Saturday, January 20, 2018

The Kleptocracy giveth, and the Kleptocracy taketh away…

The Kleptocracy giveth, and the Kleptocracy taketh away…

Insofar as “synergies,” “efficiencies” and “adjacencies” are a euphemism for job cuts, 2017’s huge merger haul spells trouble. The 10 biggest U.S. transactions to quantify targets in 2017 expected a combined $7.9 billion of annual savings, equivalent to the cost of employing 250,000 American workers at the median wage. Some $3 billion of the proposed savings come from one merger alone: Broadcom’s $130 billion offer for rival chipmaker Qualcomm.


By J.M. Hamilton (1-21-2018)


One could hear a pin drop last week, w/in C-Suites throughout the land. 

POTUS Trump, once again, made it abundantly clear that the GOP is racist; and that he entered the White House utilizing a divide & conquer GOP campaign strategy (and subsequently enacted policies) that has been in place since Mr. Nixon darkened the White House grounds, as Commander in Chief.

At issue, in the midst of immigrant and refugee negotiations with the Senate, Mr. Trump referred to El Salvador, Haiti, and Africa as “shithole countries.”  While it’s true that many of these nations are economically challenged, it does not take a rocket scientist to figure out that the U.S., and the West, have played a major role in the current malaise surrounding many of these countries’ economies: from a history of colonialism to CIA intervention and meddling, all the way to multinational exploitation and intervention in local government.

But to Mr. Trump, his classification and designation had a more racial bent, because it was coupled w/ his belief that we need more immigrants from Norway (a country that is predominately white).

Like I said, not a word from the corporate & multinational aristocracy.  After all, POTUS Trump had just delivered a huge tax cut.  And apparently, the price to be paid - for what Mr. Samuelson at the Post referred to, recently, as a “bribe” - is complicity and silence.

And that silence is both deafening and can be construed as consent:  Qui tacet consentire videturubi loqui debuit ac potuit.

Moreover, the multinational royalty aren’t just remaining silent, but are endorsing Mr. Trump by opening their checkbooks.  Many have stepped forward with one-time bonuses for their employees, or slight hikes in pay (albeit the pay increases, in many instances, still will not provide a living wage).

That these bonuses have been coupled in more than several instances, w/ rounds of layoffs or corporate facility closings, means that the tax cuts provided by the GOP will more than likely be allocated to financial engineering: job killing M&A; stock buybacks; and further job cuts. 

But we don’t have to wonder about this, many CEOs have gone on record as saying as much.

And hence, the quid pro quo  You make us, and our shareholders, wealthier Mr. Trump and we’ll trickle a few bonuses among our employees.  These bonuses – in the aggregate - might spark a temporary economic sugar rush, that will hopefully help out the GOP’s 2018 reelection prospects (Notice, the employee bonuses are one time, whereas the GOP tax cut for business is permanent – that is, “permanent” at least until some future generation finally recognizes that trickle down is nonsense, and has bankrupted this nation, and mortgaged their future).

And just like compounded interest, compounded tax reductions – on this order or magnitude – will mean the kleptocracy’s wealth will explode exponentially over time.  Further aggravating the wage & wealth divide that is threatening to tear Western governments and society apart at the seems.

More unsettling too, is that several market characteristics and dynamics are coming together to create the perfect storm, in favor of multinationals and against labor.

Consider the following:

·      As noted by JP Morgan CEO, Jamie Dimon, last year, the number of publicly traded companies since the mid- ninties has nearly been cut in half;

·      Entrepreneurship and the number of startups has been in considerable decline, spanning decades ;

·      Industry consolidation and M&A has flourished, over the same time frame;

·      Lending among Wall Street banks – a catalyst for entrepreneurship and job growth – has declined since 2010 (only recently enjoying an uptick); and

·      The capture of the Federal government by the oligarchy means that law and policies that protect labor, and labor’s right to organize has been decimated.

All these things combined not only have helped fuel wage & wealth inequality, but have given large businesses, w/in our cartelized economy, significant power – monopsony power – over labor. 

To such an extent that big and larger business, which employs 50% of U.S. labor (small businesses, as defined by the SBA, as 500 and fewer employees - per enterprise, employ 50% of the labor), has grown so powerful that they, collectively, can make or break an economy, based upon hiring decisions.









It’s important for liberals and for progressives to know and understand this, as the GOP continues to implode under POTUS Trump.  

What may follow, possibly, is the Democratic Party taking one or both houses in 2018, and possibly, the White House in 2020. 

Democratic leadership seems to recognize the damaging effects of this exceptional concentration of economic power, as they more recently have adopted positions designed to mitigate the control and power cartels & monopolies hold over the economy and government, via advocacy for greater antitrust enforcement.

