The Great Recession Blog
by David Haggith
In my last article, I argued that Socialism is “The Price Capitalism Pays When Greed Goes Unrestrained.” Unrestrained and highly rewarded greed in the US is fueling a revolution by conservatives and liberals with liberals stampeding toward Socialism as their answer under the auspices of Alexandria Ocasio-Cortez (AOC), Bernie Sanders and Elizabeth Warren.
That fire will burn across the United States from sea to shining sea because of all the dead wood and detritus that has been allowed to build up within the US Capitalist economy. I pointed out in that article that Socialism is just as prone to such rot, so no system brings safety without vigilant people doing something about it.
A large part of this corruption is aimed at feeding the war machine this nation has become which General Eisenhower had intimate knowledge of and warned us about when he became President Eisenhower — the military-industrial complex (MIC). Our worldwide wars and widespread corruption are consuming all of our nation’s energy, so I’m going to confront both in this article.
The reason I’ve broadened my objectives from just talking about economics to “beating the establishment,” which certainly includes the MIC, is that it’s time to put these economic lessons to work. I don’t flatter myself to think I am up to leading a movement against war machinery or against bankers gone bonkers, but I want to do all I can from my own tiny platform to encourage a movement because, if porcine corruption of the establishment isn’t intensely confronted, then our nation will go both Socialist and Anarchist, and that is now happening rapidly because people are seeking a way out.
Some readers argued in the comments section that US society is inevitably going toward corruption anyway because that inevitability is, in their opinions, built into Capitalism; and, therefore, it is inevitably going to swing to Socialism. I, on the other hand, believe it is probable that our society will continue to go down the path of corruption (based on the trends we can see have been prevailing for decades), but I don’t believe we should acquiesce to the idea that it is inevitable, and I certainly don’t think either corruption or greed is an end that is anymore baked into Capitalism than it is into Socialism. Socialist societies have not been any less prone to greed and other forms of corruption that I have seen. I think it is utopian nonsense to think that, if we change the system, we’ll be freed of the problems that come from our own human nature in all of our enterprises under any system.
However, whichever kind of economy you have, society will swing to the polar opposite if that economy becomes hopelessly corrupt. People under Socialist leaders will rebel, as happened in the Soviet Union and in Tiananmen Square in China to push toward a more Capitalist Society because of Capitalism’s promise of economic freedom and reward for your work, and people in Capitalist Countries will believe the answers are found in Socialism because of its promise of working together, instead of in competition with each other, and of equitable distribution of wealth. These are tempting hopes after years of experiencing tremendous hoarding at the top of wealth that never trickled down.
My view as someone who believes Capitalism is the better system is that, before you can succeed in battling Socialism, you have to succeed in getting your own house in order … by battling the pigs in Capitalism that have caused the system to evolve to serving only 10% of the people who are ruled by 1% of the people. These give fuel to the Socialists fires, and they will incinerate all of us with or without Socialism. So, this article is about a few of the things that need to change and that can be changed without changing entire economic systems.
Time for change for a change
It’s time for real change, not Obama’s fake change that was all lip service. His administration did nothing to correct the evils that have befallen the US economy or its political system, and his abject failure at correcting those wrong (because he, too, served the establishment that is entrenched in power) empowered the rise to Trump on one side and to Sanders on the other, which has now already spread to AOC.
First, we need to change corporate law. Big Corp. banks that fail due to greed, need to fail miserably and completely so their executives and board members take all the heat, and the dead wood is burned away. Their stockholders may all go with them, but that should be a known price of playing in the Wall Street casinos. Instead of using new free month to bail banks out, we should have let the bloated banks fail and used all that free new money to create new deposits in solvent smaller banks in the names of depositors from the failed behemoth banks. Instead, the Federal Reserve made the TBTF banks even bigger! Insane! Instead of solving a problem of scale, it assured the problem is scaled up to be even worse in the future.
Creating new money in new accounts to replace what burned up wouldn’t have created any inflation because all we would be doing is letting money go up in smoke in one collection of accounts and then recreating the same amount in another place, so there is no net increase in money supply. But the institutions would be vaporized, and the people who ran them out of a job. The shareholders would have taken a major loss, but they should when they pay a fortune to put greedy, overpaid CEOs in charge. Investors would start to learn to be more careful about what greedy bastards they put in charge.
That’s water under the bridge, and I’m not suggesting it would have not resulted in a lot of difficulties, but the new money would have softened the blow for those least responsible, and we would have avoided all the “moral hazard” that devolved into the corrupt reality we have been living under ever since, which took the wealth gap in this nation and made it so much worse.
