Thursday, January 15, 2015

Lombardi, Exceptionalism, and the Rule of Law…



My niece texted me last weekend (while my favorite team beat the Dallas Cowboys), and asked me about my strong affinity for the Green Bay Packers.  Aside from my love for a perennial winner, and being raised on Packer lore by my father, since I was a toddler… there’s an economic aspect to The Team that I have always found intriguing.

The Green Bay Packers are a magnificent economic anachronism for two reasons.  First, how is it that a NFL franchise in the middle of virtually, nowhere is so highly successful?  The simple answer is that the NFL embodies the success of socialism, through a television revenue sharing arrangement among the teams.  And two, the team is owned by citizens of Green Bay, WI and the public, and charter rules prohibit any single party from obtaining majority ownership.  So here is a highly successful version of socialism, the NFL, dominated by a not-for-profit team, the Green Bay Packers.  And what makes the Packers so damn good...? 

Well, the Packers can afford to take the long view of the game and develop talent and strategy, versus every other privately held team in the NFL, who all too often take a quarterly statement view, a myopic view, of the sport.  That is to say, the for-profit strategy of every other team in the NFL is all too often dominated by dollars and cents, not necessarily on winning.

Of course, American socialism is not limited to the NFL.  There’s no greater champion of socialism in America than the Republican Party, who has been redistributing wealth in America to monopolies, cartels and the plutocracy for the last 35 years (via tax cuts for the rich, allowing the formation of monopolies and cartels, by weakening regulation, regulators, and allowing regulatory capture, via Wall Street bank bailouts, and through government privatization… just to name a few examples).  Not to mention we have a fourth branch of government, The Federal Reserve, that is completely dedicated to maximum bank welfare, and inflating asset bubbles (The Fed is the quintessential government gift to Wall Street banks, shadow banking, and private equity).

Just to be clear, “socialism” is putting the means of production into a single party’s hands.  Generally, as understood by most economist and political scientist, that single party is the government.  But when Republicans, and yes even GOP- Lite (Dems), place or gift the means of production for an entire industry - into the hands of one or a few private sector companies, in the creation of a monopoly or cartel – they are creating “socialism by private proxy.” 

If you think the Federal government sucks money out your pocket, think about the money private sector monopolies and cartels take from you daily.  Whether it be Big Pharma, Big Oil (imagine, a few short months ago the price of gas was double what you are presently paying at the pump), the Cable monopolies, or the airlines (just to name a few)…. Courtesy of the State, they are all taxing you to death, through monopolistic profits.

Which brings us to my final point, before we launch into today’s piece:

Are the Packers, perhaps one of the most successful teams in American football, a model for the future of capitalism, a capitalism that works for the many instead of an elite few?  Think about how the Packers operate… is it within reason that, someday, American citizens demand that local, state and federal governments purchase entire corporations, to be run for the public good (as not-for-profits), instead of for the enrichment of less than one percent of the population?  It's not really a stretch, is it?  Many large American businesses already enjoy government backstop and support, and losses are socialized... so why not socialize profits?  As job opportunities continue to decline, as a result of technology, globalization and private equity - the Packer model may become a serious option. 

If the Packers are the example… government purchase of private sector enterprise, to be run as not-for-profits, may be an enlightened option.  There’s a reason why the NFL has banned not-for-profits from owning any other NFL franchises.  The bottom line: The for-profit teams are having trouble handling the competition.  

- J.M.H.  (1-15-15)





Lombardi, Exceptionalism, and the Rule of Law…


By J.M. Hamilton   (originally published 2-3-11)         





"God, country, and the Green Bay Packers." Vince Lombardi, the greatest Italian export, since Antonio Vivaldi. 



