Saturday, December 03, 2011

Left-sympathizing big businessmen trying to pass the buck

They blame capitalism for the extraordinarily high incomes received by many big-business chiefs and say it will provoke unrest. But many of the high incomes originate in firms that were bailed out by the government or have a cosy relationship with government.

So the high incomes concerned are not the fault of capitalism but the fault of corporatism -- the intimate connection between government and big business that Mussolini rightly envisaged as dominating the 20th century and beyond. To put it bluntly, it is our present neo-Fascist system that is creating dangerous strains, not capitalism.

If none of the big banks and other financial institutions had been bailed out and gone broke instead, most of those big incomes would have vanished too. Capitalism was not allowed to do its work of creative destruction. It is a turning back to real capitalism that is needed -- JR

A review of Capitalism at Risk: Rethinking the Role of Business

Three professors from the world's pre-eminent business school have co-written a study that at first blush seems to fall more in the genre of horror tale than business text.

Professor Bower and his colleagues note in their study the broad concerns of the 46 business thinkers that they brought together in forums on three continents, but by far the most widely held was "the tendency of capitalism, as it currently functions, to produce extreme disparities of income and wealth".

It took little to conclude that the vast accumulation of wealth by individuals compared with the stagnating fortunes of low- and middle-income workers is fuelling the backlash worldwide.

"Some leaders pointed to what they regard as excessive compensation earned by CEOs [that] strike many people as intrinsically unjustified," the authors write. The reality of growing disparities - one that is the crux of political debate within Western democracies - poses questions about capitalism's very raison d'etre.

One unidentified Asian business leader told the authors: "Herein lies a major challenge, because the world has become very much more prosperous as a result of market capitalism.

"The rich have become richer. The poor in most cases have become richer. But the gap between the rich and the poor has also grown wider … There is the growing sense of being left out, even as people are getting better off."

A European executive said: "What was the good of capitalism? Was it the fact that we were building a very large, very well-off … middle class? We are not doing this any more."

And in the US, a chief executive told the authors: "It's undeniable that in a country like ours, unfettered capitalist impulse on a global basis does seem to exacerbate the problem."

Joining the discussions were executives such as Jeffrey Immelt of General Electric, John Elkann of Fiat and Bertrand Collomb of the French group Lafarge. They included bankers and financiers, as well as the heads of conglomerates and the former US labour secretary, Elaine Chao.

That capitalism has delivered for billions is not at issue: in the last decades of the 20th century, 97per cent of countries enjoyed increased wealth, according to the World Bank. More than 450 million people were lifted out of extreme poverty.

But the executives also cited as potential threats the powerful forces within financial markets, environmental degradation, political populism, terrorism and war, fundamentalism, mass migration and pandemics.

They are quoted anonymously throughout the work.

"History tells us that when an awful lot of people are disenfranchised, they have no incentive to play by the rules, and given today's communications availability, weaponry … that's an issue we have to really think about, probably over a very long period of time," one executive said.

Perhaps unsurprisingly, given that many were the beneficiaries of fabulous remuneration, the business leaders do not appear to offer easy solutions to bridging inequalities. But they back business, not government, largely to ameliorate strains on the system.



Ron Paul, the prophet not honoured in his own country

"The problem came about because we spent too much, we borrowed too much, we printed too much money, we inflated too much and we over-regulated. We are looking at the collapsing of a market which is unstable. It is unstable because of the way it came about. It came about because of the monopoly control of money and credit by the Federal Reserve system and that is a natural consequence of what happens when the Federal Reserve system creates too much credit."

Internet conspiracy theorist? No, Ron Paul, candidate for Republican presidential nomination. Those words were from a speech to Congress in 2008 urging a "no" vote on TARP, the Mother of All Bailouts.

Three years later, with the crisis switching up a gear from banks to sovereigns and Europe teetering, Paul predicted "they will probably bail out Europe next".

That they did. This week, the Fed led a coterie of central banks in a dramatic market intervention which cut the cost of US dollar funding to European banks in half. Drunk on this latest round of credit shots, world stockmarkets popped up 5 per cent, as they do every time the Fed cranks up the presses.

Ron Paul was predictably unimpressed: "Bankers should take their dreaded haircut rather than making innocent people pay for their mistakes. The losses should be limited and liquidated, rather than perpetuated and rewarded. This is the only way we can recover."

Time wins more converts than reason. Despite being ignored by the mainstream media for years, Paul is now running between second and fifth in the polls for the Republican presidential nomination.

