Yves here. Even though Bill Black correctly puts “free markets” in quotes, we feel compelled to remind readers that it is an intellectually incoherent construct. The ideology of “free markets’ pretends that markets can exist without government involvement to insure contract enforcement and certain minimum standards of conduct. We discuss at length how commerce would quickly break down if “free markets” were ever to come into being, since it would be impossible, for instance, to buy any products with any confidence where the buyer as an individual could not verify product quality on his own and he was at risk of product failure (say new car or phone crapping our very shortly after purchase).
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. Jointly published with New Economic Perspectives
Open up a conventional economics text and you will be taught that high among the glories of “free markets” is the “fact” that they lead to firms earning “zero economic profits.” Economic profits are not the same as accounting profits. An economic profit occurs when a firm receives greater profits than the minimum required to be able to raise capital in their industry. A firm that receives a profit greater than that minimum requirement is receiving monopoly “rents” due to its market power. Conventional economists used to believe that was a bad thing, but many conventional economists from the right are now openly hostile to antitrust concerns.
One of the paradoxical arguments of conventional economists is that the “free markets” are so effective and speedy in eliminating economic profits that they create powerful incentives not to engage in expensive research and development (R&D), particularly where the success of the project is highly uncertain. The patent laws, therefore, grant a government-awarded monopoly to inventers. That patent is limited in duration, but it has no restrictions on pricing.
The development of new “ethical” drugs, particularly novel ones, is often cited as a prime example of the benefits of the patent system. What Wall Street has realized in recent years is that the patent-holders that develop these drugs present unique profit opportunities for those with a Wall Street mentality. It turns out that those who develop ethical drugs commonly act less than perfectly rapaciously. The pharmacy industry is not composed of saints, but it is composed largely of scientists and doctors who often care about the patient. This allows Wall Street types, who often define the concept “perfectly rapacious,” and a lack of empathy for the suffering of other people the best of all worlds.
- They can buy the patent rights at prices that are dirt cheap (from their perspective)
- They face zero risks that the R&D project will fail, because it has already succeeded
- They face greatly reduced marketing risks because the drug is already being successfully sold and is typically authorized for reimbursement by public and private health insurance
- The risk of undiscovered adverse side effects is greatly reduced because they wait to buy the patent rights until after the drug has been sold for several years
- They can – immediately and dramatically – increase the price of the drug
This five-point strategy would seem, from a Wall Streeters’ perspective, to present the perfect opportunity for Wall Streeters to get even richer even quicker through a “sure thing.” The paradox is that it is precisely Wall Streeters’ lack of empathy – their inability to understand how the public would respond to such a “sewer” strategy and their tone deafness in responding to the public outrage that their strategy was sure to provoke – that has been their undoing.
The thing about being a founder/CEO is that you can be a world-class asshole. On Main Street, you would at least have to pretend to be human in interactions with the public, but Michael Lewis has made his career on the basis of the fact that on Wall Street being a world-class asshole is often viewed as an asset. Two firms, both creatures of Wall Street, have followed the five-part strategy I described with the same results.
Martin Shkreli
The title of the New York Times’ article on Shkreli captures the point. “Martin Shkreli All but Gloated Over Huge Drug Price Increases, Memos Show.”
Martin Shkreli, former chief of Turing Pharmaceuticals, said in an email released by a House panel that raising a pill’s price 5,000 percent would produce “a very handsome investment.”
***
Mr. Shkreli practically gloated about the potential profits in an email he sent last August, just after his company, Turing Pharmaceuticals, had paid $55 million to acquire the drug Daraprim, and had raised its price more than fiftyfold to $750 a pill, or $75,000 for a bottle of 100.
“So 5,000 paying bottles at the new price is $375,000,000 — almost all of it is profit and I think we will get three years of that or more,” Mr. Shkreli wrote in the email….
Shkreli had started, and has been indicted for allegedly looting, a hedge fund. In his appearance before Congress he behaved in a manner that emphasized that his extraordinary arrogance had displaced any empathy for the patients. In an odd way, he showed how much of what happens in economic life is due to social and ethical restraints on the part of CEOs and the public rather than “profit maximization.” It is only when we see the behavior of someone who lacks humanity that we can see how important those normal restraints are to civilization.
