to bring.
Note that none of the locational decisions he discusses in these passages are based on economic “efficiency.” They are based on the desire of CEOs to outsource American jobs in order to obtain low taxes and weak, ineffective regulation. If we engage in a race to the bottom on taxes we make it far harder for nations that lack a sovereign currency, e.g., Eurozone nations, to raise adequate revenues. Most American outsourcing is driven not by “efficiency,” but by efforts of U.S. corporations and their wealthy executives to evade U.S. taxes.
We have seen in the ongoing global crisis the terrible cost of the competition in regulatory laxity in the finance context. Trillions of dollars of wealth – many orders of magnitude greater than all the supposed gains of outsourcing American workers’ jobs – were destroyed by that competition. In other words, Porter ends his article by implicitly admitting the essential need, rather than the “folly” of attacking the multiple corrupt and destructive races to the bottom posed by the international economic competition in laxity.
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Superb.
Agree. How do these con artists like Porter and Shleifer get to have such a nice forum at the NYT? Not good. And wasn’t Shleifer the sleazeball that Larry Summers tried to defend which then caused Summers to step down as Pres. of Harvard? He just used his dumb-girls comment as a cover.
While I respect Professor Black’s perspective on the impetus of tax evasion and lax regulation for outsourcing of jobs, I would posit a more globally sinister motive by the global inherited rich that own our world.
The standard of living/social safety net is being compromised for the masses in both the US and EU by the labor race to the bottom. Without massive government funded employment opportunities, many will never find enough work for a stable career and family. 3 factors, global population/labor force size, resource constrained consumption and standard of living differences throughout the world combine to give the global inherited rich increasing control and power. Where they invest their capital, people will live and the inverse is also true.
So why should the global inherited rich decide that the role of government should be to keep the class system based on unbounded inheritance and private ownership of property as the operative social construct of our current “civilization”?
More BS about the animal spirits of capitalism fog the focus on the global inherited rich with all the ongoing money and power who really run our world.
Get ready for the next phase of the neo-liberal project. The few remnants of the ‘liberal’ state will now be comprehensively ‘reformed’ to ensure that corporate fraud is decriminalised. Simultaneoulsy the ‘law’ will be strenghtened to ensure that anyone revealing elite fraud faces prosecution and severe punishment. The criminal, state-corporate nexus seeks a new dispensation. Regulators beware.
Economics. Neoliberalism. Eh. People believe that crap because it’s taught them by authority figures in respected universities, and rich people endorse it. That’s all. Much like finance, economics bears little empirical relation to actual physical reality, and its practitioners should be viewed more as religious zealots than as men (or women) of learning.
That’s why it’s not at all surprising to me that this individual Bill Black tears into can hold so many mutually exclusive (not to mention bizarre and nonsensical) beliefs at the same time, and yet feel no cognitive dissonance or embarrasment from it. I dare say that just about any average neoclassical economist, or adherent thereof, as a matter of course believes six impossible things before breakfast every morning. And in that Eduardo Porter is a splendid example. Thanks Bill Black!
By the way, the monetary system itself is sick and has to die. Any system of money with an exponentially growing interest component is doomed to collapse from the get-go. Even big ones like ours.
something like 500 million chinese went from rural poverty to working class
in less than a generation. has anyone here asked then what they think of
global trade?
What if they were the only people in the world?
500 million people is more than the entire world’s population during the height of the Roman Empire.
Could those 500 million Chinese prospered, by themselves, without an “other world” willing to give them a cooperation opportunity that allowed them to be of service?
Fortune Cookie Say: Today you think Deep Thoughts about money and wealth! :)
typical snark for this commentariat. where is f. beard when you need him?
think about it dude, it isn’t snark at all.
why can’t 500 million people find ways to cooperate among themselves so that they all can prosper and achieve something called “happiness”?
why do they need an “other” to give them an opportunity? Why can’t they generate it endogenously?
It is far from a snarky question. It gets to the epicenter of what wealth and money are.
do you live by yourself and grow all you eat and make everything you use?
if not, you need the “other to give you an opportunity”.
that’s true and your original comment is a very valid question. There’s no doubt many Chinese have benefitted.
But it’s also an interesting thought experiment to consider if they could have achieved the same, or better, benefit by cooperating amongst themselves.
I’m no China expert, but China seems to be a geographically diverse, resource-rich nation — unlike, say, the Arabian penninsula where desert is the norm and only through oil have they prospered in recent history, although they had a classical period where wealth (and tribal conflict) were reasonably high.
