Bari
10-03-2009, 10:20 AM
It’s been long contended in this column that the true beneficiaries of Capitalism are consumers. While businesses in such a system are the best, strongest, most efficient and productive in the world, business people can and do function in other kinds of political environments, and they are seldom the first to step up to defend Capitalism.
Watch and listen closely to what’s being said and done.
As we watch Capitalism being flushed by this brave new world, where are many business people lining up? Defending the Capitalistic system? Or lining up for handouts? Do you hear them most often demanding their economic freedom, or the dire need for government to “do something,” preferably in the form of a check?
Remember this, as one listens to the gloating and glee of the politicians and bureaucrats who perceive the demise of Capitalism, and contend it’s long past due. Think about who is truly losing and who is winning, as you watch them rub their hands together in anticipation of the power and control they expect to come their way.
Be not fooled into thinking they don’t fully understand that Capitalism most empowers, the average everyday citizen. In the frustration of thwarted efforts to control the peons, who insist upon living every day of their lives with hardly a passing glance to Congress and “wiser people,” statists fully understand what economic freedom means for the masses. They understand it when they see people buying F-150 trucks rather than the “green’ vehicles being mandated by government.
They have always known that they can “do business” with the CEOs of corporations. Both sides have long touted that as the ideal. You have heard them. Public–private partnerships they are commonly referred to in glowing terms. By definition a public-private partnership is not Capitalism. And, public –private partnerships do not deliver the best deal to consumers.
Look now, at how magnanimously the statists are paying off their cronies and allies in the business world for their sell-out— for their past cooperation in undermining businesses which attempted to function in a more honest and equitable way. Such sell-outs and cooperation are vital to a political coup over Capitalism, which is what we are now witnessing and for which we are now paying. Look at the pay off — quite literally billions of dollars – far more than these failures at business management could ever have hoped to gain in a Capitalistic system.
None of this should be a surprise. Economist Joseph Schumpeter said over fifty years ago, that business people tend not to defend Capitalism. Business people tend to be very pragmatic, he said, and will conform to whatever political structure in which they find themselves.
I am reminded of the movie Schindler’s List. The drama of this true story lay in the fact that one businessman reached a point where his “ideology” – his conscience — would no longer allow him to do “business as usual” under the structure as established by the Third Reich. It is a glorious story about one man’s decency. As a businessman doing the right thing, he placed his life at risk and sacrificed his business.
His business was doing well, functioning not in the kind of political environment required of Capitalism, but in a coercive environment required for all other kinds of economic systems.
If businesspeople are willing to participate in back-room, closed-door, deal-making they can make a profit under a lot of different circumstances, all of which are far less demanding than Capitalism. It’s far more difficult to capture market share by persuading consumers than it is to persuade politicians. All systems, other than Capitalism, are dependent upon influencing politics.
Only Capitalism has built in mechanisms that encourages ethical conduct, and only Capitalism rewards ethical conduct. Perhaps a surprising statement to those who believe they are watching Capitalism at work in the manipulation of interest rates, the regulation of banks and auto manufacturers, the confiscation of taxpayer money which is then stuffed into the pockets of corporate CEOs.
We are, after all, being told on almost a daily basis that this is Capitalism. But all these things could not happen without the use of force by government to get unwilling participants to go along. (Bear in mind, that the ability to control a man’s business --his livelihood --is the ability to control his actions completely.) The minute government uses force for any purpose other than punishing fraud or theft, one is no longer involved in a Capitalistic system. Capitalism is not a top-down imposed system – it is what spontaneously happens when citizens are free to conduct exchanges of mutual benefit.
But therein lies the problem. No one could persuade the public that this is Capitalism at work if most people really understood what Capitalism is or how the market place functions. That this fiction stands for the most part unchallenged, brings us to the other significant point made by Schumpeter – that Capitalism will ultimately fail because its greatest beneficiaries are ignorant of it.
Why is that? In large part because we are failed by the public education system – a system that first and foremost serves government and is brethren to the beneficiaries of coercive systems.
Most people do not connect their affluence to the Capitalistic system. How that can be is mindboggling given the evidence before them. To stand on any street corner in any city in the country should give overwhelming evidence that this is a system-- as impaired as it has been-- that has worked far beyond the imagination of anyone who ever envisioned utopia. That Barney Frank or Nancy Pelosi or Alan Greenspan can stand and say that Capitalism has failed, when confronted with the reality of all they can see before them, is incomprehensible. But they not only say it, but at least half the people in the nation accept the pronouncement as a fact.
