Neoliberalism Blowback

Neoliberalism Blowback

Oppressed people cannot remain oppressed forever.

And Thomas Jefferson: "We hold these truths to be self evident, that all men are created equal . . ." So the question is not whether we will be extremists, but what kind of extremists we will be. Will we be extremists for hate or for love? Will we be extremists for the preservation of injustice or for the extension of justice?

Shallow understanding from people of good will is more frustrating than absolute misunderstanding from people of ill will.  Lukewarm acceptance is much more bewildering than outright rejection.

- Letter from a Birmingham Jail, MLK    April 16, 1963

By J.M. Hamilton (8-26-2017)

If Mr. Trump has accomplished nothing else in the first eight months of his presidency, he has removed the "crypto" modifier often utilized when describing the Republican Party as "fascist."

There is nothing crypto about Mr. Trump, or the fascists that support him.  It's all very much out in the open now, and has been since the nation’s founding.

Which is a good thing, because the Party of Lincoln, which has metastasized into the Party of Trump, has laid all its cards on the table.  The Republican Party, since passage of the 1964 Civil Rights Act, has pandered to bigotry throughout the land, under Mr. Nixon's 1968 Southern strategy... a strategy that has been utilized by every GOP presidential candidate ever since (and more than a few GOP congresspersons).  

The Cheeto Messiah, as w/ all things Trumpian, has taken Mr. Nixon's strategy to a whole new level, that is to say, a whole new low.  Trump is a divider and appeals to the baser demons of our nature.  Leave it to Mr. Trump - a dullard and incompetent on most prerequisites for the presidency - to obtain a self-earned PhD in dictatorships, division, and sophistry.

The racism and racists within the Republican Party can no longer be denied or overlooked.  Mr. Trump - w/ a preternatural ability to lie w/out conscience - has captured the Party, and now, woe unto these United States and the rights of humanity

It is the duty & responsibility of every American to call out the fascists and the haters, frequently and often.  Four hundred thousand American soldiers, who died during WWII fighting fascism, would expect nothing less.  JMH has attempted to avoid this topic for a long time, but apparently, one cannot write about economics & politics in America, w/out writing about the bigotry, homophobia, and misogyny that is endemic from sea to troubled sea.

Some might think JMH has finally jumped the shark.  But given the events of the last two weeks, one would either have to be completely nescient, or in denial, about Mr. Trump, and his base of support, not to understand the obvious.

JMH has written before about willful ignorance, self-deception, and painfully, about Mr. Richard M. Nixon and his racist strategy (otherwise known down through the ages, as divide & conquer).  It's no longer enough for former Republican presidents, like the Bush family, to come out and denounce POTUS Trump's remarks, and assert the moral equivalency - Trump utilized to describe the two sides in the Charlottesville' disaster - does not represent the Party's views.  Nor is it enough for GOP Senators to distance themselves from POTUS Trump.

Particularly, since as noted by myself and others (read here and here), it is not merely Mr. Trump, who is the manifestation of racism within the Party, but the policies of the GOP, themselves, that are fascist.  Racism is so interwoven into the U.S. social fabric that many Americans of “good will” no longer see it, or are blind to it.

Now there are those who are demonstrably racist w/in the GOP, and there are those who willfully - or unwittingly - turn a blind eye to the bigotry and white supremacy built into the Party's policies.  There are also businessmen - CEOs and high net worth individuals - who are so embarrassed by POTUS Trump's actions (or perhaps, more to the point, are worried about the impact that their association w/ Trump might have upon their bottom line), that they are willing to publicly denounce and disassociate themselves from the president.

That is to say, not everybody who is a Republican, or who associates with the Republican Party, is a racist.  However, what can be said is that the Party, and its policies, are now so overtly racist that blissed out ignorance, or the need to further one's business interests, no longer provides an excuse to partner with or support the party of fascism.

Shockingly and sadly, there are two notable groups of citizens that have been more than willing to support the GOP: CEOs and Fundamentalist Christians.  Both groups should know better, and yet both groups have been unequivocal in their support for Mr. Trump and GOP policies.  Today, we address corporate & multinational America's affiliation w/ the POTUS, and next go around, JMH will dive further into the rightwing Fundamentalist Christian agenda.