Clearly there isn’t a social structure in China through which the 5 can cooperate with each “other” and achieve prosperity. They need an ouside “other”, to export to, and thereby receive foreign currency from, a currency which has an intrinsic worth that is higher than their own because it is “backed” by strucures of social organization/cooperation that are inherently more stable.
If they had endogenous cooperational structures that could support peaceful, productive, ethical working relationships, they would not need an outside world.
In fact, if they were the entire world, all 500 million, they would be forced to come to terms with the need to cooperate with each other. There would be no choice and no alternative.
Cooperation is what creates money. Money doesn’t necessarily create cooperation. There has to exist a structure of social organization that can use the money like a machine uses electricity. Money is just the electricity that makes the machine run. But the machine, the social structure, has an independence, an a-priori existence independent of the money.
This is why I believe money = property like wave = particle. The money wave localizes across a wide variety of property structures — which are simply forms of social organization analagous to the complex rituals of totem and taboo that organize pre-modern cultures — some sustainable, some not, but all existing like a wave function, independent of its manifestation as particle and guided by laws that are very hard to describe, but not impossible to describe.
Andrew, craazyman is self-diagnosed, but I had no idea he was multiple-personality disordered. And 500,000,000 personalities too!
Or maybe by “other”, you mean corporations. But oooh, they have multiple-personality disorder, too, all packed into one personhood-ity.
No wonder everyone gets so much done these days.
Too complicated craazy!
It is very simple.
Confucius say “The West will sell us the rope to hang them with…but first we need hard currency – or slave labor to offer them.”
Very interesting what you just said Craazy. Just imagine the great leaps forward we can expect in a global rush to export. Forget labor. If every household has the capability to set up a printer in their garage to manufacture anything from AK47s to delicious fungus capitalism (competition) will become the best means to poverty. You’re right, the dysfunction is already predictable. If the structure of the social system is disintegrating, everything disintegrates.
Actually, China did go thru a short period in the ’80s where the government suggested to everyone that they should set up a cast iron foundry in their back yards. You could build one with bricks, sand, wooden frames, coal and a bellows.
It was like saying “This year we are going thru the Bronze Age”, or something like that. It failed miserably, of course.
They then realized maybe they underestimated how important know how, intellectual property, and modern plant and equipment were when you are trying to play catch up with the West and the 200 year head start we had on industrialization.
Craazy @9:16
If I understand you properly, you are, in essence, potentially, at least, outlining a case for sustainability at a “local” or bioregional level. If i am understanding you properly, you are suggesting that although the mechanism for raising these half million from abject poverty was/is international trade, that is not the only mechanism capable of doing so …
If I have interpreted your perspective properly – all i can say is “Cheers, man(?)!” Je suis d’accord – and once we expose the BS of the “inevitability” of globalization, we can sit down and discuss some actually useful concepts …
Did i get it right, from your perspective?
craazyman, you need an “other” to villify, rape and pillage, also to stash your Pirate loot, otherwise not so much.
I have to agree with you; free trade is good. Automation is good too.
Unfortunately, the benefits of them are not justly distributed because of our thieving money system.
Hint: Usury alone is suspect but add counterfeiting (so-called credit creation) to drive people into debt and it becomes a monster.
It nearly all goes back to the banks – those “respectable” thieves.
Reply to Robin Hood’s comment about China having to play “catch up” to the Industrialized West.
You have it slightly backwards historically. China was working with molten and cast iron from 500 BC and continued to make large advances in smelting etc. through the 13th century. Here’s a quick squib from Wikipedia for your convenience:
China
The process of fining iron ore to make wrought iron from pig iron, with the right illustration displaying men working a blast furnace, from the Tiangong Kaiwu encyclopedia, 1637
Western historians debate whether bloomery-based ironworking ever spread to China from the Middle East. Around 500 BC, however, metalworkers in the southern state of Wu achieved a temperature of 1130°C. At this temperature, iron combines with 4.3% carbon and melts. The liquid iron can be cast into molds, a method far less laborious than individually forging each piece of iron from a bloom. This technology would be known in Europe from early medieval times on.[29]
Cast iron is rather brittle and unsuitable for striking implements. It can, however, be decarburized to steel or wrought iron by heating it in air for several days. In China, these ironworking methods spread northward, and by 300 BC, iron was the material of choice throughout China for most tools and weapons. A mass grave in Hebei province, dated to the early third century BC, contains several soldiers buried with their weapons and other equipment. The artifacts recovered from this grave are variously made of wrought iron, cast iron, malleabilized cast iron, and quench-hardened steel, with only a few, probably ornamental, bronze weapons.
