That's the reminder I want to see taped to my political candidates' laptop screen.
Today's world is run by looters. There are neoliberal looters using financial weapons, and there are neocon looters using old-fashioned military/intelligence weapons. Both groups see ordinary people doing ordinary, productive work as targets for "resource extraction", aka looting.
Below the fold we will take a tour of the many, many forms of looting, which has replaced manufacturing as the main occupation of our "economy". It's a depressing list, but accepting the reality of it is necessary to calling it out.
FINANCIAL LOOTING
1) Wall St. is looting the public
The original hope of banking and finance capitalism in the 19th century was that banks would make productive loans to finance industry. The aim was for banks to ...make loans...to finance new capital investment by manufacturers and producers, as well as by the public sector to build infrastructure. The idea was for these investments to create profits out of which to pay the interest and the principal back to the lenders. This was defined as productive lending...
As matters have turned out, banking has allied itself with real estate, mineral extraction, oil, gas and monopolies instead of with industry. So instead of getting a share of the profits, it has focused on lending against economic rent...This economic rent is created by special legal privilege or ownership rights to install tollbooths on roads, education systems and other basic needs. Owners aim to charge as they can, without regard for how this affects overall growth and balance.
...banks back the kind of economy that makes money without new capital investment. The easiest way to do this is to make loans for real estate at increasingly debt-leveraged, bank-inflated prices. They call this a post-industrial “service” economy. It is simply a rentier tollbooth economy...
Stock markets were supposed to supply “equity investment” capital. But they have been turned into a vehicle for debt-financed leverage buyouts (LBOs). Raiders borrow money much like landlords borrow to buy a rental property and bleed it. This turns corporate cash flow into interest. Governments permit this to be tax-deductible, so this encouragement of debt financing over equity worsens their fiscal position. It forces them into debt to bondholders. So the process becomes a deteriorating financial spiral.
- Michael Hudson, Debt Servitude
Wall St. insists that all these "innovative financial engineering" products are adding value to the productive economy. That is a lie. They are merely exotic games of three-card-monte by which the "smart money" loots the "dumb money".
Historically, Wall St. took about 3-5% of the profits of the economy. These days it is averaging 10%, and during the bubble years it was hitting 20%. The amount of money dedicated to IPOs is miniscule (~1%). The rest of it is this three-card monte.
2) One part of Wall St. is looting the rest of Wall St.
What exactly is high frequency trading? As thoroughly detailed in the new Michael Lewis book, Flash Boys, ...high frequency trading is a rigged game where big money buys computer speed, hires physicists and programmers to design ever more complex algorithms and artificial intelligence programs which then ply their wares on U.S. stock exchanges to loot the pockets of ordinary investors.
-Pam Martens High Frequency Trading Is Not Like a First Class Airline Ticket – Unless You Have Also Hijacked the Plane and Robbed the Passengers in Coach
Of course, the DOJ and the SOC have been completely missing in action on HFT, which many people call "legalized front-running". Despite the bizarre
flash crash. Despite the absolutely risk-free history of these so-called "high risk" plays.
3) Banks are looting the public and the productive economy
...we dismantled the most ancient of human laws, the law against usury, which had existed in some form in every civilization from the time of the Babylonian Empire to
the end of Jimmy Carter's term, and which had been so taken for granted that no one ever even mentioned it to us in law school. That's when we found out what happens when an advanced industrial economy tries to function with no cap at all on interest rates.
Here's what happens: the financial sector bloats up. With no law capping interest, the evil is not only that banks prey on the poor (they have always done so) but that capital gushes out of manufacturing and into banking. When banks get 25 percent to thirty percent on credit cards, and 500 or more percent on payday loans, capital flees from honest pursuits, like auto manufacturing...
What is history, really, but a turf war between manufacturing, labor, and the banks? In the United States, we shrank manufacturing. We got rid of labor. Now it's just the banks.
Which is why the middle class is shrinking. Basically, we're all waiters now; we're bowing and scraping and working for the banks.
- T. Geoghegan, Infinite Debt
Reviews of this article:
http://ordinary-gentlemen.com/...
http://isteve.blogspot.com/...
4) CEOs are looting the economy
The allocation of corporate profits to stock buybacks deserves much of the blame. Consider the 449 companies in the S&P 500 index that were publicly listed from 2003 through 2012. During that period those companies used 54% of their earnings—a total of $2.4 trillion—to buy back their own stock, almost all through purchases on the open market. Dividends absorbed an additional 37% of their earnings. That left very little for investments in productive capabilities or higher incomes for employees.
- William Lazonick, Profits Without Prosperity
If that https: link blocks, go through the link in
this review in Forbes.
See also: http://www.rooseveltinstitute.org/...
5) The loot is piling up so high, it can't be justified as "needed capital for investment".
I diaried this last year:
Harvard Business Review calls bullshit on today's "capitalists". I quoted the author, noted business economist, Clayton Christensen:
A fundamental tenet of economics is that some of the inputs required to make a product or service are abundant and cheap—like sand. We don’t need to account for such inputs and can waste them, if need be. Others are scarce and costly and must be husbanded carefully. Historically, capital was scarce and costly. So investors and managers alike were taught to maximize the revenue and profit per dollar of capital deployed.