We still need to imprison corporate leaders who took their corporations to bankruptcy by illegal activity. While the statute of limitations may mean these crimes are past their expiration date, I think we could dig up enough new evidence of unknown crimes to go after some of them even now. Obama’s Attorney General, Eric Holder, was too effete to do that. He tried one case, failed and then gave up — probably because Obama didn’t want to take on the establishment that funded his campaign in the first place. While it’d be difficult now because the trail is cold, we need to, in the very least, make sure from this point on that all pigs go to prison.
We also need to revise corporate laws to make shareholders and executives personally responsible for business losses when they happen due to corrupt practices. Corporations do not exist as created by God. They are not people. They do not exist as created by the Constitution either. So, they have no inalienable rights. They exist as created by Corporate law; so we need to strip out some of the protections given to Corporate leaders so that all of their own personal wealth is on the line all the time, should their company lose money either due to willful negligence or criminal actions on their parts.
We should never have allowed the wealthy to conserve their wealth by parking it in other corporate structures. Whatever you own, all assets (including all shares in any corporations) need to be seized in paying back the debts of the corporation you crashed because of your corruption or your negligent leadership. “With that much risk no one would become CEO,” you might argue. So what? Let the cowardly who are too rich to put their riches at full risk, step aside then. I won’t miss them. If they can’t handle the heat, better step away from the forge where businesses are made.
There are others with less wealth to protect who will gladly take those roles, and many of them, as small business leaders, may be much better at business. Many overpaid CEO’s are mostly good at politics — personal and national — (and at corruption), and that is why they are hired. Many have proven to be faint of thought when it comes to actually running a business. Witness some of the stupid things done by CEOs in recent years:
Remember when greedy Bank of America’s CEO announced BofA was going to start charging its customers for using their debit cards in the bank’s own cash machines? As if using cash machines doesn’t already save the bank a lot of money over hiring tellers, BofA’s CEO felt the bank needed to make this a new fee source — charge you for accessing your own money. BofA lost customers so fast over that lame move, they had to immediately send out a retraction letter. I knew as soon as I heard it that it was going to be a disaster, so did you; but greed is blinding, and the arrogant think they can get away with anything … because they have!
Remember when Netflix’ CEO decided to announce that Netflix would be dividing its physical DVD business from its streaming business, and you could buy membership in each one for the same price each that you were already paying to get the combined deal. Yes, pay double the money for your personal inconvenience as using the two services separately certainly wouldn’t benefit you any. Again, they lost customers so fast their heads spun — millions of customers in a couple of weeks — and they had to send out an immediate retraction letter. That letter didn’t go far enough, so they had to send out an additional apology letter from the CEO. Not too many of us would have been either greedy enough to try such things or stupid or arrogant enough to think we could actually get away with duping our own customers like that; but that’s what greed does to you.
Think of how foundering Sears decided it could win bigger by buying tired Kmart and how, operating within its own internal creative wasteland, it redesigned Kmart only to help it fail faster. Then think of how failing Sears decided next to move more into the big-box appliance and garden equipment business because it saw other stores doing well there only to see that fail, too. Most of us would not be stupid enough to think that crashing one sinking ship into the side of another was a recipe for success when you clearly cannot pilot the one you already have. And the big-box store idea … was just a blatant demonstration that these corporate executives have no creativity at all. The best they were able to come up with was to try to copy other things, which are now also failing all across the US.
An answer you’ll find taxing unless you’re middle class or poor
I think we even need to raise taxes on the rich, BUT not to AOC’s confiscatory level that kills an economy. It is madness to think you can suck almost unlimited money out of corporations or individuals and have them still work to make more that you can take away later. However, we need to move back to where taxes were in the Clinton-Gingrich days because that level actually worked very well. Instead of the infinitely expanding deficit we have now, we ran a balanced budget and still had economic growth — not perfect recession-proof economic growth because that doesn’t exist, but far better than we have today.
In fact, we may not even have to raise taxes on the rich above what the middle class pays, but we certainly need to stop taxing them less. There is a sweet spot on the “Laffer Curve” that maximizes revenue, but it is not the spot where Republicans have placed it for the benefit of the rich, who actually pay lower taxes than the middle class. There was nothing damaging about the tax level we had under Clinton and Gingrich, but our current budget-busting taxes will destroy the nation, taking us to half a trillion dollars in interest each year before we know it.
You have probably heard people like Rush Limbaugh state disingenuously that 10% of the people in the US pay 70% of the taxes. That is a half truth, which means it is essentially a lie dress up in truth because it immediately conveys the notion that the rich are paying far more than their fair share of taxes. That lie works because the full truth is so obscene people would never guess the deception that is being pulled over on them. The full truth is that those same 10% of the people actually make 80% of all the wealth in the nation, so they should be paying 80% of the taxes if they were just being taxed equal with everyone else.
Limbaugh and the Republican “think tanks” make it sound as if the rich are overpaying by throwing out that number when that number actually means they are underpaying — so obscene is the truth about the distribution of wealth in this nation, which has become as bad as it is precisely because of such tax breaks.
