Class Warfare

Class Warfare

“There’s class warfare, all right,” Mr. Buffett said, “but it’s my class, the rich class, that’s making war, and we’re winning.”

-       In Class Warfare, Guess Which Class Is Winning – NY Times

By JM Hamilton (8-25-2019)

The Business Roundtable (BR) – a very-much-for-profit entity, consisting of the crème de la crème of America’s CEOs – came out w/ a public policy statement last week, which stood fifty years of laissez faire business ideology - and the profits before all ethos - on its head.

Instead – and obviously feeling the political sand shifting directly under their feet - the CEOs of the BR propose a capitalism that works for all stakeholders w/in American society. 

The BR commits to (read hear) among other things:

·      Delivering value to customers;

·      Investing in employees… starting w/ compensating them fairly (moreover, we foster diversity and inclusion, dignity & respect);

·      Dealing fairly and ethically w/ our suppliers;

·      Supporting the communities in which we work; and

·      Generating long-term value for shareholders … we are committed to transparency and effective engagement w/ shareholders.

The irony for any employee who has worked w/in a Fortune 500 Company surely couldn’t have been lost on anyone.  Employees are constantly told the importance of (indeed, evaluated based upon):  honesty, transparency, delivering excellent customer service, community philanthropy, and the achievement of departmental goals.  The meeting of said goals, directly & indirectly, contributes to keeping ownership or shareholders happy.

Failure to meet any of these expectations is, or can be, often grounds for termination. 

Which begs the question, why would the CEOs of the BR feel the need to restate the principles of capitalism…  unless of course, the C-Suite brass and the ownership class don’t play by the very same rules they demand of their employees and “stakeholders” daily?

That is to say, what has been business as usual in America – under a profits uber alles regime – for the last fifty years (?): not delivering value for customers; shafting employees; dealing w/ suppliers in an unfair and unethical manner; exiting communities, when another city is willing to provide greater subsidies & tax breaks for the new corporate headquarters; and stiff-arming shareholder requests for business plans & information (say, on how management plans on dealing with: climate change, or poisons - passing as products - issued forth by said company)… as well as, busting & closing down shareholder resolutions requesting greater change & transparency?

Well, in a word, “yes.”  If anyone tunes into Bloomberg or reads business news w/ any degree of frequency, the press is replete w/ stories demonstrating how America’s top businesses, all too often, behave in ways completely antithetical to society’s well-being (while profits and wage & wealth inequality soar). 

In brief, the BR’ new policy statement reminds us that the corporate aristocracy has been waging class warfare against the 99% for the last fifty years, and really amped up the blitz w/ the fall of the Berlin Wall.  It further reminds us of our two-tiered societal structure and justice system, often written about in this very blog.  The last fifty years is best defined by the rise of a Neo-Gilded Age, and directly correlated w/ that ascendency, a brewing and ongoing populist revolt.  That is to say, an economy, government, and justice system for the one percent, versus an economy, government, and justice system for everybody else.

Let’s pretend for a moment that this is actually something more than window dressing and platitudes.  One can be forgiven for being cynical.  Afterall, plutocrats have been wringing their hands - since the ’08 crash and their subsequent bailout by the Federal Reserve - and advocating reform (while often lobbying for the complete opposite behind closed doors, or via their K Street minions).

What exactly would the business & financial elite have to do to achieve the aforementioned goals?

Well, for starters, the BR would need to break up the monopolies and cartels many of the CEOs have ownership stakes in and run daily.  There’s no greater threat to community & democracy than unchecked power; and today, there’s no greater unchecked power than America’s cartel & monopoly economy.  Serious competition w/in US business sectors would provide the checks & balances that are entirely missing today (and that our owned government fails to provide), against the unprecedented economic power the CEOs of the BR wield.  And no, American businesses do not need colossal scale to compete on the world stage, contrary to what we are told daily.  Just ask Boeing.