Valeant’s Leadership
The same NYT column showed that Valeant followed Shkreli’s strategy.
Regarding Valeant, the Democratic staff memo says the company identified the revenue goals for Isuprel and Nitropress and raised the prices to reach those goals.
Before buying the two drugs in February 2015, the company hired a pricing consultant who concluded that there was ample room to raise the price because previous big price increases had not dampened use.
One internal presentation showed that Isuprel and Nitropress had combined “2015 plan revenue” of about $525 million, up from $153 million in 2014 under the previous owner. The explanation for the big increase was “aggressive pricing through consultant recommendation.”
One email that got attention on Wall Street was sent May 21, 2015, from Mr. Schiller, who was then the chief financial officer, to J. Michael Pearson, Valeant’s chief executive. Mr. Schiller said that price hikes accounted for 60 percent of Valeant’s growth in the first quarter of 2015, or 80 percent if the company counted the contribution from the two heart drugs it had just acquired.
The Wall Street Journal has written a similar column about Valeant’s leadership entitled “Valeant’s CEO Was Key Force on Pricing.”
In early 2015, when Valeant Pharmaceuticals International Inc.’s top brass met to set prices on a soon-to-be-acquired cardiac drug, some executives suggested slow, staggered price increases. Chief Executive Michael Pearson disagreed.
To reach Valeant’s internal profit targets, Mr. Pearson lobbied for a single, sharp increase. Hospitals could still make a profit at the higher price, he argued, which meant patients would still have access to the drug. The team deferred. The day it completed its February 2015 purchase of the drug, called Nitropress, Valeant tripled the cost.
“Bet on [“sewer”] management, not on science.”
Valeant is a creature of Wall Street with its strategy championed by William Ackman and his hedge fund and other Wall Street funds.
Under Mr. Pearson, a former McKinsey & Co. consultant, Valeant earned a loyal following on Wall Street for its profitable strategy of buying existing drugs with price-increase potential rather than developing them in-house. “Bet on management, not on science,” he often said. While Valeant did have a research program, Mr. Pearson said that most of Valeant’s R&D products are reformulations of existing drugs, such as a new delivery method for a glaucoma medicine, according to the Senate documents.
***
Cuprimine and Syprine, are used to treat Wilson’s disease, a rare ailment involving a buildup of copper in the body, and were acquired by Valeant in 2013. Months after it raised the price of the cardiac-care drugs in 2015, Valeant sharply raised its price tags on Cuprimine and Syprine.
The price of Cuprimine has risen 5,787% to $26,189 since 2013, with most of the increase occurring in the summer of 2015, according to an analysis prepared by Senate committee staff for the hearing. The cost of Syprine jumped 2,934% to $19,783 during the same period. A doctor testified at last week’s Senate hearing that a liver transplant, an alternative treatment for Wilson’s disease, is now cheaper than a lifetime of Valeant drugs.
***
Upon completing its purchase of the two drugs in February, Valeant sharply raised the price of both Isuprel and Nitropress.
A month later, when a Deloitte consultant studied further price-tag spikes on the two drugs, the consultant asked a senior Valeant executive in an email: “Are you ok with the above assumptions? They are leading to high gross margins (more than 99%).”
Senior officers whose entire strategy is massive price increases, of course, thought that 99% profit margins were fabulous.
Wall Street Turns von Hayek’s “Spontaneous Order” into the Orchestrated “Sewer”
Warren Buffett and Charlie Munger excoriated the business strategy that Wall Street brought to pharmacology. Munger said it had helped turn Valeant into a “sewer.” Then Munger decided his description was too weak to describe Valeant’s corrupt culture.
Munger then took it a step further saying he believes “sewer” is too weak a description of Valeant’s corrupt culture.