The reason the rich pay less than the rest is the special capital-gains tax that was implemented under President Reagan and that has been preserved ever since. The sleeping middle class is not realizing that most people do not get rich by making wages. They get rich off of the gains on their investments. That means, for doing far less work than the blue-collar laborer does, they get a lower tax rate.
Republicans have argued this tax rate into being on behalf of the establishment for years on the basis that a lower Cap.-gains rate will stimulate the economy by encouraging “job creators” to build factories. History has proven that to be nonsense, and common sense will get you to that proof even faster than a study of history.
Think about it: Who is going to reinvest money they made from a stock sale into starting a new factory when they can just reinvest it in more stocks? Why would you choose to take on all the political and legal battles of building a factory, all the design problems, all the design battles that happen internally in an organization, all the delay it takes to actually have a fully functioning new factory on the ground, all the risk and headache of hiring hundreds or thousands of human liabilities, all the financial risk of riding your investment on all of that plus the financial risks of developing a new product or a new market for an existing product IN ORDER TO HOPE TO MAKE A PROFIT THAT WILL ULTIMATELY BE TAXED AT A HIGHER RATE (AS ORDINARY INCOME) IF YOU EVENTUALLY SUCCEED?
The very existence of a lower tax rate for taking far less risk by just buying assets that already exist, holding them then selling them in an up-rigged stock market almost guarantees you’re not going to take on enormous risk to make real profit the slow, hard way while that kind of earning remains under a higher tax bracket!
It’s such a nonsensical notion, you have to wonder that an entire nation has remained sold on it for thirty-five years even in the face of resounding proof that it is not creating factories in the US. It is creating stock-market and bond-market bubbles.
People gave up their lives to found this nation. Is this generation not even willing to give up some of its money to preserve the nation so long as there are also spending cuts (which was the Gingrich side of the chemistry that got us to relative balance in the Clinton-Gingrich standoff)? We also need to remove all loopholes for the rich once and for all, and eliminate the special capital-gains tax rate that has done nothing but fuel a casino on Wall Street.
The only way any of that will happen is to force money out of politics and go to great efforts to break up the cronyism in Washington by throwing incumbents out and giving up our own party loyalties because both parties fully support the establishment. They ARE the establishment — or, at least, its political arms.
Save Social Security, don’t sell it out!
We also need to save Social Security, which the Republicans keep threatening with their campaign to make “entitlement” a dirty word, as if you are greedy to think you are entitled to get your own money back. You are entitled to it because it was your money in the first place, which you entrusted to the government based on the government’s promise that it would be there for you when you retire or become disabled!
It’s your money. It was always your money! Don’t let politicians who endlessly borrowed from the Social Security fund now break it in order to fix their own broken budgets.
Republicans are desperately creating an argument against entitlements every day to avoid the claw back the establishment fears. They know that retired people on Social Security and younger people concerned about their parents or grandparents who are on Social Security will go after rich Republicans (and rich Democrats) to save the system if it fails. So, they want to convince middle-class people to save the system by giving up what is rightfully yours, so you don’t take what is theirs. However, those same moldy-oldie politicians have ripped off Social Security and “borrowed” from it to fund their wars and their welfare for decades.
The trickle-down tyrants will decry that my plan for saving Social Security is an unfair transfer of wealth, when, in fact, wealth has already been transferred the other way for decades by taking it away from you and using it to fund other programs and wars that have enriched the 1%! They accomplished this transfer of wealth by capping the amount of income that is taxable for Social Security so that, once again, the rich have gotten away for decades with paying a smaller percentage of their income in Social Security tax (FICA) than the middle class pays. In fact, most of their income (the part coming from capital gains) isn’t taxable at all!
So, save Social Security by removing the cap that protects 99% of the income of the 1%. Why should 100% of my income be taxable under FICA and not 100% of their income? It’s not as if it is a greater hardship for them to pay the same tax rate on all of their income than it is for you and me to pay it on all of ours! That’s a perfect legitimate claw back that has also added hugely to wealth disparity. Changing it is real justice. Ending it can save Social Security without reducing your benefits. So, fight for what is yours! Fight the mostly Republican argument about entitlements every time you hear it. They want to make you feel like a welfare baby, but it was your money all along that they were taking from you!
Moreover, because Social Security has been run into the ground for so long to fund other programs, I would claw back more of that by placing a cap on how much the rich can get back from Social Security when they retire. Cap it at what they would have received before we removed the cap on their taxable income.