An illustration of furnace bellows operated by waterwheels, from the Nong Shu, by Wang Zhen, 1313 AD, during the Yuan Dynasty in China
During the Han Dynasty (202 BC–AD 220), the government established ironworking as a state monopoly (yet repealed during the latter half of the dynasty, returned to private entrepreneurship) and built a series of large blast furnaces in Henan province, each capable of producing several tons of iron per day. By this time, Chinese metallurgists had discovered how to fine molten pig iron, stirring it in the open air until it lost its carbon and became wrought iron. (In modern Mandarin-Chinese, this process is now called chao, literally, stir frying.) By the 1st century BC, Chinese metallurgists had found that wrought iron and cast iron could be melted together to yield an alloy of intermediate carbon content, that is, steel.[30][31][32] According to legend, the sword of Liu Bang, the first Han emperor, was made in this fashion. Some texts of the era mention “harmonizing the hard and the soft” in the context of ironworking; the phrase may refer to this process. Also, the ancient city of Wan (Nanyang) from the Han period forward was a major center of the iron and steel industry.[33] Along with their original methods of forging steel, the Chinese had also adopted the production methods of creating Wootz steel, an idea imported from India to China by the 5th century AD.[34] The Chinese during the ancient Han Dynasty were also the first to apply hydraulic power (i.e. a waterwheel) in working the inflatable bellows of the blast furnace. This was recorded in the year 31 AD, an innovation of the engineer Du Shi, Prefect of Nanyang.[35] Although Du Shi was the first to apply water power to bellows in metallurgy, the first drawn and printed illustration of its operation with water power came in 1313 AD, in the Yuan Dynasty era text called the Nong Shu.[36] In the 11th century, there is evidence of the production of steel in Song China using two techniques: a “berganesque” method that produced inferior, heterogeneous steel and a precursor to the modern Bessemer process that utilized partial decarbonization via repeated forging under a cold blast.[37] By the 11th century, there was also a large amount of deforestation in China due to the iron industry’s demands for charcoal.[38] However, by this time the Chinese had figured out how to use bituminous coke to replace the use of charcoal, and with this switch in resources many acres of prime timberland in China were spared.[38] This switch in resources from charcoal to coal was pioneered in Roman Britain by the 2nd century AD, although it was also practised in the continental Rhineland at the time.[39]
Actually, I know that. But then they had the Great Wall, Mao purge stuff, and around the 1970s they decided to find out what’s up with the ROW.
I also worked for a company that decided Chinese casting making had progressed to acceptable QC standards around 1990 and we started buying from then instead of doing it ourselves.
But don’t get me wrong, I like reading historical posts.
And just imagine: those 500 million Chinese did not produce a handfull of items which failed to fall apart within 90 days of their purchase at Walmart, Home Depot, Lowes, Target, et. al. The Chinese have given new meaning to the term planned obsolesence.
Mr. Hartman;
The problem as I see it is that we cannot treat the ‘advancement’ of 500 million Chinese as a zero sum game. It being proposed that those lucky Chinese have prospered at the expense of their fellow workers in Europe and America. Another side to craazymans analysis is the idea that everyone can make progress if and when the elites are forced to disgorge their outrageous share of the common wealth. Notice that I said “common wealth,” not individual achievements. Craazymans assertion that cooperation can bring just as large if not greater returns on investments than competition, when treated at a societal scale, is a valid, even perhaps, superior point.
“How much is enough?” I’m not sure, but we have all the evidence we need before us to determine how much is too much.
there is nothing wrong with outsourcing some labor and automating some
labor. what is wrong is having nothing at hand for the “excess labor” to do
for the rest of their lives. the job guarantee thing interests me. can we design
a CCC for the 21st century?
YES !!!!
This is what is being ignored. There needs to be an employer of last resort and if we owned the government instead of the global inherited rich we could direct our government to be the employer of last resort.
The human capital that is being tortured with unemployment by our current ongoing inheritance and private ownership based class system must be saved, healed and nurtured and the global inherited rich prosecuted.
what is wrong is having nothing at hand for the “excess labor” to do for the rest of their lives. andrew hartman
People can ALWAYS find things that are meaningful (at least to them) to do IF they have enough resources such as land, tools, money, etc. to do them with.