“The main thing that Valeant did that was unbelievably clever was to pay the consumer’s part of the deductible for the drugs they were selling,” he said. “That is totally illegal—criminal under the Medicare laws. But, that doesn’t apply under the state laws. And they saw that loophole and so they did it with all the drugs that weren’t covered by Medicare… they paid the consumer share of the deductible and they tried to pretend that it was a charitable contribution, when really it was the functional equivalent of bribing the other fellow’s purchasing agent.”
Whenever Wall Street culture becomes dominant in a new field it is certain that the new field will be rigged. Wall Street pretends to love the film Moneyball about bringing science to baseball. Wall Street pretends that like baseball stars they are paid huge sums because their world is a “hyper-meritocracy.” They pretend that their expertise, as with the film, is their use of statistics to identify hidden gems. Wall Street actually runs on the opposite strategy of rigging the system to produce a “sure thing” for them at the expense of investors and customers. Warren Buffett’s famous bet, currently shows a “fund of hedge funds” producing one-third the return of simply buying an index fund. One of the reasons the hedge funds’ returns are so inferior is that the hedge fund owners pay themselves massive compensation. In Moneyball terms, the Major League batting average is around .250, so hedge funds bat the equivalent of around .083. That will get you a ticket home on the bus even from a single “A” minor league team. Batting successfully against a Major League pitcher is one of the hardest things in sports. Beating an index fund should be vastly easier.
When CEOs whose firms are supposed to excel in science cause Wall Street to salivate by telling them to ignore science and “bet on management” they know that they are speaking in code and signaling that they are unethical managers who will run a business like a “sewer.” Wall Street knows that the word “bet” is a deliberate misnomer – it means to bet on CEOs who rig the system and produce a “sure thing” – not to gamble. The only gamble Wall Street takes is whether the CEOs will be such open assholes that they will enrage the public.
Conventional economists ignore all this. They spread propaganda about “zero economic profits” and ignore reality. Economists, statistically, score lower in empathy than the public, which makes serving as an industry apologist not only career and wealth enhancing, but also no sweat.
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The article ended up being about something else than what I expected from the title, but I’ll respond anyway.
Keynesians believe the fundamental problem with our economy is a lack of demand, and that fiscal stimulus will boost it and return the economy to normalcy. But while the lack of demand may describe our economic malaise, it doesn’t explain its causes. Economic growth in the 90’s and 00’s wasn’t all that great, even in the midst of two massive bubbles. Clearly the real economy hasn’t been functioning well–and this goes back to the 70’s (probably due to the rise of German and Japanese competition).
If we look deeper, we see that profit rates (particularly in manufacturing) have been falling steadily since the 70’s. Since profits are the lifeblood of the capitalist economy, this is why the real economy has been stagnating since, with the only periods of substantial growth coming from the blowing of huge bubbles. Whether this fall in the rate of profit was caused by the downturn period of the profit cycle or because of a global crisis of overproduction/under-utilization of capacity in manufacturing (resulting from the rise of Germany and Japan in the 70’s), I don’t know. If it’s the former, after another recession and the destruction of capital values, the economy will restore itself and see a boom period, although less robust than the 90’s and 00’s. And the process will continue, until eventually, the rate of profit will approach zero, slowly strangling the economy. If it’s the latter, we won’t see a return to normal growth rates–we’ll get Japanese style stagnation at best, disaster at worst.
Either way, Keynesian fiscal stimulus will only ease our pain and delay the inevitable. It will not solve the structural problems that caused this crisis to begin with.
If the Keynesian response were global, it could go some serious way towards alleviating the problem, but when you combine outsourcing with begger thy neighbor trade strategies (like Germany suppressing wages) you get the mess we are in. Keynesian stimulus in one country just leads to growth somewhere else (China). If the Keynsian policies lifted all boats, we might have long-term issues but they would not be the ones we face today which are driving us all in a race to the bottom.