People are more concerned about their frustrations and insecurities of the system – which do exist – then they are aware of the long-term benefits of it. At the same time, amid their frustrations, people are assuaged by intellectuals who teach them to resent the system and who vilify its central figure – the businessman.
For the intellectuals the businessman represents the greatest of all injustices. Under Capitalism almost anyone can rise to the heights of great riches without having to bow to those so much smarter and so obviously their superiors, the intellectuals or the politically powerful. (Think, Bill Gates who never sat before a professor or asked permission of a politician.)
The system makes kings of paupers, who would otherwise know their place. The elite in the US can access little that isn’t equally as available to the most common of commoners, a situation which spawns a resentment that smolders deep within the souls of those who otherwise portend an affinity with, and concern for, the poor and disenfranchised.
Flat screen televisions are beyond anything ever experienced or imagined possible by the highest of the high of royalty of any country in any era in history. Flat screen televisions not only grace the multi-million -dollar homes of the most elite of this country, but can be found in the most shabby of homes on the wrong side of the tracks in the smallest town in America. This is what Capitalism has delivered, and this is what it cannot be forgiven.
Written by Evelyn Pyburn
"Capitalism has failed"
Yes, that is the underlying message delivered today by one of the world's leading financial publications. For many of us, this is no surprise: you had to be truly ignorant to pretend like the economic system was a success just based on the growing divide between rich and poor over the past decade, and the three-decade long decline in wages in the country. Still, to see the FT pronounce the obvious is refreshing.
The article in written by Martin Wolf, one of the FT's main economic gurus who I don't always agree with but who always writes something sophisticated. His piece kicks off a new FT series dubbed "The future of capitalism". His first paragraph:
Another ideological god has failed. The assumptions that ruled policy and politics over three decades suddenly look as outdated as revolutionary socialism.
And this is precisely what many people have argued for many years--many people who were laughed at, ignored by the media talking heads and policymakers, and scoffed at as just people who were not willing to get with the new, great global economy. There were some voices who pointed out, amid the noise of the nonsense of the "Dow 35,000" (can we hang those people?) and the stupid nonsense about the "free market" and "free trade, that something was gravely amiss...as in, the actual vast majority of people were not having such a great time.
Wolf continues:
How did the world arrive here? A big part of the answer is that the era of liberalisation contained seeds of its own downfall: this was also a period of massive growth in the scale and profitability of the financial sector, of frenetic financial innovation, of growing global macroeconomic imbalances, of huge household borrowing and of bubbles in asset prices.
And...
Carmen Reinhart of the University of Maryland and Kenneth Rogoff of Harvard argue that the era of liberalisation was also a time of exceptionally frequent financial crises, surpassed, since 1900, only by the 1930s. It was also an era of massive asset price bubbles.
Indeed, we saw these asset bubbles, under Democratic and Republican Administrations, but, no matter how many times they popped, no one really wanted to say, "stop, this isn't a way for our economy to run". Why? For a combination of reasons: some people got very rich, a lot of politicians continued to get paid off in campaign contributions by people who did not want to see fundamental change and, frankly, dumb, incompetent economic managers who were still, for some reason, given worldly seer status (Robert Rubin and Alan Greenspan come to mind).
How many times, in the past three decades, do you remember hearing about how wonderful our economy was? The noise obscured this fact:
http://img43.imageshack.us/img43/2516/capitalismus.jpg
This show what really was happening--people were working their asses off and not getting paid. Which forced people to rely on credit cards and home equity and...well, you know where that story ended up.
Wolf continues:
We are witnessing the deepest, broadest and most dangerous financial crisis since the 1930s. As Profs Reinhart and Rogoff argue in another paper, "banking crises are associated with profound declines in output and employment". This is partly because of overstretched balance sheets: in the US, overall debt reached an all-time peak of just under 350 per cent of GDP - 85 per cent of it private. This was up from just over 160 per cent in 1980.
And buttressing that today is the World Bank report forecasting the worst economy since World War II:
In one of the bleakest assessments yet, economists at the World Bank predicted on Sunday that the global economy and the volume of global trade would both shrink this year for the first time since World War II.
The World Bank said in a new report that the crisis that began with junk mortgages in the United States was causing havoc for poorer countries that had nothing to do with the original problem.
As a result, it said, nations in Latin America, Africa and East Asia have had not only their growth stifled but their access to credit as well.
