Tag: free market capitalism

Capitalism and Innovation

Innovation is at the heart of capitalism

We have been constantly told this for so long that it is now an assumption that has become an accepted fact. On the other hand, government is slow-footed, clumsy, bureaucratic, rule bound and the antithesis of innovative. This is the flip side of the capitalism is innovative story. One famously turned into a much quoted phrase by President Reagan, “Government is not the solution to our problem, it is the problem.”1

So, when you see this image  from the Charles Koch Institute you do not need to be too clever to know that this fits into this narrative.2  Markets drive innovation. Technology becomes more powerful and prices fall as products reach the mass market.

What does government have to do with these technologies?

The first satellite based phone call was made in 1962 featuring VP Johnson and the Chairman of AT&T Fred Kappel. NASA, a government agency put the satellite up and AT&T provided other parts of the technology. From today’s perspective this might appear to be a joint project between government and private industry. That would be a mistake. The AT&T of that time was a government regulated national behemoth that held a monopoly on telecommunications. Thus it did not suffer the risk aversion that makes it impossible for capitalist corporations to invest in projects that will not turn a profit within a few years at the outside.3

iPhone and the State

see Mazzucato, Mariana. The Entrepreneurial State, p 116.

Apple is one of our cultural darlings. Noted and notorious for its creativity and sense of style. But all of the basic technologies that they first applied to develop the iPod and then the iPhone are the fruits of government-funded research. LCD screens, click wheels, multi-touch screens, the internet, GPS, Siri, and more…..4

 

Risk and Capitalism

For all of the chest beating about the bold risks taken by capitalists, the capitalist time horizon is very short when compared to the many years of work that have gone into almost every significant scientific and technological advance. Without extensive government investment in activities that deliver longer term success, the capitalist system will simply eat its seed corn until it is gone. This is so not just for scientific and technological development, but also for education, health, environment, and infrastructure. Capitalism is not structured to fund any of these necessary activities without government action to protect these areas of human endeavor.

 

  1. 1st inaugural address 1983 []
  2. Unfortunately I have not been able to find the original page this appeared on. The original Koch website economicfreedom.org no longer exists []
  3. This is not to argue for the return of our telecommunications sector to this regulated monopoly or oligopoly state. The important fact is that AT&T was sufficiently protected from the short term quarter to quarter focus that now dominates the capitalist world that it maintained a national system of research labs, Bell Labs, that did much fundamental research. []
  4. see Mazzucato, Mariana. The Entrepreneurial State: Debunking Public vs. Private Sector Myths. Revised edition. New York, NY: PublicAffairs, 2015. []

Healthcare and Markets – why don’t they work together?

A consistent chattering point in American discussions of healthcare is the claim that if we can only bring transparency and competition to healthcare we will drive prices down and bring sanity to healthcare. The rest of the world knows that this is not the answer but we seem to remain in the thrall of universal free-market thinking.

To answer this question lets start with an example of a market that works reasonably well and which we all know very well. In our little patch here in Hudson we have four supermarkets within about a six mile radius servicing roughly 20 thousand people. I can choose to shop at Price Chopper, ShopRight, Hannafords, or Walmart. There are also farmer’s markets and roadside stands. I have lots of suppliers to choose from. Generally I shop at two places, but I certainly stop at all of them with some frequency. When I step inside I regularly pick up the green and red peppers, the onions, and other vegetables that I like to chop up for my cooking. Now, I do not hold a degree from CIA (Culinary Institute of America) so I am not exactly expert, but I generally can identify a fresh vegetable when I see one. Unlike some Presidents I do know how much things generally cost and there are price points for green peppers, for example, that reduce how many I pick up from three or four to one or none.

So,  a functioning market has a number of suppliers (sellers) and lots of buyers. The product for sale is understood by the buyers and they can examine it for quality readily. Prices move up and down in reaction to supply and demand. Market capitalism in action.

Health is not a green pepper

Health is complex and above all it is about life and death of the buyer, me and you. It is inherently emotional. Generally, people will do whatever is necessary to avoid pain and discomfort. This is not a choice between green and yellow peppers. Further, diagnosis and treatment options require many years of advanced education and training to understand. It is simply not true, and never will be true, that people without this training can make well informed decisions about which treatment path to take. Then, unlike our supermarket example, here in Hudson there is one supplier of health services, Columbia Memorial Health, the local hospital. To choose a different supplier I can drive an hour north to Albany or 45 minutes south to Rhinebeck. Even in Boston where I lived for many years, the choices were broader but then I was faced with the fact that the appearance of choice confronted me with my lack of expertise to make a well informed optimal decision. Health is not green peppers. Doctors and hospitals are not grocery stores. I did not graduate from Harvard Medical School.