Yes, fiscal stimulus on that scale could “alleviate” the suffering, but it wouldn’t solve the root, structural causes of the crisis, problems plaguing the real economy. It’s only a temporary stabilizing measure, anyway, that has to be paid for somehow. Yes, a lot of Keynesians think budget deficits don’t matter, but I don’t believe that there is a free lunch. Someone has to pay for it–if it’s not paid back in taxes and doesn’t come in the form of inflation, developing countries will have to pay for it by being left behind, since they don’t have strong enough currencies to support that quantity of debt. Their firms get left in the dust because they don’t get that extra boost in demand. And of course there are other issues as well; fiscal stimulus is only effective at creating long-term growth if it improves the conditions for capital accumulation (which was certainly the case during the New Deal, since the western half of the US was hardly settled and needed infrastructure). But while replacing subway cars boosts demand (workers, materials, etc.), it won’t improve long-term prospects for capital accumulation. American infrastructure badly needs upgrading, and doing so will provide a boost to the economy, but then what? We’ll eventually be back to where we are now, but this time there won’t be any new bridges left to build. And with profit rates still low, economic growth will remain elusive.
John and James these are excellent comments. Regarding fiscal stimulus, I would just like to say that there are ways to design a program of spending that would “minimize” leakages and increase the effective multiplier to generate local economic growth and income that stays local. We often forget that America is an urbanized country, with an aging population, a relatively lousy health system (meaning huge demand for service jobs helping people), a gigantic $1 trillion gap in infrastructure spending, and obviously a massive need for new technologies and products to reduce GHG emissions and adapt to climate change. Obama and Christina Romer et al. like to throw out the nominal dollar size of the stimulus package while conceding the amount was too small. Well, it was also an amateur planning job. I remember driving on outer Cape Cod a few years ago, far out by Brewster, and low and behold there was a giant sign proclaiming ARRA funds had been used to improve the road. We were putting money into a road in Brewster when we could have been replacing lead pipes in Flint!
I live in NY and the subway system is under duress, to put it mildly. The federal government could put $50 billion into the system tomorrow and get the money back in tax revenue and productivity gains in NY in 5-10 years. Young people would get training, could learn new advanced engineering techniques, learn how to manage public works projects, and laborers would finally be able to pay rent in NY and maybe sock a little money away. I think it was Kalecki that advanced the very practical learning-by-doing argument that productivity gains follow public spending and that we should emphasize public spending over the rate of profit.
Of course, there are politics so the distribution of funds is not just a perfect planning context. There would be some necessary hard bargaining to get close to the ideal fiscal stimulus package but it is not rocket science and there is a strong case to be made if someone will just take it to the public.
Hell, I’ve always thought that if Bernie wanted to really take the older electorate he should propose a program in which the federal government would pay older workers to retire early (say 2 or 3 years) to make way for younger workers who are losing out on some of the most important work years of their lives. Since we have a retirement crisis on our doorstep, old workers would probably some of the money and save some of it. Young people would spend their new earnings as well but over the long run its not about the money. It’s about filling jobs with young workers. Some people would think it is loopy but guess what there is a perfectly acceptable (pragmatic) economic case to be made for a program like that.
The economics-mainstream news complex really does a disservice to American citizens by not even allowing an honest conversation on fiscal policy. I mean look at what they did to Friedman at UMass Amherst. It is discouraging, yet the possibilities are really fascinating if we stopped resorting to economic theories and started to experiment and act.
The concepts of growth and investment become distorted when viewed solely form the perspective of profit accumulation. 99% margin of profit on a drug? Assholes indeed. It’s not a race to the bottom, it is plunder plain and simple. When you plunder something, you literally destroy it. It is a system plundering itself.
Neoliberalism is a cancer imposed on the broader citizenry. It should be called Canceralisim to clearly illustrate the effects brought by its implementation into society. No one would say meekly, Oh well, I deserve my cancer.
There must be a purpose to the growth and investment beyond profit. You need to build and invest in real things for real people.
Sorry for the rant- it is just the frustration of seeing abundant resources being waisted every day. The organizations needed are ones that can channel work and monetary resources into productive efforts to grow better lives for citizens. Millions are raised for political effort, but that seems like a black hole and ineffective at alleviating human suffering.
Shunning the Assholes and calling them out on their behavior is a more thankless job than it deserves.