Let’s face the fact that the counterfeiting cartel has stolen from both debtors and non-debtors. The minimum required is to end that theft and provide restitution. And if that’s not adequate then land reform and nationalizing the large corporations and redistributing their common stock could be considered too.
Away with make-work!
“the job guarantee thing interests me. can we design
a CCC for the 21st century?”
No, we can’t. Because that ended up being temporary pecuniary workfare and on the current race to the bottom trajectory– that you favor leaving unarrested– this looks to be permanent.
Unless you plan on making that your own lot in life, in which case I’ll reconsider.
By the Chinese government’s own admission, every year there are upwards of 100,000 violent riots in towns and cities across the country, usually due to horrid economic factors, that have to be put down. The actual number is probably much higher.
This gets virtually zero coverage in the West. But clearly, if 500 million Chinese are somehow materially better off these days, they are curiously darned furious about it.
Pelham-this has always been the case in China..which gave rise to “benevolent
dictator” concept…the people had to be placated…Confucian “order” simply didn’t work in hard times. People’s representatives (monks-who refused to STAY at imperial court) spoke for villages, at their behest…were trusted, to do so..
parallels exist-ours are no “monks”, and they’re NOT trusted to speak for the people-only corporate sponsors…
500 million Chinese. ‘Somebody’ had to give up whatever these people ‘got’. These somebodies will get nothing.
“Thanks, future generations!”
As an advocate for public schools, I look at the “Race to the Bottom” from a different perspective: when corporations move offshore to reduce their taxes they diminish the revenues of schools, public services, and health services. Porter may be naive about corruption, but he at least acknowledged that our country needs a better safety net for displaced workers and an education system that encourages students to attend and graduate from college.
But if we are looking at a “safety net” concept to replace the magnitude of contributions to the public fisc that corporations have permanently removed and funneled overseas, aren’t we really saying that the idea of building the society with the contributions of everyone who is participating, benefitting from the “Polis” (for lack of a better word) has disintegrated? Where do you get a “safety net” to replace what corporate extractors have removed? Maybe repatriating what they removed? Isn’t it more logical to simply admit that the system that leads to this drain of wealth, assets and labor out of the country is incompatible with a society that provides public services? Ergo, it is inhumane and not sustainable?
This country’s #1 problem being political corruption. MONEY!!! CORRUPTION!!!
It’s called “stave the beast,” where the paid-off politicians give tax breaks and subsidies to the Fat Cats that fund their elections; drive the government’s revenues to a terrible deficit; refuse to increase taxes to compensate, and starve the economy (schools and etc).
We are at a point where taxes are at a 30-year low, corporations have more excess cash than ever before, and $20-30 Trillion is residing in foreign tax havens, NOT creating jobs and NOT paying taxes, all because they spent a portion on campaign bribes!
Our trusted politicians have sold us out, and we are about to re-elect them again. Obama is blamed, all while the Tea Party and right-wing wackos are blocking government progress, and the Dems are not making it an issue.
Jack Lohman
http://MoneyedPoliticians.net
Obama should be blamed because he’s going along with it. Hell, it’s perpetrating it!
…he’s perpetrating it..
The bribes are going to both parties, and they should BOTH be jailed.
I love prof. Black’s articles. He has the details firmly under control. I think he may not realize however that Capitalism as practiced today is fundamentally a religion. It has its own alternative ethical system based on doing the will of the deity known as “the market”. The concept of greed doesn’t even exist. Remember maximizing utility is what all good people do under market “ethics”. There is no alternative (at least in the minds of the true believer).
“It’s own alternative ethical system.” I like that. As in “I commit fraud against innocent victims in the throes of primal animal spirits, therefore it is neither unethical nor illegal.” (Unlike, say, the man who shoots his wife when he finds her in bed with another man. Because that guy, in the the throes of primal animal spirit named “Jealousy” or “Blind Rage,” will definitely go to jail for manslaughter.)
Executives are paid to meet expectations. That’s where the control fraud and intentional blindness is coming from. The real greed comes from investors who expect to earn a premium above some “risk-free” rate.
Hello Dear, are you truly visiting this web page regularly, if so after that you will absolutely get fastidious experience.
Amazing, that we need experts, economists, CEOs, Journalist etc. to tell us that in a FREE MARKET, greed, fraud, crimes, bad behavior will not exist.