As for the stock markets, The Wall Street Journal says today that it is possible that the Dow will go below 5,000 (where are those morons who predicted Dow 35,000?):
As earnings estimates are ratcheted down and hopes for a quick economic fix fade, the once-inconceivable notion of returning to Dow 5000 or S&P 500 at 500 looks a little less far-fetched.
A decline to 500 on the S&P is 183.38 points and 27% away. The index already has lost 881.77 points, or 56%, since its peak in October 2007. The index, which lost 7% last week, hasn't been below 500 since 1995, when the tech-stock bubble was just beginning. After dropping 6.2% last week, the Dow is 1626.94 points and 25% above 5000, a level it also hasn't seen since 1995...
...Some analysts who look at stock price trends see the indexes heading much lower.
"There's a good chance the market could keep going lower," says Bill Strazzullo, chief market strategist at Bell Curve Trading.
At the end of the article, Wolf reaches the following conclusion:
At the extreme, the integration of the global economy on which almost everybody now depends might be reversed. Globalisation is a choice. The integrated economy of the decades before the first world war collapsed. It could do so again.
On June 19 2007, I concluded an article on the "new capitalism" with the observation that it remained "untested". The test has come: it failed. The era of financial liberalisation has ended. Yet, unlike in the 1930s, no credible alternative to the market economy exists and the habits of international co-operation are deep.
"I've a feeling we're not in Kansas any more," said Dorothy after a tornado dropped her, her house and dog in the land of Oz. The world of the past three decades has gone. Where we end up, after this financial tornado, is for us to seek to determine.
I agree with him--but only to a point.
The WAY IN WHICH the integration of the global economy was undertaken may be reversed. Note my emphasis--the WAY IN WHICH. Most people I know who opposed the "new capitalism" did so because they saw the seeds of the collapse of the system because it was based on punishing workers and seeking out efficiencies based simply on finding the lowest wage possible.
We did not--and do not--oppose integration among countries. That was just a phony part of the debate--people have been integrating, in different ways, since the beginning of human history. What we opposed were the rules, or the lack of rules, that, in fact, built the very foundation of this perverted system that has now collapsed on itself (and, in a front-page article in the same FT, the paper reports that the Asian Development Bank will report today that "Falls in the value of financial assets worldwide have reached more than $50,000bn, equivalent to a year's economic output"...that's 50 Trillion, folks).
Now, as Wolf says, the world of the past is over.
And the optimistic part: we can now rebuild an economy that values broad prosperity over greed. Let's get to it.
By Jonathan Tasini.
Watch and listen closely to what’s being said and done.
As we watch Capitalism being flushed by this brave new world, where are many business people lining up? Defending the Capitalistic system? Or lining up for handouts? Do you hear them most often demanding their economic freedom, or the dire need for government to “do something,” preferably in the form of a check?
Remember this, as one listens to the gloating and glee of the politicians and bureaucrats who perceive the demise of Capitalism, and contend it’s long past due. Think about who is truly losing and who is winning, as you watch them rub their hands together in anticipation of the power and control they expect to come their way.
Be not fooled into thinking they don’t fully understand that Capitalism most empowers, the average everyday citizen. In the frustration of thwarted efforts to control the peons, who insist upon living every day of their lives with hardly a passing glance to Congress and “wiser people,” statists fully understand what economic freedom means for the masses. They understand it when they see people buying F-150 trucks rather than the “green’ vehicles being mandated by government.
They have always known that they can “do business” with the CEOs of corporations. Both sides have long touted that as the ideal. You have heard them. Public–private partnerships they are commonly referred to in glowing terms. By definition a public-private partnership is not Capitalism. And, public –private partnerships do not deliver the best deal to consumers.
Look now, at how magnanimously the statists are paying off their cronies and allies in the business world for their sell-out— for their past cooperation in undermining businesses which attempted to function in a more honest and equitable way. Such sell-outs and cooperation are vital to a political coup over Capitalism, which is what we are now witnessing and for which we are now paying. Look at the pay off — quite literally billions of dollars – far more than these failures at business management could ever have hoped to gain in a Capitalistic system.
None of this should be a surprise. Economist Joseph Schumpeter said over fifty years ago, that business people tend not to defend Capitalism. Business people tend to be very pragmatic, he said, and will conform to whatever political structure in which they find themselves.
I am reminded of the movie Schindler’s List. The drama of this true story lay in the fact that one businessman reached a point where his “ideology” – his conscience — would no longer allow him to do “business as usual” under the structure as established by the Third Reich. It is a glorious story about one man’s decency. As a businessman doing the right thing, he placed his life at risk and sacrificed his business.