So as to end fiscal, foreign policy, judicial, monetary, and regulatory capture (that is to say, creating a democratic government that responds to the will of the people, instead of an elite few), BR CEOs would, ideally, need to insist upon campaign contribution and political reforms, such as: term limits; limits to the campaign season; and caps on campaign contributions and spending.  Perhaps a constitutional amendment that would reapportion the Senate in a more representative fashion?  Since we're dreaming, popularly elected SCOTUS members, as well as, a popularly elected Federal Reserve decision making body, including, but not limited to, the Chairperson.

If we are truly going to protect the stakeholders in society, the CEOs of the BR are going to want to put a leash upon – if not altogether eliminate - ALEC, K Street lobbyists & the US Chamber.  It’s these bodies that often advocate policies and positions that no responsible company would be caught dead advocating in public, on behalf of their business patrons (that is to say, ALEC, K Street, and the US Chamber are paragons of the profits before all mentality that has crushed the American Dream and virtuous capitalism).

Since we are talking diversity and inclusion – dignity & respect – among all employees, that pretty much rules out supporting the GOP, which is xenophobic, homophobic, misogynistic and racist.  It’s hard to express & achieve the BR’s new goals and support the political party of bigotry.  Isn’t it?

And while we are placing the US and her communities first, the offshoring of jobs to save a buck, the Uber economy, treating employees as contractors & subcontractors… yeah, that has to go.  And the BR, if its genuine and sincere, obviously must see the need to provide equal pay, paid maternity leave, and a living wage?  Right?

How about investments?  Would we expect a reputable CEO and company to be hanging out w/ dictators and despots on the global stage… dictatorships who behave in ways completely antithetical to America’s, and American multinationals', professed values of freedom, human rights, liberty, rule of law, democracy and yes, even – often ignored – egalitarianism?  Doesn’t really work for CEOs to be seen w/ killers, like MBS and Saudi Arabia, does it?

And then there’s crossover investments, and board seats, w/in America itself.  Should the BR’s CEOs have investments w/ gun manufacturers, how about the ultimate earth killer, Big Oil… what about the MIC, which sells death and mayhem around the globe?   Not a good look, and entirely inconsistent w/ the BR’s renewed conscience.  How about tobacco and Big Pharma, which robs the public and the taxpayer, daily.  Perhaps the BR CEOs could recommend ending some of these industries, or current business practices of same, altogether?  At the minimum, boycott & divestment would seem entirely appropriate. 

What of accounting and tax fairness, simplification, and transparency?  There’s little doubt that such reforms would better serve America, her communities, employees, and yes, even shareholders (done properly, it just might spur aggregate demand).  How about a tax on wealth to mitigate the power of the ownership class, who make unseemly demands of BR CEOs… unseemly demands like taking out massive loans on the corporate credit line to finance dividends and stockholder buybacks?  This debt, if history repeats, setting companies up for failure, during the next economic downturn.  What better way to protect communities, employees, and in the long term, shareholder value?  

Limits on the amount of leverage applied to predatory private equity LBOs?  What better way to protect: bondholders, business, labor, stakeholders, and the American economy?

How about trade agreements that dispense w/ dictators, or that are tied to reforming nondemocratic regimes and improving democracy and human rights?  Such trade agreements just might mitigate the mass migrations we are seeing out of the world's authoritarian/totalitarian regimes & failed states.  What about fair trade agreements that mitigate labor, regulatory, and tax arbitrage, and give labor a seat at the table during negotiations?

Et al., et al.

Yes, let’s not be naïve, or take the BR at its word… but let’s be willing to suspend disbelief for a moment and imagine that these CEOs are, collectively, ready for real change.  It took fifty years of neoliberal ideology to create our present mess; it’s going to take a while – and perhaps a couple of progressive administrations – to unwind.

There’s, obviously, a great deal of money to be made in honesty, truth, and transparency (otherwise these smart business leaders wouldn’t be recommending these changes).  But w/in the short to midterm, the transition to a more compassionate & ethical capitalism, like that proposed by the BR, could prove challenging, indeed.  Perhaps the BR could backup their mission statement, w/ an action plan and a timeline?

At the end of the day, actions speak louder than a press release.

It would be presumptuous for JMH to assume to speak for all Americans….  However, my guess is the majority of Americans would gladly support the aforementioned reforms.