Fee for services not for health – perverse incentives in action

In reality our market based healthcare system operates just as one would expect given the imbalance of expertise and relative small number of suppliers.  The suppliers have enormous power and they are taking advantage of the buyers, us. They set the prices as they wish. Through historical accident we have added a mixture of government and private insurance that obscures what is going on. Worse, this market is not selling health at all. In a self-enriching cycle, the doctors and hospitals are incentivized to use as many tests, procedures, and prescriptions as possible. They are paid for these; not for health. This is the pay for service model.

Every other developed country in the world understands all of this very well and has for decades. Each country has evolved systems to establish a national or regional budget per capita for health. This is done in negotiations between the government, other stakeholders, and the medical providers. The providers are expected to deliver health. Markets and profits enter, if at all, only peripherally. It is up to them to determine how many tests, procedures and drugs to prescribe. They can decide that preventive medicine is more effective than costly technology intensive treatment. They  optimize the mix.

The proof is in the pudding

Here are a set of facts that speak loudly to both the cost and poor quality of the American healthcare system. The US spends $9,800 per capita on healthcare. Our developed country cohort spends approximately one half of that (excepting Switzerland the outlier at approximately 70% of our spending). These countries all achieve a life expectancy between 81 and 83 years while the US is at 79 years. This numerically small gap in fact represents a very significant gap in performance. According to the most recent CIA World Factbook: “The US ranks 56th in infant mortality out of 225 countries; 48th in maternal mortality out of 184; and 42nd in life expectancy at birth out of 224.“ These facts should outrage all Americans.

Click for large size.

The Democratic Party and Healthcare – Preserving Obamacare Cannot Be The End Game

While our current attention is on the Republican Party’s transfer of wealth to the rich and corporations through the charade of a healthcare reform, the Democratic Party needs to face up to its future and the future of our healthcare system in particular.

The Global Context

The chart shown here tells you everything you need to know about the outrageous amounts of money we pay versus the astonishingly poor outcomes for our health. Basically we pay twice (200% more) than almost every other developed country in the world for healthcare that is distinctly second rate.1 To put it simply we have a healthcare system that is ripping us off and laughing all the way to the golf course. It is a market system that incentivizes tests, procedures, and prescriptions, not health. It is a market system in which the providers, doctors, hospitals, insurance and pharmaceutical companies set prices as they wish.  Our healthcare system consumes just shy of 20% of our economic output. Our developed country competitors use 8%-10% of their output.

click for large size.

Preserving Obamacare is not enough to bridge these gaps.

Obamacare addresses the lack of access to healthcare in a significant but hardly comprehensive manner. It only hints at changes to the incentives and pricing that drive the unhealthy outcomes. Obamacare is not the solution. Better than nothing, but given the enormous resources being spent and the fundamental failings of the outcomes it is not sufficient.

Health Not Profits

In order to create a world class healthcare system we need to focus it on health not profits. Every other developed country long ago recognized that a market based system would not work because health is not a commodity like corn, cars, or cell phones. It is complex, multi-dimensional, and emotional. It requires a system capable of a holistic approach to people and the society they live in. Each of the countries with universal healthcare approaches implementation very differently in the details, but all have some sort of national/regional health budget that is negotiated with the various constituents. This amounts to a lump sum per person with which the health system operates to deliver health outcomes. The proof that it works is in the chart above. 

Outrage and Political Will – Stop Taking Big Money from the Rich and Corporations

The Democratic Party must absorb the reality of our situation. We need to develop and express some outrage at the current healthcare providers. It will not be a simple task to bring a sector of the economy that consumes nearly a fifth of economic output to understand that we cannot allow this to continue. We need them to evolve to a system that consumes a tenth while vastly improving healthcare for the entire population. A basic truth here is that we as a society cannot and should not allow one sector to consume so many resources, so inequitably, for such poor outcomes. In the global context this is not sustainable and makes us less competitive and less flexible to meet the changes. 

None of this will happen as long as Democrats are taking money from the rich and corporations. If there is a single lesson from the Bernie Sanders campaign it is that with messages and programs that reflect the needs of the vast majority of Americans, you can raise enough money to fight off the Republican Party and its wealthy and corporate sponsors. Time to start now.

  1. The US ranks 56th in infant mortality out of 225 countries; 48th in maternal mortality out of 184; and 42nd in life expectancy at birth out of 224. – source Current CIA The World Factbook – https://www.cia.gov/library/publications/the-world-factbook/ accessed 5/13/2017 []

Neoliberalism Revisited

A return to a topic first posted 2/10/2017.

Neoliberalism – a term that needs never to be used

February 10, 2017

Dollars and Sense has been around since the 1970s. Always a source of well researched critiques of capitalism. I recently, after a more than 30 year hiatus, re-upped a subscription.