Not on this planet.
“ The Master [Confucius] said, The virtue embodied in the doctrine of the Mean is of the highest order. But it has long been rare among people ”
— Analects, 6:26 (Burton Watson tr.)
The nature Competition is that it becomes fierce in time and in the process justifies all means. If a doctrine based on competition is not followed with teaching of values of honesty and fair play, it is sooner or later resort to fraud.
All the pontification of Economists, Wash & Wall St PHD’s is an intentional distraction from the Truth; There is NO Competition, There is NO Free Market, there is NO Capitalism!….period!
Greed?…Is the impending Result NOT the root cause of the train wreck. You’d have to assUme the journey BEGAN on a level playing field to ascertain greed drove the train off the tracks. The TRUTH be known, the architects Engineered ‘The System’….for CONTROL.
There is ONLY Technocratic Corporatism Engineered Fraud and Collusion via the VEILED Automated Business Methods, Contracts, Patents, Trademarks, Service Marks and Artificially Intelligent Computer Software….that process ALL the information on…‘The System’…TPTB Designed.
When will the disingenuous Intellectual Elite expose ‘The System’ to the serfs? Everyone KNOWS it’s rigged. When will someone tell them HOW?
Serfs in waiting for Intellectual Honesty,
Ken Dost and Debra Klass
De facto there isn’t, agree. Just wanted to show that there are destructive sides to competition in general and you can see it in sports as well.
The irony is that in order to have “free” markets and “competition” you need equal players – God forbid, we’ll have to say the forbidden name communism. So it seems we got into a full circle here…which brings me back to the great Confucius and his doctrine of the mean.
Equal participants means equal access to information and equal power to manipulate markets.
I disagree with your… The irony is that in order to have “free” markets and “competition” you need equal players –
First…You NEED have Sound Currency and Second…you NEED more than two players. Right now, we have neither. Remember…all roads lead to Rome?
Based on The Swiss Federal Institute of Technology’s research published last Fall titled…The Network of Global Corporate Control….we now KNOW who the top 50 are and Barclays is Numero Uno. Per the ‘Black’ brief above and the EXPOSURE of the manipulation of LIBOR, everyone ‘theorizes’ HOW they got to the top of the pyramid. ;-) ;-)
ONLY when you look at the architecture of THEIR System, do you really know HOW they did it. They work as a team and play by different rules.
Just like the left-right paradigm espouses a fake choice, these TBTF Banksters hang a shingle on their door purporting to be and offer something different than the TBTF Bankster next door while contractually, they share the same ‘underground’ plumbing but more importantly, they share the Blueprints for THAT plumbing. You and I are not privy to that information unless you start digging.
And, let me tell you, you’ve gotta lotta manure to shovel thru before you find the ‘corner stone’. When you do, THEY…are ONE. We are only pawns in a Virtual Reality game of monopoly where the rules were cleverly crafted to usurp laws, man’s common sense, and defy gravity….so long as they are NOT exposed.
According to THEIR Blueprints, A Mortgage is NOT a Mortgage. It’s a contract to sell…NOT buy. But WHO in Academia or Law care anymore? They continually debate semantics when the answers are right in FRONT of their nose! Either they forgot how to do basic investigatory work like Holmes or Mason OR just like the ‘theorized’ Greed of the banksters by some in this brief above…I theorize PRIDE has Academia in a Race To The Bottom.
Frankly, methinks this article needs a bit more proof reading – when he refers to “an ethical race to the bottom”, huh?
In any case, though he refutes Porter in a number of areas, he essentially lets stand the offhand description of globalization as “inevitable”, and suggests that what we need to do is engage in international efforts to at least ameliorate the damage that anyone with a brain by now recognizes is intrinsic to the process … So we wind up with orgs. like the WTO, or trade “conventions” like NAFTA et al …
This has seemed to me a fundamental flaw, or at least quite serious weakness, in much “lefty” critique of the system for some time – a failure to examine honestly and dispassionately the real potential value of the dreaded “P” word (protectionism, for those whose minds might be elsewhere …) That word is routinely avoided, shunned or openly disavowed in polite lefty conversation …
I really do believe that we need to pull out, dust off, revitalize that “P” word as a useful, nay necessary, IMO, tool for self preservation all over the planet …
Ha-Joon Chang’s stuff, methinks, is very useful for thinking about this ….