As I stated in the post, I thought that the OP would be about something else…but I decided to reply anyway, a bit unrelated perhaps, but on the topic of profits and how “free markets mean zero economic profit.” It’s the fundamental behind our current malaise, and one that needs to be discussed, but Keynesians miss it. Keynes never wrote about the tendency of the rate of profit to fall, although it was a very credible theory in Marx’s day. Smith and Ricardo both believed in it, for example. And the data is clear that profit rates have been falling steadily since the 70’s. Either it is a simply downturn in the profit cycle or it’s because we’re in a global crisis of overproduction/under-utilization of capacity in manufacturing. I’m not sure which. But either way, Keynesian stimulus will only temporarily alleviate the suffering (lack of demand); it will solve the fundamental structural issues plaguing the real economy that underlie the current crisis.
Where do you get the idea that profit rates have been falling? Most of the manufacturing companies I deal with have been posting massive profits. They just don’t employ as many Americans as they used to. Unemployed people don’t buy stuff. Its not that hard to understand really. The vast majority of the productivity increases over the years haven’t made it into the hands of people that buy stuff.
Labor is a small component of manufacturing any more. I’d say less than 10% in most cases.
You can spin that as oversupply or poor competition if it helps validate your world view. You can erect a organized religion of finance full of gatekeepers and sycophants (I’m sure Krugman will go to your parties if the drinks are free). Its not going to change the fact that in the end “the economy” is really simple in aggregate. Poor people don’t spend much and they spend less when you take away their government support. The only way you get out of an economy like that is with a revolution, bloodless or not. We’ve spent about 30 years in this one, but it will end some day.
Nature likes equilibrium. Thinking you can use imagination and trickery (call it Economics, give it some high priests, go all out) to outwit something that’s a basic part of every physical law is just plain nuts and probably where the idea of “usury is evil” comes from. You can’t create value infinitely no more than you can create mass. So some greedy people have created a state (call it inequality) that is far from equilibrium for their personal benefit. Its not a new state, its just a new excuse. “Because God says so” has been replaced with “because Mr Market says so”. Still, In recorded history it has only ended one way.
I’m not referring to the mass of profit, I’m referring to the rate of profit. People confuse the two. Here’s a good explanation: https://thenextrecession.wordpress.com/2016/04/09/apples-and-pears-the-economist-on-profits/
While it is true that workers’ wages have stagnated, this is inevitable because we are in a labor abundant economy. With the rise of countries like China and the increasing interconnectedness of the global economy, the labor market has essentially expanded–firms can easily relocate off-shore to wherever labor costs are lowest. Thus, stagnating wages and high unemployment are an inevitable part of the mix, and there is nothing we can do about it. Keeping factories in the US through trade policies, for example, will only result in inflation and lack of competitiveness. The profits will go to firms abroad that pay their workers less.
Keynesians believe the problem is a lack of demand, or, in other words, consumption. If only we could boost consumption permanently (through fiscal stimulus and racking up debt ad infinitum), the economy would grow at normal rates, they believe. However, consumption clearly is not the answer. In order to paper over the lack of demand in the 90’s and 00’s (due to stagnating wages, as you mentioned), massive amounts of credit was extended to households. We had this throughout the 90’s and 00’s and the economy still grew much more slowly during the 50’s and 60’s. Consumption reached historic levels during this era (as well as our current account deficit) and we still ended up in this mess. And now we’ve maxed out our credit card bills. This boost in demand, however, did nothing to change the fact that profit rates have been steadily falling in the manufacturing sector. This is ultimately what caused the crisis, and it’s a problem that no amount of fiscal stimulus can solve.
In order for the “rates” of profits to be lower, the absolute profit levels must decline. Its simple calculus. You can’t just claim the tail wags the dog and not provide some sort of rational (mathematical) explanation. Just because corporations do a poor job of spending their money doesn’t mean the money wasn’t generated in the first place. Whether its turned to debt or burned in piles doesn’t matter.