His business was doing well, functioning not in the kind of political environment required of Capitalism, but in a coercive environment required for all other kinds of economic systems.
If businesspeople are willing to participate in back-room, closed-door, deal-making they can make a profit under a lot of different circumstances, all of which are far less demanding than Capitalism. It’s far more difficult to capture market share by persuading consumers than it is to persuade politicians. All systems, other than Capitalism, are dependent upon influencing politics.
Only Capitalism has built in mechanisms that encourages ethical conduct, and only Capitalism rewards ethical conduct. Perhaps a surprising statement to those who believe they are watching Capitalism at work in the manipulation of interest rates, the regulation of banks and auto manufacturers, the confiscation of taxpayer money which is then stuffed into the pockets of corporate CEOs.
We are, after all, being told on almost a daily basis that this is Capitalism. But all these things could not happen without the use of force by government to get unwilling participants to go along. (Bear in mind, that the ability to control a man’s business --his livelihood --is the ability to control his actions completely.) The minute government uses force for any purpose other than punishing fraud or theft, one is no longer involved in a Capitalistic system. Capitalism is not a top-down imposed system – it is what spontaneously happens when citizens are free to conduct exchanges of mutual benefit.
But therein lies the problem. No one could persuade the public that this is Capitalism at work if most people really understood what Capitalism is or how the market place functions. That this fiction stands for the most part unchallenged, brings us to the other significant point made by Schumpeter – that Capitalism will ultimately fail because its greatest beneficiaries are ignorant of it.
Why is that? In large part because we are failed by the public education system – a system that first and foremost serves government and is brethren to the beneficiaries of coercive systems.
Most people do not connect their affluence to the Capitalistic system. How that can be is mindboggling given the evidence before them. To stand on any street corner in any city in the country should give overwhelming evidence that this is a system-- as impaired as it has been-- that has worked far beyond the imagination of anyone who ever envisioned utopia. That Barney Frank or Nancy Pelosi or Alan Greenspan can stand and say that Capitalism has failed, when confronted with the reality of all they can see before them, is incomprehensible. But they not only say it, but at least half the people in the nation accept the pronouncement as a fact.
People are more concerned about their frustrations and insecurities of the system – which do exist – then they are aware of the long-term benefits of it. At the same time, amid their frustrations, people are assuaged by intellectuals who teach them to resent the system and who vilify its central figure – the businessman.
For the intellectuals the businessman represents the greatest of all injustices. Under Capitalism almost anyone can rise to the heights of great riches without having to bow to those so much smarter and so obviously their superiors, the intellectuals or the politically powerful. (Think, Bill Gates who never sat before a professor or asked permission of a politician.)
The system makes kings of paupers, who would otherwise know their place. The elite in the US can access little that isn’t equally as available to the most common of commoners, a situation which spawns a resentment that smolders deep within the souls of those who otherwise portend an affinity with, and concern for, the poor and disenfranchised.
Flat screen televisions are beyond anything ever experienced or imagined possible by the highest of the high of royalty of any country in any era in history. Flat screen televisions not only grace the multi-million -dollar homes of the most elite of this country, but can be found in the most shabby of homes on the wrong side of the tracks in the smallest town in America. This is what Capitalism has delivered, and this is what it cannot be forgiven.
Written by Evelyn Pyburn
"Capitalism has failed"
Yes, that is the underlying message delivered today by one of the world's leading financial publications. For many of us, this is no surprise: you had to be truly ignorant to pretend like the economic system was a success just based on the growing divide between rich and poor over the past decade, and the three-decade long decline in wages in the country. Still, to see the FT pronounce the obvious is refreshing.
The article in written by Martin Wolf, one of the FT's main economic gurus who I don't always agree with but who always writes something sophisticated. His piece kicks off a new FT series dubbed "The future of capitalism". His first paragraph:
Another ideological god has failed. The assumptions that ruled policy and politics over three decades suddenly look as outdated as revolutionary socialism.
And this is precisely what many people have argued for many years--many people who were laughed at, ignored by the media talking heads and policymakers, and scoffed at as just people who were not willing to get with the new, great global economy. There were some voices who pointed out, amid the noise of the nonsense of the "Dow 35,000" (can we hang those people?) and the stupid nonsense about the "free market" and "free trade, that something was gravely amiss...as in, the actual vast majority of people were not having such a great time.
Wolf continues:
How did the world arrive here? A big part of the answer is that the era of liberalisation contained seeds of its own downfall: this was also a period of massive growth in the scale and profitability of the financial sector, of frenetic financial innovation, of growing global macroeconomic imbalances, of huge household borrowing and of bubbles in asset prices.