“protectionism” is the boogyman that neo-libs, neo-cons, multinationals,trilateralists, or whatever the name is for those people – use to scare us.
They all point back to the Great Depression and point out how protectionism was such a mistake then. But the facts were that the US was the world’s largest EXPORTER at that time. Not the world’s largest importer. So we shot ourselves in the foot.
Tarrifs are about the only thing that could keep outsourcing from finding the lowest point on earth. Even Warren Buffet proposed a “lite” version – trade vouchers – the idea is this would provide a mechanism to force balanced bi-lateral trade as opposed to Free-For-All trade that we have now.
And even the word outsourcing is an Orwellian Newspeak word. It doesn’t mean the order went offshore – it means multinationals move everything there – capital investment, training, the chinese government negotiates for patents in return for allowing foreign companies to “invest” in China, and on an on.
What’s going on makes terrorism look like childs play.
No argument – but that begs the question, i think, – why don’t we get some robust proposals for “protectionism” from those who claim to abjure neo-con, or neo-liberal, economics?
Black’s prescription for the ills of globalization is a bit weak, downright anticlimactic, if you ask me …
It’s a start. But it’s been my working life – the third world lusting after my job.
Warren Buffet was Obama’s advisor when he proposed trade vouchers. Then O put him and all his other early big name advisors out to pasture.
It quite spooky how almost no one with a real voice or power has much to say about it, even tho everyone seems very aware of “globalization” and it’s result.
When i try to raise the subject in “lefty” circles i am met with stares, silence, or mumbles about “helping the poor in the 3rd world” ala this China stuff here. When i point out it is the “3rd world” that is getting its act together and throwing monkey wrenches into further WTO nonsense, they say “yeah, the US et.al. has to stop subsidizing its ag, etc.” when a big part of those small(er) countries desire is the ability to protect their own ag and their own industry …
I was hoping, when the article from the Exiked the other day mentioned Chang, there might arise a discussion, as a sidebar, about his stuff. I have raised it here before and never gotten a bite ….
Strange indeed to see this elephant in the room ignored by so many who condemn the neo-liberal consensus that “free trade” is at the heart of … “Fair trade” seems to be the rallying cry, when it is greatly reduced trade, and the right to say “no trade”, that, IMO, would be so much better for us and the planet ….
“Want to sell it here? Then make it here” should be a theme we should hear expressed considerably more ….
Folks seem to equate “protectionism” with “isolationism” as if they were co-terminal or at least conjoined twins – but that is only because they have accepted neo-liberal framing. Methinks it is quite simple, mot to mention desirable, to separate the two; pursue the first, eschew the second in mutually beneficial policies and pursuits that involve sharing technologies. Ironically a mutual recognition of the value of local protection would enhance a transfer of technology in ways that “free trade” never will ….
It doesn’t surprise me at all that our “lefties” are either clueless or couldn’t give a crap.
I graduated college in the late ’70s as a lowly BSME, and couldn’t help noticing the entire Masters of Engineering class was either Chinese or Indian. I was told the Indians were all rich kids and the Chinese were geniuses sent by their government.
Curtural differences and values, methinks.
It all goes back to the money system; the workers’ jobs have been automated and outsourced away with their own stolen purchasing power via the government enforced/backed counterfeiting cartel, the banking system.
And for what? The government certainly does not need banks and as for the private sector, is it incapable of creating its own ethical and stable money systems?
For a guy that is a fan of indentured servants, whats your point. Everything you say is in conflict, write off debt and start all over again[?], only under the ideologically *correct* as voiced by the (your words) “chosen.” people.
Are you too say – that – you[rs – are superior – to all – other things by proxy of your ***BELIFES*** and until the everyone and living thing recognizes this ultimate state, any other system is doomed to fail? So much self actuating prophecy… the world is groaning under its weight.
F. Beard says:
August 10, 2012 at 1:07 pm
is it cool for you to be my slave as were not country men? skippy
No because as a Christian I have been grafted into the status of “chosen.” Even if you were a fellow Christian or a Jew, you could at most have me as a indentured servant for 6 years.
OTOH, I reckon you might be fair game … :)
Read more at http://www.nakedcapitalism.com/2012/08/links-8912.html#K6PuBtGW5WoLOFLA.99
Skippy… the cognitive dissonance echos for century’s upon not deaf ears…. but closed minds… shezzz. Money is just a form physical of control, a tool, its the masters that apply the force of it. And as far as I can tell, reading and studying, its your mob that enforces the masters desire.