Labor abundance has nothing to do with it. Moving jobs overseas was and always will be a pyramid scheme. Some firms do it and make some money at it (the ones that don’t get ripped off, they don’t brag too much when that happens but it does happen). Late comers then find out that no one has any money left to buy cheap plastic junk. People who were happy to buy stuff when they were working can’t. which means more people are out of work, which continues the vicious cycle. Consumption reached historic levels when the profits were (re)distributed more equally because 99% of people can’t afford to burn piles of money they have to spend it. As long as its routed correctly it can be spent again. It has no intrinsic value except to facilitate trade between people. I think that’s the part Economists don’t get or can’t get because their paycheck depends on it. For the providers and recipients of goods and services money is a convenience. Someone provides electricity, water, and other things to your home but the part that matters is the stuff, not the money. If you can’t get the stuff or go to the hospital, the money is worthless. Studying money I’m sure is interesting and there’s plenty of opportunity to scam a sucker or two, but its not that important to humanity. Humanity needs stuff, when “money” starts getting in the way of that heads will roll.. literally.
I’m sorry but you have demonstrated that you don’t understand the difference between the rate of profit and the mass of profit.
https://en.wikipedia.org/wiki/Rate_of_profit
The mass of profit can be quite high, but if the rate of profit sees a sustained decline, eventually we get a reduction and investment and a recession.
Moreover, I think you’ve answered your own questions. Since the financial crisis, corporations have seen astonishing profits, yet the economy is still struggling. This is because the rate of profit is low and declining. Profit growth has been slowing and is approaching zero. If this continues, we will see a fall in investment, and then a fall in consumption (a recession).
It strikes me that in order to take the position that there is a declining rate of profit over the long term (e.g. the last fifty years) you would have to be basing your claim on the labor theory of value and working from theory as “profit” as reported by business entities is an utterly meaningless number. However, assuming that you are accepting the labor theory of value as the basis for your assertion, your argument is somewhat or totally confounded by the fact that each of the contrary pressures to the inevitable downward slide in the rate of profit is quite robust and acting to push the rate of profit in the other direction.
I suppose that in order to buttress your argument it would be useful to reveal your source of data and explain your theory of value so that we know where you are coming from.
I’m reminded of the anti-trust arguments that raged around Microsoft Windows perhaps 15 years back. Economists and pundits moved the goal posts from the old saw about the point of the market economy is giving the consumer the best goods at the lowest prices (classic Smith) to arguing that Microsoft had “earned’ its monopoly by “out-competing” its rivals, and therefore “deserved” its monopoly rents. This switcheroo has become embedded in both conservative and neoliberal dogma. They talk about Smith and the beneficial results of markets, while falling back in the last analysis on defending profits over all other social goods (something Adam Smith would have been appalled by). This shows how duplicitous and venal these advocates are. However, shamelessness combined with power is a hard racket to break.
It seems to me the basically political scuttling of the Microsoft antitrust case gave a green light to this sort of garbage.
The five-point strategy is just Microsoft’s business plan metastacised into the health sector.
Yves:
Inherent in this statement is the presumption that the government is functioning for the greater good.However, free markets cannot exist when the market has captured and controls government.
With respect to the market, and other segments of our society, our captured government is no longer concerned with the greater good, but instead with the delivery of greater profits to corporations and individuals. To Yves point, the “certain minimum standards of conduct” was reflective of a government that was acting more as a referee, whereas today it has aligned itself actively against the consumer in many ways.
Wall Street would prefer we had to buy the air that we breathe if there was a way they could own it. There is no minimum standard of conduct for Wall Street. They are the true super predators of this country, and the world. Martin Shkreli was reigned-in in large part because of the attention he drew to what is standard practice in his world, practices which his peers prefer to conduct outside the public limelight, because, since they control the government regulators, the limelight is their only fear. And as the men who control the corporations continue to tighten their control of government, they have less to fear with each passing year.
You are correct about the presumption that the government is functioning for the greater good being less than we would wish or that it should be. However, all is not lost. It is the only real countervailing force that we have in our lives that we can count on to generally be on our side… except when it is not, of course. However, the alternative of you vs. GM, you vs. Merck, you vs. MetLife is far worse. We have a compromised government that we certainly need to fix, but depending on the free market certainly isn’t going to make things better… it would make them far worse.