“Whoa!” some will say. “Now you are a Socialist!” I don’t consider that Socialism so long all we are doing is making sure the poor and the middle class get back every penny of their own money that they put into the system! If the ship goes down, the rich captains are the ones that should go down with it, not all the passengers. They have benefitted by having their salaries capped, while I have not. They were able to invest the billions they saved on Social Security taxes into other things that made them a lot of money. I was not. They have benefited by tapping Social Security to fund corporate welfare and warfare (among other things of course). They have benefited by making most of their wealth off capital gains, income that has no applied FICA tax at all.
If you want to create a real uprising that helps society, you don’t need guns. Go for the money! Make sure that what you were promised you would get at retirement is there because you already paid up front. Let the people who hired lobbyists to spend it all away, make up the full shortfall that is now resulting from their profligate government spending. Push that agenda so hard that politicians of either party don’t have a leg they can stand on. Knock them down if they try!
In short, stop giving the rich unmerited extra blessings that widen the gap between the rich and the rest.
Warfair is welfare for the rich
This could be your child!
As for those wars the middle class have funded, they in particular serve only the rich while bleeding our nation dry. Why are we spending trillions of dollars to keep kicking hornets’ nests in the Middle East? We created a power vacuum in Iraq, then had to spend a fortune fighting the same war again in order to keep the vilest of insects from taking over the dilapidated infrastructure we left behind.
Do we really believe we are going to be heralded as “great liberators” by people who have lost their roads and businesses and sons and daughters, fathers and mothers, brothers and sisters and cousins and friends who died as soldiers fighting against us or perished as “collateral damage?” Get real!
Of course, we need to defend ourselves, but we don’t need to create regime changes. We don’t need to try to make the Middle East democratic … or Capitalist. Why would anyone even think a democracy will be more friendly to the US if it is ruled by millions of people who hate the US for killing half the people they know, including their children, and destroying half their buildings and roads, power lines and water in their land? We have no moral obligation to save everyone from their own evil dictators, and I can think of no examples where that has gone splendidly well or where anyone has thanked us for it. Why would they when you look at the human cost and the suffering from being a war zone that continues for the rest of their lives?
Due to Heir Hillary Clinton’s former guidance, we are still trying to effect regime change in Syria where we will also only wind up with a power vacuum we have to endlessly police. We also had a dictator who had decided to play nice with us in Libya, so we helped kill him under Pillary’s guidance and used our embassy in Bengazi to headquarter the effort, making it a legitimate war target. And we busted relationships with Russia by backing a coup in Ukraine. (Trump is still fighting Hillary’s Wars.)
Do I feel safer because Gaddafi is gone? Not a bit. He wasn’t bothering me any. Will I feel safer if Assad is gone? Of course not. He’s never threatened me. Do I like either of them? Of course not, but they are not my problem; and I’m not willing to spend our national treasure getting rid of them or my grandchildren’s blood. If you want to make America great again, don’t break it financially by fighting other people’s wars!
These things get full support by both parties in government because they make numerous corporations rich, which makes those corporations’ corporate bankers rich, too. That is the “military-industrial complex.” And the MIC owns Donald Trump! Why else do you think he has put top brass in charge of all national security offices in the land AND in charge of running his cabinet as chief of staff — the second-most powerful office in the White House, arguably more powerful than the Vice President.
These wars also give power to Socialist revolution just as we saw in the 60s because of Vietnam — a place now long under Communist rule that has become so much better than it was in the 60s because we left. It’s nice enough now under Communist rule that Trump just went on retreat there, and that Communist rule has on its own (just as in China) evolved more toward Capitalism without war trying to force it to go that way. It’s evolved in that direction because that is what works!
This is just a starter list
Until there is a real end to the entrenched greed that always looks out first for the rich — even at the cost of the lives of the poor all over the world — a Socialist revolution is going to grow. I don’t see any successful battle against that corporate greed happening by those who consider themselves Capitalists, so the Socialist revolution I described in my last article isn’t going away. On the contrary, it is gaining power rapidly and has lots of fuel firing it up. Because it is growing in dominance in our global economic discussion, I will be covering its many facets from time to time in future articles.
I find it unfortunate that our society is becoming more Socialist because we’ve chosen to save Capitalists from Capitalism, instead of saving Capitalism from Capitalist pigs. If we had actually let Capitalism work like it was supposed to a decade ago, a lot of dead wood would have been burned away, and a lot of people would have been reluctant to try such nonsense again. Socialism would not have so many footholds (justifications).
We need to regulate greedy behavior that we know is economically risky and punish it quickly because no system will survive human beings if human beings are not vigilant against human evil. The punishment needs to greatly exceed the rewards of greed by preferring prison to fines. Abject failure in that department gives Socialism plenty of room to argue.
Neither system is going to save us. Any system we agree to go by is going to require the majority of people being vigilant and active to save it from the minority who want to use it to abuse others for their own profit.
If you missed my first article in this series, you can read it here: “Socialist Revolution: The Price Capitalism Pays When Greed Goes Unrestrained.”