So let's cut to it.  Specifically, what policies - advocated and promoted by the GOP  - are racist?

For starters, there's law & order politics, which is the manifestation of Jim Crow in the 20th & 21st centuries. America locks up a disproportionate number of minorities for simple drug possession.  Commit multi-million, or billion, dollar fraud on Wall Street and you almost always walk.  But a person of color gets caught with a joint in their pocket and there is a serious probability of jail time.  And even though there have been enlightened moves away from mass incarceration policies, by both political parties, the War on Drugs - and the War on minorities - continues to this very day (thanks in large part to Trump's attorney general – Mr. Jefferson Beauregard Sessions III). 

Voter suppression, and POTUS Trump's Voter Fraud commission, has one aim and that is to disenfranchise minority voters.  Couple this with gerrymandering and you have a highly overt attempt to keep minority voters - who typically vote Democratic - from either casting the ballot, or marginalizing their votes and democratic outcomes.

The policies of austerity, and safety net reduction, are directly aimed at the indigent and minorities.  The GOP has proven time and time again, that they have zero reservations about expanding the deficit, or national debt, to pay for tax cuts for the wealthy and war w/out end.  Conversely, the GOP will do everything in their power to cut funding & spending programs that aid children, women, and those in need (and in many instances, these programs benefit - not only minorities - but white voters as well).

The aforementioned Southern Strategy, or dog whistle politics, is a strategy designed to play disaffected white voters off of minority voters, when in reality both groups of voters should be aligned in common cause against the Oligarchy.  Every day that racial prejudice, animus, and socio-economic discrimination plays out is another red letter day for the plutocracy that rules over us all.  Social division rewards, almost exclusively, the Oligarchy and the billionaire class.  

Why do you think Trump exploits division and the politics of resentment like a Pro?

The GOP, in particular, has supported the Ayn Rand economy on steroids, deregulation, and free trade uber alles.  These policies allow Wall Street to prey upon the poor and the disenfranchised with predatory loans, and allow multinationals to flee offshore, in order to avoid taxation, exploit foreign labor, and commit regulatory arbitrage.  This has led to a race to the bottom across the globe, w/ nation states played off upon one another, in terms of jobs, tax base, and the gutting of services provided to those in need.  And the West’s politicians either don’t care, or haven’t the courage to call it out.

The Ayn Rand, or neoliberal economy, has directly led to industry consolidation, and the formation of predatory cartels and monopolies. Many economic sectors and industries are consolidated, so as to be dominated by one or a very small number of players.  This degree of industry consolidation is highly disadvantageous and often equates to a form of economic discrimination, particularly weighing against those with limited education and means (call it monopolistic taxation w/out representation).  Most frightening is the degree of consolidation w/in the MSM, internet commerce, internet service & content providers, and telecommunications companies.

The consolidation of the MSM is George Orwell’s nightmare and a dictator’s dream.

Civil asset forfeiture, the war on drugs, war w/out end (under the premise of fighting terror, while being allied to the number one sponsor of terror, Saudi Arabia), the criminal justice industrial complex, the cash bail system, and regressive tax codes, etc., etc., etc...   these are all additional GOP chains that bind & weigh disproportionately upon children, the poor, minorities, and women. 

The GOP’s attacks upon women’s reproductive rights, and medical services, is another patriarchal position designed to keep women in their place.

“In American history, we’ve never had business leaders decline national service when requested by the president,” said Jeffrey Sonnenfeld, a professor of organizational behavior at the Yale School of Management. “They’ve now turned their backs on him.”    - NY Times   (Photo:  Mr. Stephen A. Schwarzman, chief executive of the Blackstone Group, meeting with President Trump in April)

The great irony in all this is not only are the GOP's policies racist, retrograde, and designed enrich an elite few at the expense of many (many of the policies above have a business angle, or are adopted to mitigate taxation upon the connected & the wealthy), but the policies above also harm Trump's base of support.  For not only do these policies discriminate against persons of color, but no few of these policies in number have a socio-economic bent that adversely impacts poor whites as well.  It's also important to note that the Democratic Party has its own history w/ racism, and in more recent times (particularly under POTUS Clinton) had outright co-opted many of the GOP’s policies.  That said, the progressive - Sanders/Warren - wing of the Democratic Party is working to move the Party away from discriminatory and neoliberal policies.