Brilliant work Dr. Black ! It appears Obama’s positive message of Hope and Change was meant for the accounting control frauds and the criminals on Wall Street. It appears Austin F has been following the game plan as closely as I have. Inverted Totalitarianism – hence Geithner using people as foam for the Wall Street robber barons to gently land. Corruption begets corruption, greed begets greed – and under the protective umbrella of our government, allowed to flourish and grow.
Derivatives have proven to be the 21st century financial WMD’s and nothing is being done to stop the financial terrorist/banksters from perfecting their use against “we the people”. In short, this is a bankster coup of our government – just like they tried around 1934 before their plans were exposed by Gen Butler. They have found a way to do it this time without a violent overthrow. Silence is acquiescence.
Sigh – I guess we know this and i guess we also know that nothing will be done to fix it as long as the folks who have acted as gov’t facilitators – the Ds and Rs – are left in power. So i guess we know they must be removed from power – which of course begs the question – why are not all the folks who know this working to remove them from power?
Globalization and “free trade” is really just the Haves whipping the Have-Nots into increasingly desperate competition for sustenance. It’s a deadly race to the bottom presented as competition between sovereign states, but actually run by transnational capital. Run by faceless corporations doing the most efficient thing for their quarterly profits, which may include bribing entire governments, raping nature for resources, global control fraud, fostering wars of aggression — whatever works for the bottom line right now.
But —
if you step back and view this blue marble we all live on as Spaceship One for our species, as our sole life support system, then all this competition to control all the oil or have the most atomic weapons or build the biggest military or corner the market on rare earth metals or convert everyone to a particular religion or be the single richest SOB walking around is straight up madness. It has nothing to do with our survival as a species. It has everything to do with our looming extinction.
On a spaceship hurtling through unknown space, carrying us all to an unknown future, the single most important thing is to keep everything working on board so we survive and actually get to our future. Letting 1% of the crew commandeer the bridge and play a game of divide and conquer is nuts. Letting the wiseguys announce over the intercom that the toilet cleaners will henceforth only get one meal a day so the bridge team can have five launches a process of ever-growing chaos that only benefits the gangsters who grabbed the wheel.
Soon the engine room people shut off the star drive until they get larger mattresses; the gardeners stop growing food until they get five stars on their epaulets; the IT people unplug a few vital wires until they are allowed more gaming time, and the school teachers go on strike until somebody starts cleaning the damn toilets again. Everyone out for themselves and their group means the wiseguys prosper by taking advantage of each separate group in turn. Meanwhile, the ship fails and everyone dies because no one’s looking out for our one and only life support system.
Gang rape Mother Nature too many times and she won’t suckle you any more.
Only when a sufficient number of humans recognize that we actually are on that spaceship, and that our first duty is to survive together on it, will we stop this chaos we are living.
There’s little doubt that the only thing that can bring about such a global realization and decision is seeing our toilets running over, and our spaceship planet clearly dying before our eyes. And us right along with it. That’ll be what learns us, probably too late.
Why the hell should we let it go that far? How ’bout we round up the crooks and liars now, and put everyone to work looking out for one another and our only home?
We can do that, you know. Any time we choose.
Yup …
I belive you Antifa, and working toward you.
Nicely stated !!!!
We only need the collective will to laugh the global inherited rich out of control of our world.
thanks for being another voice of sanity in this modern asylum. i literally know only one other person who sees things this way and even they haven’t made the mental leap to accepting extinction as the end game. so how do we change things? it is frightening to be awake to the truth of this world and to feel helpless in the face of the Destroyer. i know the way out is Love, the only true power in the universe, but how to awaken the rest of humanity to this?*
*and I don’t mean Love (eros,amor) I mean Love (agape). the Love as taught and lived by the Buddha, Jesus, etc.
Well said Black Swan & Antifa. It is the only way to truth. It is truth that will put a stop to all this madness of the current world economics that is mentioned here at NC. How else can enough people of intelligence,goodwill and courage stop these horrors of the 0.01%? Love is NOT some superficial or religious notion, it is the only power that will bring enough sense and strength to those who seek to honour the manifestation of this terrible and beautiful planet. Act Local, Think Global,Realise Universal. Love is the power they will find at the base of quantum mechanics and what was suspending the Universe before the instant of Creation.
Never forget:
Outsourcing is purely to save money FOR EXECUTIVES. They get big bonuses based on hypothetical outsourcing returns, which are never required to be met.