After a recent TV debate, host network CNBC took down an internet poll which had Ron Paul thrashing his rivals. His supporters were "gaming" the poll, said the network. There was no evidence.

A civil libertarian and stickler for the constitution, Ron Paul voted against Dubya's invasion of Iraq, the Patriot Act and the TARP bailout. He wants Fort Knox and the Federal Reserve audited, and the gold standard returned.

Needless to say both Wall Street and the military industrial complex - and Republicans and Democrats - are equally leery.

Fox News, which is pushing Newt Gingrich, gave Paul a spot of airtime the other day. A Barbie-blonde presenter attempted to fit him up with a sex scandal of the confected "do you deny…?" genre. It backfired.

The presenter simply couldn't nail him as Paul a) doesn't have that "girls in the hot-tub" look about him, b) has a penchant for telling the truth, and c) displays the uncommon trait of common sense.

They haven't been able to snare or discredit him yet, so they ignore him so assiduously that people are beginning to suspect he must be onto something.

He is fond of pointing to paradox, for instance the Fed lending to the banks at close to zero and then the banks lending it back to the government at 3 per cent - by buying Treasury bonds - after the government has given it to the Fed in the first place for free (by expanding the Fed's balance sheet).

If Ron Paul looked prescient for his call on Europe this week there was sure-fire vindication after the Bloomberg news agency won its freedom of information lawsuit against the Fed and revealed the central bank had funnelled $US13 billion in funds to US banks without disclosing it to Congress.

Bear in mind the Fed, unlike other reserve banks, is owned by private banks. Wall Street if you like. The Fed and the big banks fought for more than two years to keep details of the largest bailout in US history a secret. Now the rest of the world can see what it was missing.

The Fed didn't tell anyone which banks were in trouble so deep they required a combined $US1.2 trillion on December 5, 2008, their single neediest day.

The abuses are legion, well worth a read. Morgan Stanley, for instance, took $US107 billion in Fed loans in September 2008, "enough to pay off one-tenth of the country's delinquent mortgages" while it was telling everybody it was healthy. That was before TARP.

The rub with hiding things, with lax accountability, is that confidence in public institutions suffers. Indeed the capitalist system is based on trust, trust that a counterparty will pay, that an institution won't run off with your money, that you are being told the truth.



More doubts about the Breivik diagnosis

In Norway, an insanity defense requires a defendant be psychotic - so out of touch he cannot control his own actions - while committing a crime. Somehow this week, two forensic psychiatrists determined that Anders Behring Breivik, 32, was insane when he methodically killed 77 people on July 22.

Breivik has admitted that he set off a car bomb in Oslo, killing eight, then gunned down 69 people, mostly teenagers, on an island summer camp. But he has refused to plead guilty on the grounds that his actions were "atrocious but necessary" in service to his crusade to "save" Europe from Marxism and a "Muslim invasion."

The maximum criminal sentence in Norway is 21 years - although authorities can extend prison time for those deemed to be a danger to society. Thus Breivik had reason to believe that, disguised as a police officer, he could shoot up a camp full of teenagers, lay down his weapons and surrender - and he still might go free in his 50s.

If the forensics board backs up the insanity finding, a court could commit Breivik to three years of psychiatric care. It's unlikely, but he could be out in his 30s.

In an e-mail, University of Oslo psychology Professor Svenn Torgersen explained, "At least every three years, he can be assessed. If he is non-psychotic, and in addition considered no threat to other people, he will be free, and no new court case. Yes, many psychiatrists and psychologists are surprised."

Prosecutor Svein Holden supported the "delusional" finding as he told reporters that Breivik's "thoughts and acts are governed by this universe." And: "He sees himself as chosen to decide who shall live and who shall die, and that he is chosen to save what he calls his people."

Swedish forensic psychiatrist Anders Forsman, however, told the Associated Press, "It is difficult to see this as criminal insanity. He seems to have carried out the killings in a rational way. He is an efficient killing machine."

Consider these words from Breivik's terrorist manifesto: "Once you decide to strike, it is better to kill too many than not enough, or you risk reducing the desired ideological impact of the strike." For a man not in control of his thoughts or actions, he sure did what he wanted to do.

News accounts indicate that Norwegians could accept an insanity finding as long as Breivik spends the rest of his life in government custody. But Oslo deliberately prohibits life sentences, even for the most heinous crimes. Politicians boast about the nation's humane criminal justice system with its commitment to redemption.