Would it be better if these leaders – and the ownership class - took these actions upon themselves, or wait for a nonviolent political revolution that insisted upon changes, perhaps even far more draconian? 

That’s the multi-trillion-dollar question.  Isn’t it?

After all, class warfare, ultimately, is bad for: America, business, capitalism, and profits.

Copyright JM Hamilton Publishing 2019

The Political Center is Extreme…

The Political Center is Extreme…

“I was appalled to learn that Jeffrey Epstein was found dead early this morning from an apparent suicide while in federal custody,” Mr. Barr said. “Mr. Epstein’s death raises serious questions that must be answered.”

-       Jeffrey Epstein Dead in Suicide at Jail, Spurring Inquiries - NY Times

By JM Hamilton  (8-10-2019)

As I write this, news has come out on the final curtain call for one Mr. Jeffery Epstein.  The notorious Mr. Epstein, equal parts Jay Gatsby, Icarus, and serial pedophile. The dossier Mr. Epstein compiled, or little black book, which was supposed to save his tail, in the end became his noose.  Mr. Epstein flew too close to the establishment… lured billionaires, royalty, and presidents into his dark web… his wings melted and now is no more.

Dead men tell no tales, and they give no testimony either.  And the lives of the ruined & scarred children?  Collateral damage?

And so, the complete mosaic of sordid & unseemly stories rests for eternity w/ Mr. Epstein’s corpse.  The jigsaw puzzle has been spilled onto the floor now, never to be fully assembled.  The establishment breathes a collective, albeit tentative, sigh of relief.

Why should anyone be surprised.  It’s unimaginable that Mr. Epstein died of suicide, just as its unimaginable that in today’s surveillance state, there’s no video recording of Mr. Epstein’s final moments (or perhaps there is but not for public viewing).

Hitler had some of his attempted assassins strung up by meat hooks & piano wire and is said to have filmed the executions for his own personal amusement.  How did Mr. Epstein go again?

The establishment plays by different rules then you and me, and somehow gets away w/ portraying their actions, as normal, enlightened, the only path forward, and even heroic.  Sure, some minor tinkering around the edges from time to time, but real substantive change… that’s a problem.  Real change interrupts profits flow.  (Therefore, we get industries that should have been retired decades ago, operating to this very day, like Big Oil.)

But political centrism (i.e. the ideology of the political duopoly) – the so-called pragmatic approach - is anything but normal, enlightened, and the opposite of heroic.  That is to say, centrism is corrupt, cowardly, and evil.

Which is exactly where we are going today.  The extremism surrounding the political center, which has moved so far to the right that arguably it more closely resembles a cult or atavistic endeavor at dominance among societal classes.  Class warfare… the rich cornered the market centuries ago.  In surveying today’s economy, one wonders: how far have we really come from feudalism? 

Hmmm. How indentured these United States, and to pay for what:  endless war, tax cuts for the wealthy, Wall St & kleptocratic bailouts, the multi-trillion dollar derivatives & swaps industry utilized to insure - and gamble upon - debt that will never be repaid?  Survival of the fittest?  Maybe so, but perhaps, only if the fittest are homicidal maniacs w/ no conscience and no remorse.

But enough w/ the dark tangents.  Let’s focus on the extremism surrounding centrism.

Economic

The dominant players in the economy like to wrap themselves in the mantle of capitalism and free markets… but when they aren’t reducing companies to rubble w/ too much debt or running a Ponzi scheme – a la Wall Street, they’re running monopolies and utilities.  How hard is it to run a monopoly?  How hard is it to leverage a healthy company’s credit line to the point of exhaustion, so as to pay for unearned dividends and stock buybacks?  I believe, once upon time, they used to call these activities, “stock manipulation.”  Retailer after retailer – at one time, a prime source of employment – run into the graveyard by private equity firms and hedge funds.  And some say, private equity saves businesses.  Far from it, private equity is the greatest plague to ever walk the earth, a destroyer of both business and opportunity.