Dear Dollars & Sense,

Your new issue showed up the other day with the word “neoliberalism” in bold type on the cover. The continuing use of this term is not helpful. When I first saw this word a few years ago I wondered how the word “liberal” and “neoliberal” are connected? Then, I remembered the little I can recall about 19th century European political philosophy. Oh, its that liberalism that is new!

Really, outside of academic circles no one knows what this word means. Most in my circle find it off-putting, obscure and boring.

Free Market Religion

I prefer to refer to this ideology as “free market religion”. “Free market” is a widely used term as in “free market capitalism”. And “religion” gets across the fact that this is a counter-factual pile of BS.

If you don’t like my term, come up with something better. Please stop using “neoliberalism”.

A Reply from D&S

2/22/2017 – Chris Sturr commented on New Issue!.

in response to Mark Orton:

……

Mark, this is something that we struggle with, but we have over the years decided that it is more important to call our current economic system by the name that left economists have tended to use. You’re right that its origins are academic, but other mainstream publications have been using it more and more (for example, The Guardian, Salon, Jacobin, and (as far back as 1990) The American Prospect.

Dollars & Sense authors have been using (and carefully defining) the term “neoliberalism” for years now (most recently in David Kotz’s two-part piece on the crisis of neoliberalism (here, but for years before that). We do try to explain the term whenever we use it.

Sasha Breger Bush’s cover story makes a careful argument that Trump’s economic policies do not signal an end to the free-market, anti-government policies of the neoliberal era, but do signal the end to its globalist orientation. She’s proposing that if he gets his way we will be entering a different economic regime, and she gives it the name “national neoliberalism.” It’s a bold and thought-provoking analysis and we wanted to use her new term on the cover. We recognize that downsides, but we think our readers are familiar enough with the term and those who aren’t will read on to see what it means.

You suggest calling neoliberalism “free-market religion” (which reminds me of Bill Black’s term “theoclassical economics”–see for example here). I think that works when “neoliberalism” refers to free-market ideology. But “neoliberalism” also refers to an economic system that results after years of policy justified by free-market ideology. You’re right that the ideology is BS, and the economic set-up that results from years of “free-market” ideology is not really characterized by “free-markets” (as Breger Bush show’s, it’s just as much about corporate capture of government to promote ruling-class interests at the expense of everyone else). But the system itself is not BS and it deserves a non-pejorative name. The name that left economists have come up for it is “neoliberalism.”

Anyhow, you are surely right that it is offputting to some people, and that’s why we’ve struggled with whether to use the term. But we think the value of getting people familiar with the name of the economic system we’ve been living under outweighs the downsides of using the term. Your comment is a reminder that we need to do better about explaining what we (and left economists) mean by the term.

A Further Thought

This is of course an interesting addition to my knowledge of the thinking at D&S about the language they employ. But, even this discussion further supports my conviction that we need to develop a more robust accessible language to use in public discourse about one of the most important issues of our time. I am quite certain that the readership of D&S is not confused or put off by the term “neoliberalism”.

The audience of my concern is the average American who has been subjected to a sustained campaign of free-market thinking from the Republicans, most Democrats, the mass media, corporations, the academy…..not to mention Wall St. for the past 40 years. If we want to offer an alternative analysis we need direct language that does not refer to thinking and issues from 150 years ago that invites immediate suspicions that those speaking are academics and intellectuals who by definition are not connected to the day-to-day realities of American life.

Delusions: free-market ideology (neoliberalism) – the posts

Capitalism and Innovation
July 5, 2017

For all of the chest beating about the bold risks taken by capitalists, the capitalist time horizon is very short when compared to the many years of work that have gone into almost every significant scientific and technological advance. Without extensive government investment in activities that deliver longer term success, the capitalist system will simply eat its seed corn until it is gone.

Read more →
Healthcare and Markets – why don’t they work together?
June 26, 2017

A consistent chattering point in American discussions of healthcare is the claim that if we can only bring transparency and competition to healthcare we will drive prices down and bring sanity to healthcare. The rest of the world knows that this is not the answer but we seem to remain in the thrall of universal free-market thinking. To answer this question lets start with an example of a market that…

Read more →
Trickle-Down Returns to Enrich the Rich
June 24, 2017

You need to be clear that the vicious Republican Party is at work on tax changes for their masters among the rich and corporations. There job is making sure that the 40 year stagnation in incomes for the 80% will not change course and the flood of wealth will continue to those at the top. 

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The Environment, Trump, Koch Brothers & Big Money
June 5, 2017

The now publicly visible campaign by the Koch brothers and many others to make their decade’s long campaign to deny climate change bear new fruit in public policy. More evidence that the plutocrats are now so secure in their control over our politics and the government that they can come out of the shadows and rule directly through Trump.