The quality of worker in India, in China is absolute crap compared to the US equivalent. Go ask anyone actually managing IT projects and you’ll find that you have to spend more money and more time to achieve the same work quality of any staff before outsourcing.
The actual returns of outsourcing are negative, not positive.
I wonder to what extent control fraud, Gersham’s dynamic, globalization and outsourcing are human behaviors–which result primarily from the creation, evolution and now dominance of both large private and public bureaucratic structures in our society.
I would argue that some of our original, deepest inherited cultural values(for example,the belief in tinkering, the worth of becoming a jack-of-all trades but master on none, a high regard for what is practical and useful as well as making money for oneself) do not fit comfortably inside large hierarchical structures(public or private).
Does such cultural values still exist inside our heads and behind our eyes?
Are they still worth pursuing?
Could they flourish again in a much more decentralized environoment? (Maybe like the U.S. between 1776 and 1840)
Would those with social democratic beliefs ever consider such heresy?
Neoliberalism is just the surface ideology of kleptocracy. It doesn’t make sense, but then it doesn’t have to make sense. It only has to seem to. Pointing out its logical inconsistencies, and those of its practitioners, is well pointless. Neoliberals are not moved by either evidence or logic. The object of the exercise is not to describe anything. It is to give cover to and distract from looting. That is something very different. It is unimportant whether neoliberals really believe in their creed or are cynically faking it and know it’s all about the looting. It’s bad faith either way. They, especially those who pretend to be experts, have no excuses for not knowing that the system they defend and which they profit mightily from is destroying the rest of us.
They know it – we know it. We know how to fix it but don’t, so what can one say …
Occam’s razor applied to the Gordian Knot makes us heir to the throne …. so why do we keep using electric shavers?
Thank you Bill Black, nicely done.
From a criminology perspective it’s interesting to focus a minute on Andrei Shleifer’s notion that “I don’t believe in the saints-and-crooks theory.” As Bill Black explains, AS holds that because “even the most saintly C.E.O.” will commit accounting fraud because of “market pressure,” the motivation is not “greed” but rather “primal force.”
The well-developed concept of manslaughter as a lesser charge than murder when a person takes another’s life embodies the (humane and rational) belief that if a person takes another’s life while in the throes of a “primal force” (e.g. jealousy and rage upon discovering his/her spouse in delicto) it is not fair to charge them with intentional murder (“primal force” overtook the rational mind at the time of the act so that the person is not deemed to have been capable of forming “intent”). But neither is it fair or just to let them off entirely, because they did take a life, and society does not want to encourage jealousy-induced killings. (In Yugoslavia, there is apparently a provision in the criminal code that automatically downgrades any killing to manslaughter if it occurred during the “scirocco” — the hot wind that makes people nuts.)
Why then would not the same concept apply to CEOs and financiers gripped by the “primal force” of “competition with crooks”? Let the white-collar defendants claim there was no specific intent to rip off the faces of known and unknown millions [for purposes of argument only] — why wouldn’t it be appropriate to charge them with the fraud equivalent of a manslaughter charge — financial harm through trickery conducted with reckless disregard or gross negligence?
My point is not that there aren’t plenty of straight “first degree” fraud charges that could be brought across the finance and regulatory board, but the extraordinary claim inherent in Mr. Shleifer’s “I don’t believes in the saints and crooks theory” view, what would be high crimes anywhere else is simply non-criminal primal behavior when it involves crimes of money rather than violent crimes against the person (or, of course, the property of the .01%).
Edit/Insert: “…when it involves crimes of money by the captains of industry, banking and the government . . . “
Look at this post at Economist’s View:
http://economistsview.typepad.com/economistsview/2012/08/if-obama-was-for-it-we-had-to-be-against-it.html
Impeach Mitch McConnell! He’s a traitor. He’s more interested in the success of his party and philosophy than the nation. He’s as much a traitor as the commies in the ’50’s were said to be. Impeach him!
Interesting that Andrei Schlieffer is cited. He was involved in a scandal of embezzling millions of dollars in a project in Russia. Had he not been a harvard Professor he would be doing 20 to life in prison. Schliefer is a crook that got away!!!!!!!
That one is not mentioned on his Harvard bio!
Primal force like animal spirits is just a way of removing agency, and responsibility and culpability, for events. Such phrases divert attention away from the perpetrators of crime by laying causality off on to vast non-specific processes.