And...
Carmen Reinhart of the University of Maryland and Kenneth Rogoff of Harvard argue that the era of liberalisation was also a time of exceptionally frequent financial crises, surpassed, since 1900, only by the 1930s. It was also an era of massive asset price bubbles.
Indeed, we saw these asset bubbles, under Democratic and Republican Administrations, but, no matter how many times they popped, no one really wanted to say, "stop, this isn't a way for our economy to run". Why? For a combination of reasons: some people got very rich, a lot of politicians continued to get paid off in campaign contributions by people who did not want to see fundamental change and, frankly, dumb, incompetent economic managers who were still, for some reason, given worldly seer status (Robert Rubin and Alan Greenspan come to mind).
How many times, in the past three decades, do you remember hearing about how wonderful our economy was? The noise obscured this fact:
http://img43.imageshack.us/img43/2516/capitalismus.jpg
This show what really was happening--people were working their asses off and not getting paid. Which forced people to rely on credit cards and home equity and...well, you know where that story ended up.
Wolf continues:
We are witnessing the deepest, broadest and most dangerous financial crisis since the 1930s. As Profs Reinhart and Rogoff argue in another paper, "banking crises are associated with profound declines in output and employment". This is partly because of overstretched balance sheets: in the US, overall debt reached an all-time peak of just under 350 per cent of GDP - 85 per cent of it private. This was up from just over 160 per cent in 1980.
And buttressing that today is the World Bank report forecasting the worst economy since World War II:
In one of the bleakest assessments yet, economists at the World Bank predicted on Sunday that the global economy and the volume of global trade would both shrink this year for the first time since World War II.
The World Bank said in a new report that the crisis that began with junk mortgages in the United States was causing havoc for poorer countries that had nothing to do with the original problem.
As a result, it said, nations in Latin America, Africa and East Asia have had not only their growth stifled but their access to credit as well.
As for the stock markets, The Wall Street Journal says today that it is possible that the Dow will go below 5,000 (where are those morons who predicted Dow 35,000?):
As earnings estimates are ratcheted down and hopes for a quick economic fix fade, the once-inconceivable notion of returning to Dow 5000 or S&P 500 at 500 looks a little less far-fetched.
A decline to 500 on the S&P is 183.38 points and 27% away. The index already has lost 881.77 points, or 56%, since its peak in October 2007. The index, which lost 7% last week, hasn't been below 500 since 1995, when the tech-stock bubble was just beginning. After dropping 6.2% last week, the Dow is 1626.94 points and 25% above 5000, a level it also hasn't seen since 1995...
...Some analysts who look at stock price trends see the indexes heading much lower.
"There's a good chance the market could keep going lower," says Bill Strazzullo, chief market strategist at Bell Curve Trading.
At the end of the article, Wolf reaches the following conclusion:
At the extreme, the integration of the global economy on which almost everybody now depends might be reversed. Globalisation is a choice. The integrated economy of the decades before the first world war collapsed. It could do so again.
On June 19 2007, I concluded an article on the "new capitalism" with the observation that it remained "untested". The test has come: it failed. The era of financial liberalisation has ended. Yet, unlike in the 1930s, no credible alternative to the market economy exists and the habits of international co-operation are deep.
"I've a feeling we're not in Kansas any more," said Dorothy after a tornado dropped her, her house and dog in the land of Oz. The world of the past three decades has gone. Where we end up, after this financial tornado, is for us to seek to determine.
I agree with him--but only to a point.
The WAY IN WHICH the integration of the global economy was undertaken may be reversed. Note my emphasis--the WAY IN WHICH. Most people I know who opposed the "new capitalism" did so because they saw the seeds of the collapse of the system because it was based on punishing workers and seeking out efficiencies based simply on finding the lowest wage possible.
We did not--and do not--oppose integration among countries. That was just a phony part of the debate--people have been integrating, in different ways, since the beginning of human history. What we opposed were the rules, or the lack of rules, that, in fact, built the very foundation of this perverted system that has now collapsed on itself (and, in a front-page article in the same FT, the paper reports that the Asian Development Bank will report today that "Falls in the value of financial assets worldwide have reached more than $50,000bn, equivalent to a year's economic output"...that's 50 Trillion, folks).
Now, as Wolf says, the world of the past is over.
And the optimistic part: we can now rebuild an economy that values broad prosperity over greed. Let's get to it.
By Jonathan Tasini.