And we wonder why pension funds are no more, wages stagnate, and America is dead last – in terms of upward mobility – among Western democracies.  RFK once said that GDP growth, as a metric on the economic health of the nation, was no way to run an economy.  The same can be said of the stock market as an index of economic health & general prosperity.  We know there are alternative ways to run an economy, like a middle class – an expanding middle class – driven economy. 

Some of us remember the GI Bill that kicked it all off, Post WW II; some of us studied history and remember FDR and his proposed economic bill of rights.  Of course, the plutocracy has done everything in its power to insist upon austerity, burying the economic bill of rights and doing its best to dismantle the social safety net, ever since.

The binary economy - de rigueur among the billionaire class - has to go.

Political

Centrism presumes that money will always be in politics, politicians will always be paid for, and democracy is often the choice between the lesser of two evils.   The political watchwords of today are “capture” and “redistribution of wealth.”  

Regulatory, fiscal, monetary, judicial and foreign policy capture, by an elite few, so as to enrich an elite few at the expense of many.  Redistribution of wealth – a perverse socialism – from the 99% directly into the hands of the 1%. It’s all highly toxic stuff.  And yet, from the elite we get hand wringing over the potential moral hazard surrounding socialism. 

The donor class should know… they’re both addicted and experts on the redistribution of wealth, from you and I directly into their offshore havens, or one of the biggest havens of all: America.  And the political class – legally on the take – nods, aids, and abets. That socialism works – when administered by a responsible government – and to ameliorate capitalism’s worst effects – is indisputable, as best illustrated in Canada and Scandinavian countries, today. 

It’s called the mixed economy, stupid.

This is the political centrism that we are told is pragmatic, utilitarian, and the norm: austerity for the 99%, and the rigged economy - w/ guaranteed profits - for the 1%.  And of course, socialized losses when it hits the fan.

We are told that the radicals are folks like AOC, Gabbard, Sanders, and Warren.

We are told that the richest nation on earth can’t afford:

·      Universal childcare and Pre-K;

·      Peace and a peace dividend (that terrorism is perennially on the march, and so over 50% of this nation’s discretionary budget – a greater allocation than the G10 combined – must go to military spending);

·      Medical care (instead of being a human right, is a privilege);

·      We are told that antitrust enforcement will dampen animal spirits and economies of scale… when the complete reverse is true: monopolies kill economic growth, initiative, jobs (define diseconomies of scale), and opportunity;

·      Fair trade (and that trade agreements must be dictated and negotiated by multinationals and monopolies behind closed doors, away from public oversight and where labor has zero seats at the table);

·      We are told that a living minimum wage is unacceptable, while corporations & multinationals utilize their employees' food stamps as a direct, and indirect, subsidy to their bottom lines;

·      Free college education;

·      We are told the Federal Reserve can print money to fund tax cuts for the wealthy, credit card wars, and Wall Street bailouts; but that MMT - to fund a better standard of living for all - is a fantasy. 

·      We are sometimes even told that gays, minorities, and women must patiently wait their turn for real change to come in society because we might upset rural whites, who – already stressed economically - are put off by social change (why they just might go on a killing spree).  When the 99%’s real oppressors are the robber barons, who own the economy, the government, and the MSM. 

Et al., et al.

This all appears contrived.  The elites, and their centrist ideology, don’t want to see ordinary Americans enjoy the very same benefits/welfare the plutocracy takes from the state daily: whether it be liquidity pumped into markets, courtesy of the Fed (the very markets the private sector has bailed on); or a free tax ride (via a byzantine tax code, favoring – you guessed it – the aristocracy).  

Talk about your free lunch.

And the elites can’t figure out why there’s so much pushback against centrism.  Why the GOP establishment was rejected in 2016.  Why HRC lost in 2016.  Why young people/voters, increasingly, are not put off by socialism.  Why progressives are ascendant in the Democratic Party, while the centrists & faux-progressives – Unca Joe, presently, notwithstanding – circle the drain.

If the people at the top don’t figure it out, and soon, Newton’s Third Law suggests that serious blowback is headed their way.  There is little doubt of capitalism’s appeal, when it works for everyone.  However, what is suspect and increasingly under scrutiny is crony-capitalism, and the political centrism surrounding it.

Copyright JM Hamilton Publishing 2019