Before there was AMC’s Mad Men, there was a true man of the sixties named Vince Lombardi.  One gets the feeling that Lombardi would have flossed his teeth with Mr. David Draper.  As hard as Lambeau field in January, Lombardi burned brightly throughout the sixties, and led the Green Bay Packers to win the first two Super Bowl games ever played.  His passion, dedication and commitment to the game of football made Lombardi a winner, and an American icon.  His name graces the Super Bowl trophy awarded to the championship team, year after year.  As with any genius he would drive some of his players “nuts,” and many others would have a “love/hate” relationship with the man, long after they stopped playing for the Packers, Giants or Redskins.  We get a snap shot of Lombardi by reading David Maraniss’ book, When Pride Still Mattered.  Note the following passage after the 1967 New Years Eve win over the Dallas Cowboys, in the fabled Ice Bowl:

“The Locker Room was a jangle of cameras and lights when Lombardi got there after the game.  He evicted the press and talked to his men alone, telling them how proud he was:  for running to win, for persevering and meeting their greatest challenge, winning three straight championships.  He barely stifled the tears that came so easily to him, then fell to his knees and led the team in the Lord’s Prayer.”

Now, by way of comparison, can you imagine Lloyd Blankfein, CEO of Goldman Sachs, dropping to his knees to lead a boardroom in prayer, after hitting quarterly financial targets?  Both men, Lombardi and Blankfein, are brilliant in their respective fields of football and banking, and both men are fully engaged, and extremely focused.  Both men are razors.  

But what makes one man loved and adored by many, while the other man is despised and reviled by many? I have thought about this question long and hard, and have concluded it is one thing: it is the rules that these respective men play by.

It is said that there is a thin line between madness and genius, and my guess is the dichotomy centers around whether or not society is the beneficiary of the singular individual’s talent and achievements, or whether it is the victim.  Robert Downey Jr., in the movie Rodney Dangerfield – Back to School, once identified football as a “crypto fascist metaphor for nuclear warfare.”  Now, I don’t believe Mr. Downey’s comedic line for a moment, but if football devolved, by a change in the rules, into some sort of barbaric blood sport during Mr. Lombardi’s time, complete with knives, guns, and collateral damage into the stands, than my guess is society would not view Mr. Lombardi and football in such a favorable light.   Conversely, the rules of banking have become so heinous and so detrimental to society, that the genius Blankfein is not viewed by many as a prince of a man, but rather, a villain.  Why?  Quite simply Mr. Blankfein’s reputation, and that of his Wall Street brethren, are victims of their own rules.

Take Dodd Frank bank reform legislation for instance.   These rules, on the heels of the worst banking crisis known to man, were stripped down and were basically written behind closed doors, in large part, by members of, or lobbyist for, the Wall Street banking cartel.  “Financial weapons of mass destruction,” Mr. Buffet’s phrase to describe derivatives and credit default swaps, remain, for the most part, beyond the reach of regulators, and hidden from public view.  These derivative instruments with hundreds of trillions in notional value played a very large role in our last global financial crisis, and undoubtedly will play an even larger role in the next financial crisis.  And the fatal flaw in Dodd Frank legislation?   Well, as usual our elected leaders in the Congress passed the buck.  Not only did they fail to give specifics on how the banks and these instruments were to be reined in (in fact they exempted the lion’s share of these derivative instruments from the rules themselves), but Congress abdicated their responsibility and punted to the regulators.  The very same regulators, who failed to rein in Wall Street’s worst excesses the last go around, that are prone to capture, and can change in the blink of the eye, with a change in administrations.   That’s right.  Even the best and most well intentioned ministrations of Obama regulatory appointees can be reversed with the pull of a voting booth lever, and a Republican president entering the White House.  Let us pray, not.

In short, Dodd- Frank is the bomb, and I’m not talking about a 50 yard aerial strike- pass play launched from the twenty yard line.

Perhaps Mr. Downey’s line would be less comedic, and certainly more accurate, had he stated:  Banking is a crypto fascist metaphor for nuclear warfare.  Indeed, Mr. Blankfein’s rule making appears, ultimately, to be to the detriment of society, business, the world, and ultimately to his reputation.  Unfortunately, the joke is on us.