Israel hobbling Iranian nuke threat

AN IRANIAN nuclear facility has been hit by a huge explosion, the second such blast in a month, prompting speculation that Tehran's military and atomic sites are under attack.

Satellite imagery seen by The Times confirmed that a blast that rocked the city of Isfahan on Monday struck the uranium enrichment facility there, despite denials by Tehran.

The images clearly showed billowing smoke and destruction, negating Iranian claims yesterday that no such explosion had taken place. Israeli intelligence officials told The Times that there was "no doubt" that the blast struck the nuclear facilities at Isfahan and that it was "no accident".

The explosion at Iran's third-largest city came as satellite images emerged of the damage caused by one at a military base outside Tehran two weeks ago that killed about 30 members of the Revolutionary Guard, including General Hassan Moghaddam, the head of the Iranian missile defence program.

Iran claimed that the Tehran explosion occurred during testing on a new weapons system designed to strike at Israel. But several Israeli officials have confirmed that the blast was intentional and part of an effort to target Iran's nuclear weapons program.

A former Israeli intelligence official cited at least two other explosions that have "successfully neutralised" Iranian bases associated with the Shahab-3, the medium-range missile that could be adapted to carry a nuclear warhead. "This is something everyone in the West wanted to see happen," he added.



Republicans aim to quash new union rules

Republicans are maneuvering to short-circuit an effort by Democrats on the National Labor Relations Board to approve rules that would quicken the pace of union elections.

The GOP member of the labor board is threatening to resign his post, which would deny the board a quorum and quash the entire process. At the same time, the House is poised Wednesday to approve a GOP bill aimed at short-circuiting moves they consider anti-business. That measure is unlikely to go anywhere in the Senate.

The developments are the latest sign of how intensely business groups are opposing any moves that could help organized labor make new inroads at companies that have long opposed unions.

At the labor board, the Democratic majority was set to take up a proposal Wednesday that would simplify procedures and shorten deadlines for holding union elections after employees at a work site gather enough signatures.




Leaping toward the Keynesian Dream: "The Fed’s latest inflationary scheme sounds like a technocratic innovation. It lowered the costs of currency swaps between central banks of the world, with the idea that the Fed would do for the globe what Europe, England and China are too shy to do, which is run the printing presses 24/7 to bail out failing institutions and economies. In effect, the Fed has promised to be the lender of last resort for the entire global economy."

Plundering wealth vs producing wealth: "In recent decades, the rich have gathered an increasing share of the total wealth in the United States. As this wealth disparity grows and especially as large numbers of the formerly middle class fall into poverty and even into homelessness, this flow of wealth from main street (from anyone not seriously wealthy) to those who already have extreme wealth, becomes more obvious -- and more suspect."


List of backup or "mirror" sites here or here -- for readers in China or for everyone when blogspot is "down" or failing to update. Email me here (Hotmail address). My Home Pages are here (Academic) or here (Pictorial) or here (Personal)


The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)


2 comments: said...

Thoughts on Israel:

The flow of Jewish immigrants to Israel has subsided. By 2007 there were actually more Jews emigrating out of Israel than immigrating into it. That trend has continued every year to date.

Furthermore, the world's Jewish population is in decline. The Jewish Agency's Institute for Jewish People Policy Planning warns that the Jewish population declines by 150 per day; 50,000 per year resulting in a depletion of the pool of future Jewish immigrants to Israel.

The Jewish birth rate in Israel, 2.9 per woman, offers little consolation. While it exceeds the 2.1 rate required to sustain a population, recent research reveals that half of Israel's young people want to leave the country. That could effectively diminish the birth rate from 2.9 per woman to less than 1.5.

Consider Israel's emerging Arab population. Israel's Jewish birth rate falls far below that of Palestinian Arabs in Israel and the West Bank, which is 3.7 children per woman. "This means that by 2020, the population of Jews out of the total population of Israel plus the West Bank, without counting Gaza, would decline to 56%."

When Gaza is included, the future for Israel's Jewish majority grows even more bleak. In 2000 the Jewish majority was 55 percent. By 2010 that majority had reduced to 52 percent. The Jewish majority would be lost in or about 2015.

Robert said...

The "Plundering Wealth vs. Producing Wealth" column linked to is a great one! It expresses very well my attitude that there is absolutely nothing wrong with getting rich by producing value and engaging in voluntary exchange (think Apple and Steve Jobs). But seeking to become rich through the use of government force to rape, pillage, and plunder the fruits of other people's labor (think George Soros, bailed-out banks, etc.) is criminal. It's HOW one pursues getting rich that matters.