While it’s still true that scarce resources need to be managed closely, it’s no longer true that capital is scarce. A recent Bain & Company analysis captures this point nicely, concluding that we have entered a new environment of “capital superabundance.” Bain estimates that total financial assets are today almost 10 times the value of the global output of all goods and services, and that the development of financial sectors in emerging economies will cause global capital to grow another 50% by 2020. We are awash in capital...witness the $1.6 trillion in cash on corporate balance sheets.
Given there is no need for this capital accumulation, that said money just sits in offshore accounts to avoid corporate and personal (billionaire) taxes, the demands for more austerity are simply the lies of looters.
7) Austerity is nothing but looting.
Starting with the bankruptcy of New York City in 1975 and the Mexican debt crisis of 1982, austerity became the principal means to effect a historically unprecedented redistribution of resources from the bottom to the top.
At the other end, the magnifying glass created the preconditions under which the world’s wealthiest businesspeople, white-collar criminals and Third World dictators could further increase their accumulated capital – obtained through decades' worth in pillage and plunder of state resources and common property – in offshore bank accounts and foreign capital investments, where this immense stolen wealth largely escapes taxation, regulation and criminal investigation.
The financial privileges obtained through this process, referred to by David Harvey as "accumulation by dispossession", stand in direct relation to the fiscal deprivation at the bottom. Ultimately, major scandals like HSBC's Swiss tax evasion scheme are merely flash points offering us a clearer view of the hidden dynamics at work in the world economy: what is taken from one side shows up at the other. In a word, there is no such thing as austerity; there is only a highly skewed redistribution of scarce resources. In this upside-down world of financialized capitalism, money simply tends to flow upwards.
- J. Roos, HSBC and the Upside-Down World of Austerity Politics
A current DKos story discusses how many of today's rough, tough "capitalist" billionaires basically got their money by looting (i.e., privatization of) third world government assets.
http://www.dailykos.com/...
MILITARY LOOTING
Neocon looting, while highly visible, is really in service of the financial elites.
Overseas, neocon warmongering and coup-making provides the "shock" for Shock Doctrine austerity economics to be imposed on ruined countries by organizations like the IMF (or, recently, the ECB). The IMF has been known as leg-breaking loan shark for decades (see Confessions of an Economic Hitman). Greece is a poster child for the end purpose of austerity - to loot a country as clean as a buzzard picks a carcass. To privatize (i.e., steal) everything of value in a country while still leaving that country enslaved to a debt they can never pay off.
At home, neocon warmongering buttresses an obscene defense budget, an oppressive intelligence surveillance regime, an unending propaganda campaign to intervene all over the world - at an immense budgetary cost, crowding out social spending almost completely. No money for our crumbling infrastructure, because that would create jobs and maybe get a few people out of debt.
NEOLIBERAL LOOTING IN THE U.S.
In the US, point country for the neoliberal takeover of the Developed World, privatization as a form of looting is already entrenched and spreading.
We have un-dischargable student loans that turn a profit for the "government", i.e., off-load the tax burden onto our children, turning them into debt slaves before they even get a start in a job.
We have a growing list of states (Wisconsin, Kansas, Michigan, North Carolina, etc.) whose Koch-fed rulers cut taxes on the rich and cut services to the poor.
We have the Billionaire Boy's Club (and their errand boys, like Mayor 1% and Arne Duncan) still ramming school privatization down our throats despite the proven corruption, unaccountability, and lack of benefit of this ripoff of public money.
We have a growing cancer of privatized prisons, with guaranteed profits (the "free market" in action). Corporations compete to gouge prisoners and their families with monopolized services - outrageously priced telephone calls, fees for clothing and food.
We have privatized large parts of the military. This is where the neoliberal/neocon symbiosis is most visible. We outsourced supplies to connected crooks like Haliburton. We outsourced body guards for the State Dept. to murderous mercenary crooks like Blackwater/Xe/Academi. We outsourced intelligence gathering to Booz, Allen - and they certainly would never use the info for their private gain or for blackmailing people. No. They are really patriots. Truly. Just ask Ed Snowden.
THE BEST GOVERNMENT MONEY CAN BUY
All these privatizations have become possible because we have privatized all three branches of government. The SCOTUS has delivered Citizens United and McCutcheon: infinite, secret donations can be funneled to any candidate. The two Koch Brothers and/or Sheldon Adelson can equal the spending of entire political parties.
Privatized legislators and bought-and-paid-for governors then privatize prisons, schools, healthcare, pension systems, etc.
Finally, we have President Obama getting ready to ram the secret, corporate coup d'etat TPP through a Fast Track process - with unheard-of-in-the-last-six-years "bipartisanship". That will be game over.
GAME OVER
But, given the laundry list I have just recited, we are clearly at the end of the game anyway. Short of massive Euro-style demonstrations (which, in the US, would be pre-emptively Cointelpro-ed and actively kettled and suppressed ala Occupy Wall St.) Congress and Obama will do as they are told. They are all bought and paid for; and they are paid to loot us. It's just a question of whether Jeb or Hillary will be doing the neolibs/neocons dirty work.