And while we’re tilting at windmills this week, what about that other raging Leviathan, Exxon Mobil Corporation?  Here again, the rules of capitalism, and society, have been so distorted, so as to cause many Americans, particularly Republicans, to think that Exxon is a capitalist enterprise.  No, we hardly pay it a mind when they report out another record profits quarter.  Now when demand is down or flat, supply is up, and OPEC says they have plenty of capacity to fix prices (um, provide a stable environment for world energy consumption), how exactly does Exxon make record profits?   Well, that would be because they are, virtually, a government sanctioned monopoly, controlling significant amounts of market share.  And as this blog has written monopolies and oligopolies are authorized by the government and can be controlled by the government, that is when there is the political will to do so; and this blog has also argued that monopolies, as creations of the state, are nothing short of socialism by private proxy.  That’s right, you – dear consumer – are the beneficiary of an energy industry that is not dedicated to evolutionary energy policies away from the burning of fossil fuels; but rather, an energy industry dedicated to the global addiction of a product produced by Middle-East tyrants and dictators, and maximizing profit at your expense. 

No taxation (i.e. monopolistic profits) without Representation!  Here is yet another industry that writes its own rules in Congress, and not only captures the regulators, but drugs and has sex with them.  Witness B.P.’ gulf disaster last spring, and their pet poster-boy, Representative Joe Barton (Republican-Dallas); and prior to that, the capture, drugging and rape of the Minerals Management Service (Oh, I forgot, one can’t rape the willing!), supposed watch –dog for America and Americans.  Given that monopolies are creations of government, and socialism by private proxy, windfall profits, like those made by Exxon, constitute a tax on society.  But unlike the taxes levied by the government, where at the voting booth Americans have some say in the tax rate and distribution of government revenue, the American voter has absolutely no say in the price per gallon of gasoline, or the interest rate and terms of a bank loan they may receive.  And the problem the American consumer is faced with?  We now have several monopolies engaged in predatory pricing campaigns against the public so that America’s ever shrinking middle class has little or no discretionary spending for goods and services, beyond the basics: food, gas, and interest payments to the bank!  And we wonder why the alleged nascent recovery stalls whenever government stops spending stimulus money.  

Unemployment remains untenable.

Supply side theory/ Reaganomics, and the Laffer curve, an oft touted economic theory of the Republican Party, posit that tax revenue to the state actually diminishes at some progressive tax level.  So that by cutting marginal tax rates, economic activity is actually spurred by animal spirits, entrepreneurial initiative is charged, and as a result, a rising tide of business activity causes the economy to advance ten yards up the field, and government receipts to actually increase.   Democrats call this theory “trickle down.”  For the sake of the argument I’m about to make, I’m willing to give the theory some credit.  The problem with supply side economics is that both political parties are good at cutting taxes to drive the economy up the field, but neither party has the will or discipline to increase taxes once the economy has run across the goal line; hence our colossal national debt.  Witness the saga of the Bush tax cuts, over the last decade.  By the way, it has been argued that President Kennedy was the first supply-sider.

That said, and here’s my point, if Republicans believe that supply side theory actually works, why not apply the practice to monopolistic profits, or taxation by private proxy?  If the government was to truly rein in the likes of Big Oil and the banking industry by taxing, or regulating against, unseemly profits at the pump or by taxing the usurious interest banks charge (both are forms of taxation without representation), think about how much more discretionary income the middle class would have to spend on other goods and services?  If we believe Mr. Laffer and the Austrian school, the economy would certainly soar.  And let’s not forget rising fuel prices precipitated the financial collapse in 2008.

But if you believe the Republican Party is going to apply their economic golden-rule to the likes of Wall Street Banks or Big Oil than think again.  Public be damned, the institutions of Wall Street and Big Oil, flush with monopolistic taxation, fill election campaigns with money, and their mercenary lobbyist roam the halls of Congress, frequently and often.

If Big Oil and banks expect the government, and the public, to bail them out for their own disasters, whether it is gulf oil spills or financial crisis, might “the people” reasonably expect that their own government would protect them from monopolies worst pricing/taxation excesses?  After all, democratically elected government allowed for these monstrous combinations.  Unfortunately rule making, and the rule of law, has been hijacked by the plutocracy…. to the public's, business community’, and nation’s utter detriment.

History tells us that Coach Lombardi, a favorite of the business community, was both a Democrat and a friend to the Kennedy clan.  One wonders if Mr. Lombardi would have supported a windfall profits tax.

GO GREEN BAY!


 Copyright JM Hamilton Publishing 2015

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