Many CEOs correctly denounced Mr. Trump's comments over Charlottesville, and walked off his advisory boards and committees.  In doing so, the majority of these executives also knew full well that they would continue to work with the Trump administration, behind closed doors, and continue to support the party of fascism through campaign contributions, donations, PACs, 401(c)s, lobbying, etc.

And it is this kind of behavior that should not continue. The GOP, as the party of fascism, must either be abolished or reformed.  Just as Nazis are no longer tolerated in Germany, America must wake up to the fact that we cannot tolerate the Republican Party, in its present incarnation.  CEOs and high net worth individuals need to demonstrate - not only sound business acumen - but a profound understanding of the political environment we all live in. 

Most importantly, the Oligarchy needs to demonstrate that they are keenly aware that one American political party in particular – and its policies - are ripping this nation apart at the seams.  After all, what will it do to their quarterly earnings if this nation is at civil war, or if their products & services are boycotted, because of continued multinational support for oppression & tyranny?

Call it neoliberal blowback… call it what you like, but the sick patient – that is our nation – is growing worse, not better.  Right-wing conspiracy theorists once believed Obama would create a crisis before leaving office, so that he would not have to leave the presidency.  JMH always believed that such speculation was idle and incorrect, but with POTUS Trump on the other hand, apparently, anything is possible.

 Copyright JM Hamilton Publishing 2017

Is the Stock Market Destroying America?

Is the Stock Market Destroying America?

Even if we act to erase material poverty, there is another greater task, it is to confront the poverty of satisfaction - purpose and dignity - that afflicts us all. 

Too much and for too long, we seemed to have surrendered personal excellence and community values in the mere accumulation of material things.  Our Gross National Product, now, is over $800 billion dollars a year, but that Gross National Product - if we judge the United States of America by that - that Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. 

It counts special locks for our doors and the jails for the people who break them.  It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. 

It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities.  It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children. 

Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play.  It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. 

It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile. 

And it can tell us everything about America except why we are proud that we are Americans.

If this is true here at home, so it is true elsewhere in world. 

-       Robert Kennedy, University of Kansas, March 3, 1968

By J.M. Hamilton (8-12-2017)

If we take Mr. Kennedy’s speech, and replace gross national product with stock market, the speech is as topical today as it was in 1968 (perhaps even more so).

Seemingly, the stock market, and its results, have become the sine qua non of the American economy and private & public sector achievement.  POTUS Trump – facing significant roadblocks in shoving his domestic agenda through Congress – has often cited the stock market as a key achievement of his administration to date.  Even his predecessor, POTUS Obama, cited the stock market and its results, as a key economic performance indicator.

But if we take a closer look at what makes the stock market soar, we find out that many of the contributing factors are actually highly detrimental to the economy, our nation’s democratic principles, and ordinary Americans… especially, in the long run.

Let’s start with the obvious, nothing warms a stock analyst’s heart, like layoffs and cost cutting.  An announcement of layoffs or reorganization will often spark a stock’s ascent.  If a company is facing slow growth, why push for organic growth by offering a superior product or service, when – if a company has the means or credit line – they can buyout a competitor.  The company that is bought out will almost always see their stock soar.  

And the primary purpose of buyouts and M&A?

Well, that’s to achieve synergy, which is a pretty name for layoffs and cost cuts. And with synergy and M&A – depending upon the nature of the product or service – often comes greater market concentration, the elimination of competition, and higher prices.  As JMH has addressed many times, market concentration (a/k/a cartel & monopoly) is bad for the economy, employees, creativity & innovation, and troublesome for the consumer. 

All these things, the stock market applauds, even if the company goes private for a period of time.

One avenue for owners to cash out of a privately held company is to take the company public, which places the company back into the stock market.

Financial engineering, that is goosing the stock and/or its performance, artificially, through buybacks, layoffs, and M&A is almost always a Wall Street favorite.  Even if the company has to take on debt to accomplish said financial engineering.  The money deployed for financial engineering isn’t finding its way into the hands of consumers/employees, which would increase aggregate demand; and the money deployed for financial engineering is not going into CAPEX, which often creates additional capacity, greater efficiencies, higher productivity, lower costs, and improved products & services.