But there is still more work to do and thought given on how to prevent the kleptocracy from throwing the economy into a tailspin, the second a future Democratic, or even Green, Administration enacts policies designed to curtail the power of cartels and monopolies.  (Some may recall a taper tantrum a few years back.  When the Fed started to back off its hyper-accommodative monetary policies that help fuel the stock market's rise, the bond investment community caused the Federal Reserve to reverse course, and rev up its printing presses, again.  Could we expect a tantrum directed at the economy and hiring, if, say, Dems began enforcing & updating antitrust laws?  That's not as improbable as some might believe.  Think: Capital Strike!)

The kleptocracy is not likely to act favorably or kindly to anything that upsets the status quo, or threatens their power to mint money (via monopolistic returns) and control the government.  They could act in ways to deliberately sabotage an administration or political party, the kleptocracy deem to be unacceptable or unworthy.  

Given the precarious position of the nation's finances (thanks to tax cuts for the wealthy and credit card financed nation building & wars w/out end), a severe recession - orchestrated by the multinationals - and the resulting diminishment in tax receipts - could have a destabilizing impact upon the Federal government.

As for our friends, the C-Suite aristocracy… many businesses talk about accountability, ethics, philanthropy, and responsibility; but throwing money at a political party – that is based upon the premise of white supremacy – in the hopes of reducing one’s tax bill - is morally reprehensible, and is not a sustainable business practice.

If business leadership truly wants to be accountable and responsible, they must speak up, frequently and often, against the party of racism.

After all, misogyny and racism no longer sells.

Misogyny and racism are bad business.



Copyright JM Hamilton Publishing 2018


Sunday, January 7, 2018

THE PRIVATE SECTOR IS KILLING CAPITALISM & DEMOCRACY

THE PRIVATE SECTOR IS KILLING CAPITALISM & DEMOCRACY


Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of Government except all those other forms that have been tried from time to time.

- PM Winston Churchill


Well, now that we have seen each other, said the unicorn, if you’ll believe in me, I’ll believe in you.  Is that a bargain?

Yes, if you like, said Alice.

- Lewis Carroll, Through the Looking-Glass


By J.M. Hamilton (1-7-2018)

Cue the Prosecco, pour the Vivaldi, and taste the Fire & Fury.

We've just passed through the Looking-Glass, and the GOP has spun so many lies - for so long - that what is down is up, and what is right (wing) is clearly wrong.  A Hatter - given to fabulous story telling & lies - resides in the White House.

Time has a way of revealing old truths and new ones too.

Why it seems like it was yesterday that POTUS Reagan said these famous words, during his first Inaugural Address:

In this present crisis, government is not the solution to our problem; government is the problem. 

And over the span of time, perhaps Mr. Reagan was right.  JMH is not into absolutes or broad generalizations, but look around the globe: Western democracy, as we know it, and mainstream democratic political parties, are in retreat (propped up by deceit, fiction, lies, and vast sums of money).

Yes, the stock market continues to soar, fueled by artificial sweeteners and the Grand Enabler: central bank printing presses.  Other than that, is there much good to say?  

Not really.  National debt spirals out of control.

One thing is for certain, where Western democracies have been co-opted, purchased, and run by, and for, a global oligarchy - or worse still, a kleptocracy - are we really any better than any alternative forms of government?

JMH has taken more than a couple of shots over the years - not at the Chinese people (whom I have the utmost admiration and respect for) - but at China's government.  

Authoritarian & totalitarian governments are so passe, until they are not.  

My freedom loving, and civil-libertarian, heart just hates the thought that a gang of wealthy elites - in a one party state - can run a government and country for their own benefit, while crushing all dissent, smearing all competitors, and censoring news and information flow.

But who - or what political party - am I describing?  China's communist elite or today's Republican Party?

A Republican Party that is hell bent on banning/eliminating words from government reports, ramping up libel laws (to crush dissent), and allowing the consolidation of information & news media, so that The Republican Party narrative can be carefully choreographed, controlled, and trotted out?  

And let's not forget the GOP's revocation of the net neutrality laws, which essentially means a cartel of Internet service providers can, and will, have the means to control Internet news content and information flow. (And the poster boy for Orwell's nightmare - a man presently afraid to show his face in public.  Why that would be the lobbyist - and mouthpiece - for the Internet cartel, and current FCC head, Mr. Ajit Pai)

If Reagan were alive to see what Republicans have become, he'd switch back to the Democratic Party.  By today's standard, Reagan is a Democrat.

Not that Clintonian Dems are so much better, but Mr. Trump and everything the Republican Party has come to stand for (in essence, obtaining obscene wealth at all costs & at the expense of many) is starting to make China's Marxists look almost contained, controlled, and professional.  

At the end of the day both Republicans and the Communist Party serve a ruling kleptocracy; at the end of the day, both parties prove Reagan's maxim that our governments - controlled by ruling & unaccountable cadres - are the problem.