Elections matter… even the current one where one needs to hold one’s nose to vote… Too bad we don’t have proportional voting… it would make things a lot more interesting and might even give us the government we want.
“Market” and “State” are just two manifestations of the same power trip. Modes to organize human activity are captured by sociopaths and the whole thing goes all to heck.
And anarchy works so well…
The ideology of free markets is very different than the ideology employed by conventional economists. That seems to be the fundamental link being missed here. Our problem is not that we are overrun by intellectual and political free marketeers. That’s a ‘left/right’ dynamic that really doesn’t exist in the US context. In the US, almost everyone is a centrist, wanting a balance between libertarianism and communism.
Quite the opposite, our problem is that we are overrun by authoritarians who see moar as the solution to everything no matter what the evidence demonstrates. That’s an ‘up/down’ dynamic about centralization of power vs. decentralization of decision-making. The excessive nature of IP law today is a great example not of government fixing market failures, but rather, of government creating them on purpose in order to enrich connected insiders.
Your points bring up today’s error in no longer referring to “political economy” but looking at politics and economics as though they are two different beasts. They are as different as a woman and a man… i.e. virtually identical except for some relatively superficial differences. The reason that “left/right” doesn’t exist is because Capitalism is triumphant. Even Bernie’s “Democratic Socialism” is simply a flavour of Capitalism. When the very basis of politics is agreed upon by both sides, everything else is going to be fiddling at the margins.
You are correct at singling out authoritarians as being the problem, however, you are really recapitulating James Otis’s fight against the oligarchy in 1762 that culminated with the Revolutionary War and a change in the ruling oligarchy… I wonder what he would have thought about where we are today if he could come back to see it. None too happy, I’m sure.
Your comment on IP law is on the mark. It has gotten totally insane. It has formalised the extortion of economic rent instead of ensuring a fair return on “genius” and investment.
My wife and I specifically ordered no Big Pharma shot panel upon birth. Per public healthcare policy, an expert system, hospital neither informed nor gained our consent, but instead administered, resulting in acute reaction and ICU internment. Rather than telling us so directly like civilized human beings, the State prosecuted my wife as and convicted her as an unfit mother, with no due process under Family Law and nothing more than the opinion of its psychologist, behavior duplicated under best practice millions of times across this country and others, with both children and aging parents as the object, resulting in massive taking of collateral and income with no due process / life, liberty and property.
Because the majority cannot sustain its own reproduction and its economy is based upon an actuarial ponzi, corruption is the only possible outcome. Obviously, I am not going to waste my time proving to the majority that debt, backed by metal or not, is not money. A closed system of genetically modified people eating genetically modified food living in an artificial economy constructed to deliver false signals for the purpose can only implode, as we are all witnessing, the middle class drowning itself in debt.
Yes, the market, a frequency compilation, can be timed like a clock.
The .01%, or whatever it is today, cannot force the majority to do anything. We will see if the best and brightest work for Wall Street, long and short,
On both sides of a rigged contract for America.
Paying interest on interest with negative rates on increasing GDP per capita in demographic deceleration is just another parlor trick, changing nothing, and we are not all so incompetent as to be blinded by a shell game, nor do we require agency experts at university for guidance. Due process delayed is due process denied.
Great elucidation of the misbranding of “bets” in the prescription drug / hedge fund area. It raises the general question–both practical and ethical–of how much profit is “enough”? It depends on the risk–actual (if historical though that’s also not always accurate) or as predicted by the seller, or as “sold” to or perceived by the buyer. Whether the profit seems fair or scandalous depends also on how much the principals are being paid, cost of money. And what would enterprises look and feel like if there were no “profits” (surpluses reinvested, or distributed to workers such as in a co-op)?
Thanks also for talking about the concept of “economic profits”. This is the first time I’ve come across this term, on NC or elsewhere. I’d like to understand more about how it becomes useful, or is it mainly a theoretical idea used to justify or compare one policy to another?