No, the money utilized for financial engineering is going – directly & indirectly – into the CEOs', C-Suite Executives', and shareholders' hands, (since many CEOs, and C-Suite Execs - for publicly traded companies - are largely paid based upon stock performance).

Wall Street and the stock market, generally, eat the aforementioned up because the focus of the market is on the short run, and it is highly speculative.  Current U.S. P/E ratios are well above historical norms (can you say "bubble").

Of course no discussion, or write up, about how the stock market runs afoul of the interests of ordinary Americans can be complete w/out touching upon the impact the fourth branch of government has on the American economy, that is the Federal Reserve.

Perhaps, no other branch of government has the power re-inflate stagnant or panicked markets, like the Federal Reserve.  The Fed has the ability to: bailout entire industries; pump liquidity into markets that have all but dried up; suppress interest rates to drive investors into highly speculative financial vehicles, like the stock market (and away from bonds and savings accounts); and even buy up toxic assets to clean up Wall Street bank balance sheets.

But are the Fed’s actions good for the economy, the consumer, innovation, and the long term interests of the nation?  Does turning on the Fed’s printing presses facilitate long term solutions to real structural problems & government imbalances (such as the national debt, or the U.S. empire); or does the Fed - and assorted central banks - merely paper over crisis and punt the can further down the road for future generations to deal with?

A wise person once said: A crisis is a terrible thing to waste.  Thanks to the Great Depression, FDR and congress were able to enact many reforms that made the American economy and capitalism stronger in the long haul, like social security, the GI Bill (which played a significant role in America’s middle class creation), and regulations such as Glass Steagall, that helped protect the American economy for decades. 

As a result of the Fed’s actions in 2008, there was little or no real reform.  Wall Street banks grew larger and more powerful, and are still TBTF.  Moreover, what little reform effort that was passed in the form of Dodd-Frank has been, or is in the process of being, rolled back under the current administration & congress.  Wall Street banks are back to selling financial weapons of mass destruction, that is to say, banks are back in the derivatives and the debt securitization business, which is moral hazard defined.

The Fed spent trillions bailing out Wall Street banks, while the American people have suffered austerity, incarceration for non-violent offenses – like drug possession (to such an extent that America, arguably, has become the largest penal colony on the planet --- incarceration aimed primarily at the disenfranchised & minorities), and record levels of higher education debt.  The American dream is out of reach for a generation of Americans.  And don’t let the reports of lower unemployment fool you.  The government, conveniently, no longer tracks U6, but more than a few independent research firms do.  U6 measures, along with unemployment, the underemployed and those who have simply given up looking for work.  Today, U6 is in the high single digits, and was in the double-digits for much of POTUS Obama’s two terms in office.

Some economist claim that many members of the U6 labor pool will be permanently unemployed and/or are unemployable.  Labor participation, w/in the pool of working age adults, has not recovered from the 2008 crash.

Moreover, there were many unintended (or perhaps they were intended?) consequences of the Fed’s actions.  For example, the pirates of the private equity industry and Wall Street banks have made out like bandits.  Wage and wealth inequality are at record levels.  And the Fed’s easy money policies have fueled a M&A binge, that kills jobs.

As for Wall Street, the stock market cannot get enough of the Fed’s easy money policies.  In fact, like an opioid junkie, the stock market has gone into a taper tantrum every time the Fed threatened to remove the easy money punch bowl. 

The stock market – and Wall Street - applauds easy money policies, job killing M&A, industry consolidation, cartel & monopolistic profits, and it climbs to new highs over the outsourcing of labor to foreign shores.

Hell, the stock market even applauds when U.S. multinationals, such as Apple (the largest publicly traded company by market cap), climb into bed with China’s totalitarian regime, and exploits China’s slave labor colony.  The exploitation of China’s labor at pennies on the dollar, plus the buyout of Apple competitors, plus tax avoidance strategies, has earned Apple stock market adulation and appreciation.  All the above allows Apple to make an obscene profit on its iPhone, its number one selling product. All this at the expense of the American worker, who not only misses out on an Apple job, but has to shoulder a bigger tax burden, due to Apple’s – and the crème de la crème of U.S. multinationals’ - tax avoidance.