But it doesn't have to be this way.  A few simple reforms - like a popularly elected SCOTUS, removing unseemly sums of money from politics, and a US Senate that is allocated by population - and the US government can be shiny and new again.  

Government doesn't have to be evil or wrong; government can be made to serve the 99%.  

That is to say, government is only as good as the people who serve, and who have the moral courage to speak their minds.  Democracy just happens to be the least worst choice of all alternative forms of government.

But introduce vast sums of money into a Democracy and we become little better than an authoritarian or totalitarian dictatorship, ruled by a moneyed elite.

Much is made of the “rule of law” ... but it's only as good as the laws on the books.  If our government passes laws that condones & enables corruption, and subverts transparency, at every turn, than the rule of law - and the laws of the land - aren't worth the paper they're printed upon.



As scary as our crony government is, our crony economy is equally frightening - for it is the monopoly economy that provides that explosive wealth used to subvert our republic.

The global kleptocracy not only likes a rigged government, but they like a rigged economy.

This mean - as JMH has oft written - that cartels and monopolies are the order of the day.

You see, it's no longer enough for large-scale enterprise to make a profit, but those profits have to be turbo charged, via consolidation, financial engineering, and M&A.  Consolidation and M&A are known killers of: customer service; innovation; jobs; and its practitioners are connoisseurs of predatory behavior.

In fact, while were comparing China's government to America's, why not compare China's state run enterprises to U.S. cartels and monopolies?

US monopolies - often propped up by government sanction & bailouts, and all too often are too big to fail (see Wall Street banks) - most resemble.... you guessed it, here comes the punch line, China's state run enterprises (which are also propped up by China's government, receive bailouts, and are often too big to fail).

Somewhere along the way Republicans - and alleged, free market enthusiasts - took a U-Turn, and instead of appreciating Adam Smith (who defined “capitalism” as competitive markets, with many competing entrants, operating w/in the guardrails and the regulatory rules of the road - established by government), came to fall in love - to the point of idolatry - w/ Ayn Rand's golden calf.

The problem with Ayn Rand's individualist dogma - and the libertarian economic ethos - is (taken to the extreme): it always metastasizes into cartel, monopoly, and the crony economy.  Of course, the U.S. kleptocracy has no overriding ethos, other than: the ends always justify the means.  And their religion boils down to several things: their personal enrichment, at your expense; the almighty dollar rules; and only suckers pay taxes.  Like China's kleptocrats, the U.S. kleptocracy believes in privatizing profits, while socializing losses (see again, the Wall Street bank bailouts).

The very things Adam Smith warned us about.

It doesn't matter how gifted the genius is, or how nifty the product is, no man or woman should have the ability to establish a government sanctioned cartel - or monopoly - in any country that respects democracy, freedom, and economic & human rights.  

Monopoly and monopolistic profits are antithetical to capitalism, democracy, and human rights; and if the private sector fails to compete, in a given market w/in the economy (to better insure monopolistic returns), the government has an obligation to compete against the private sector within that market.

The outcome of nearly all monopolies (unless strictly controlled & regulated)  - in the long run - is not only pernicious, but highly destabilizing.


Alice and The Hatta, by Lewis Carroll


Destabilizing?  But to what degree?   

Take a look at the rise of M&A and monopolies - throughout the West over the last 37 years - and the rise of populism throughout the West today.  

Look at relatively prosperous Germany (the crown jewel of the EU), which today, cannot even form a coalition government.  

Take a look at Egypt and Iran (where both countries have little economic opportunity, high rates of unemployment, and whereby, their economies are controlled by - you guessed correctly - crony cartels and monopolies), and what do you see?  

Answer: military coup and revolution.


It's been that way for centuries.

JMH - perhaps naively - believes in a mixed economy: all the best that capitalism has to offer (in a carefully regulated environment), combined w/ a social net necessary to contain capitalism's inevitable fallout.

But a mixed economy – w/ strong democratic institutions -  means we need a government controlled regulatory regime, that will: expand and enforce antitrust laws; and establish commercial rules of the road, that protects consumers, labor, and society (and moreover, insures the inevitable social costs of doing business are picked up by the industry and biz that produces those costs, both foreseen and unforeseen).

As it stands today, the greatest threat to the US economy - and capitalism -  is a government controlled by a ruling kleptocracy.  

A kleptocracy that is funded - when they are not pigging out at the government trough - by an economy that is dominated by untrammeled cartels and utilities.

No other threat to our nation exceeds this one.  

For the survival of our freedoms and our democratic institutions, it is a threat that must be contained.  It's time to wipe the sleep from our eyes, and rejoin Alice on the other side of the Looking-Glass.



Copyright JM Hamilton Publishing 2018