“None are more hopelessly enslaved than those who falsely believe they are free”

Wednesday, October 24, 2012

Crony Capitalism


General Electric CEO Jeffrey Immelt and President Obama speak at a GE plant in Schenectady, N.Y., on Jan. 21, 2011. Former Reagan administration official David Stockman, who is writing a book on the topic, calls Immelt the "poster boy for crony capitalism." Immelt, by the way, was appointed by Obama as the head of his Council on Jobs and Competitiveness.

I Love America. Let’s not EVER get that twisted. But it sickens me that the interests of the rich and mega corporations are so thoroughly intertwined with the government agenda.  And let me be perfectly clear: the criticisms that I levy on this forum apply to the world stage, not just America.  This is a global, geo-political issue.

I wanted to post a link to this article because I found it particularly interesting.  Please take a look at it, but if you decide to skip it, here are the salient points:

Crony capitalism exists and it is thoroughly bipartisan.

The central role of government, in its current form, is to do whatever Wall St (read: The Man) asks.

Capitalism is dead.  Socialism for the rich is what’s in play. 

It’s all speculative. What I mean by this is that speculation / guesswork  is what drives the markets.  In the article, Stockman notes that in the future, had GE done things the right way “they would've been less likely to go back into this speculative mode of borrowing short and lending long.”  As they say: “scared money don’t make money”, which implies that playing it safe (saving in particular) is for losers. Here’s what we have to consider:  a company, which is ALWAYS in business to MAKE MONEY certainly has a responsibility to its shareholders (you and I) to make money (as a primary motive), but it also has a responsibility (because it bears the public trust to the extent that any company can be considered “too big to fail”) to be responsible.  Instead, speculation (and outright stupid and reckless behavior) on the part of corporate giants like GE and the governments’ complicity have led to this mess. Bottom line: speculation on the part of investors (you and I) should be encouraged. Speculation on the part of businesses should be regulated.  And instead of providing the necessary regulation, congress is lobbied, palms are greased, laws are passed, and tax regulation is enforced that encourages the recklessness and feeds the greed. 

David Stockman, a former Congressman, Reagan’s budget director, and an Investment banker, says it best:

“When we get to the point where the one triple-A, a multi-hundred-billion-dollar company gets to call up the secretary, issue the SOS sign and get $60 billion worth of guaranteed Federal Reserve and Treasury backup lines, then we are, you know, our system has been totally transformed. It is not a free market system. It is a system run by powerful, political and corporate forces."

The players will change, but the game remains the same. It doesn't matter which of the two men contesting for the White House is ultimately elected. The problem will remain that Wall Street will continue to wield disproportionate power in Washington and over the economy.

Big gains are privatized and big losses are socialized.  Our world.

Check out this website, which outs the particularly bad politicians www.AgainstCronyCapitalism.org and the recent Op-ed piece by University of Chicago economist Luigi Zingales, CronyCapitalism and the Crisis in the West.

No comments:

Post a Comment

Please leave a note here for The Ogre if you want to comment on this topic. ALL comments, stories, personal accounts and anecdotes are welcomed and encouraged. I'll do my best to respond, if needed.