Does Apple leverage its massive employment opportunities against China’s communist leadership to seek democratic reforms, or improved human rights, or even to enhance information & knowledge of China’s billion plus population? 

The answer is “no.” Apple has not leveraged their employment capacity for democratic & human rights reforms. In fact, Apple recently took many applications, including VPN apps, off their Chinese app store, so as to be in compliance with the totalitarian regime’s laws.

Apple is not alone…. Dozens of U.S. multinationals recently joined Mr. Trump on a junket to Saudi Arabia.  Saudi Arabia has been accused – directly & indirectly – of being one of the largest sponsors of radical Islam on the planet.  These U.S. multinationals, partnered w/ the Terror Kingdom, signed contracts and agreements worth hundreds of billions of dollars.  And yet, U.S. soldiers are dying many, many years later for wars in the Middle East, where U.S. leadership has no clear-cut objectives or exit strategy.  America spends trillions for weapons systems that are subject to failure, cost overruns, and monopolistic pricing… while one in five U.S. children live in poverty. (But hey, publicly traded defense contractors, and the stock market, loves it.)

These same multinationals – thanks to SCOTUS – lobby our own U.S. government daily, spending billions for legislation, tax breaks, and perks that benefit their interests, exclusively.

And the stock markets reaction, no morals here…. The stock market has climbed ever higher.  In fact, setting new records, since the ’08 crash.

 Mr. Robert Kennedy, former U.S. Attorney General & Senator from New York

So if the stock market works at cross-purposes with the interests of the majority of Americans, and the nation’s founding principles, what is to be done?  As reported in the Washington Post, only 50% of Americans have any interests in the stock market, and often that participation is indirect or passive, via ETFs, 401Ks, pension/retirement plans, IRAs, or mutual funds.  Approximately, 50% of Americans have no interest or holdings w/in the stock market.

Any yet, all the aforementioned highly detrimental activity to boost returns – let’s not kid ourselves – for an elite few.

Fortunately, there is a relatively new class of socially conscious investor, and indeed investment funds & ETFs that are encouraging board of directors and management to behave in a socially conscious manner.  A recent Bloomberg piece stated that even members of the highly conservative Chicago School of Economics acknowledged that profit maximization is not the sine qua non of capitalism.

Socially conscious investors are waking up to the fact that profit maximization, via a rigged system, often means social costs that are picked up by the taxpayer, the government (e.g. the private sector paying a non-living wage), or through higher unemployment.  Which means said socially conscious investor is paying for the short term profit maximization of multinationals, via higher taxes, social unrest, a polluted environment, and political instability.

But socially conscious investors will need to do more, and much of their firepower needs to be directed at executive pay.  Tying executive, and board, compensation to items other than stock price, or earnings (such as employee welfare; customer service ratings; lobbying efforts that are pro-environment/pro-consumer; and actually --- don’t faint --- paying one’s taxes, w/out exploiting every dodge and loophole) is something socially conscious investors will need to push for.  Consumers too, have a role to play in the executive compensation arena, via boycotts and voting with their purses and wallets.  Citizens can also vote in politicians that support a kinder and gentler capitalism…  a capitalism/mixed economy that works for the many, not just an elite few.

Employee ownership and stock plans – as well as employee seats on the board of directors – can also bring about positive, more socially conscious, outcomes (see Germany and Mitbestimmung).

In industries that are troubled, such as the energy sector, socially conscious investors are demanding more data, information, and exit strategies & future planning.  (Socially conscious investors can also say “no” to IPOs for highly leveraged companies, that have been looted by private equity firms.)

My guess is socially conscious investing has a future, as do socially conscious companies.  If the entire macro business paradigm is pushed to the tipping point, towards a more socially conscious multinational, the companies that will be hurt – w/in the stock market - will be those that are still involved in a hyper-predatory game, where the ends always justify the means. 

With a greater shift to capitalism with a conscience will come a more socially conscious stock market. 

Mr. Kennedy was right… we cannot measure the economic, ethical, and spiritual health of the nation by a single economic measurement, least of all the stock market.

 Copyright JM Hamilton Publishing 2017