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Neoliberalism Revisited
June 3, 2017

If we want to offer an alternative analysis we need direct language that does not refer to thinking and issues from 150 years ago that invites immediate suspicions that those speaking are academics and intellectuals who by definition are not connected to the day-to-day realities of American life.

Read more →
Naive Talk about Healthcare from Adam Davidson in the New Yorker
May 25, 2017

The solution to our healthcare problems cannot be clearer. Look at Canada, Germany, France, Japan, Australia, Netherlands, UK, Denmark, Sweden, and others. Plenty of healthcare systems with decades of operational experience producing much better outcomes for very single person in these countries at less than half the cost!!

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The Global Context of the US Healthcare Debate
May 14, 2017

The solution to our healthcare fiasco is first to recognize its true nature and then to face down those who are consuming a fifth of our economic output while producing profoundly bad results.

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Regulations vs Protections – more than just words
May 7, 2017

The word “regulation” has been used as an epithet and rhetorical sledge hammer by Republicans and the centrist Bill Clinton Democrats as part of a general campaign to discredit anything that the government might do. This is part of the decades long political strategy of the rich and corporations to puff up the delights of “free markets”.

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Dumping Concrete: a law of capitalism In action – a local example
May 6, 2017

Thanks to GossipsOfRivertown for the image. The May 3rd post “Unbelievable” on our favorite local blog GossipsOfRivertown.blogspot.com caught our attention. This F.H.Stickles concrete truck dumping waste concrete next to a stream running into the Hudson River is a local demonstration of one of the central laws of capitalism. For more pictures of this incident go here. Every company seeks to get someone else to pay for as many of its…

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United Airlines, Monopoly/Oligopoly, The Natural Laws of Capitalism
April 17, 2017

From: http://newyork.cbslocal.com/2017/04/15/united-airlines-new-policy/ The recent incident in which United Airlines used the Chicago Police Department to enforce its corporate policies has already roused plenty of comments. Many have focused on the clumsiness, even callousness of the policy and its later justifications by senior managers. This is missing a more telling point about airline travel today. In the US four airlines control over 80%1 of the seats…

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Building the New American Economy – Not
April 5, 2017

The title of this short book, only 130 pages, Building the New American Economy: smart, fair, & sustainable by Jeffrey D. Sachs with a foreword by Bernie Sanders (Columbia University Press, 2017) is unfortunately misleading. There is much here about the new economy. The misleading part is that there is very little about its construction, the building of the new economy. Sachs covers many important issues in a thorough, efficient…

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BEHEMOTH (BEI XI MO SHOU) at TSL Hudson
March 4, 2017

This 2015 movie by Chinese director Liang Zhao is filled with great cinematography and sounds. It trades back and forth between scenes of enormous horizon gulping coal mines, under ground mines, iron making, and ends with scenes of a ghost city filled with enormous apartment blocks in a newly developed but vacant city West of Beijing. But, the most arresting part of the movie is its focus on the workers,…

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Job (Business) Killing Regulations
March 2, 2017

Ever since Ronald Reagan told us in his 1981 Inaugural Address, “Government is not the solution to our problem; government is the problem.” government bashing by right-wingers, Republicans and many Democrats has been a constant drumbeat of political rhetoric. Now we have Trump with his “Kill 2 regulations for every new one” and a government dominated by Republicans for whom destroying government has been an objective for decades. We are…

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The Internet and Demand Management (Advertising)
March 1, 2017

My friend Joe Keenan recently sent me an article by Vicki Boykis, “Fix the internet by writing good stuff and being nice to people” from her blog Woman.Legend.Blog.  Today’s internet is mean. It’s hard to pinpoint exactly when everyone online became a jerk, but to me it seems that the tipping point occurred right when making money off content started being worth more than the content itself. Ms. Boykis devotes…

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Neoliberalism – a term that needs never to be used – Updated
February 10, 2017

Dollars and Sense has been around since the 1970s. Always a source of well researched critiques of capitalism. I recently, after a more than 30 year hiatus, re-upped a subscription. Dear Dollars & Sense, Your new issue showed up the other day with the word “neoliberalism” in bold type on the cover. The continuing use of this term is not helpful. When I first saw this word a few years…

Read more →
Talk Back: Correcting the Anti-Government Bias of Our Politics
January 29, 2017

President Reagan was not the originator of this central trope of free-market (neo-liberal) politics, but he famously said in his first Inaugural Address in 1981, “Government is not the solution to our problem; government is the problem.” President Clinton, a Democrat, continued this theme during his terms culminating the the deregulation of the financial industry in 1999 setting the table for the collapse of 2008 and the Long Recession. Listening…

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The Gig Economy in the Academy – a note
December 29, 2016

The values of capitalism, especially as expressed through free market (neoliberal) ideology, have come to dominate how we organize our lives. Silicon Valley and the tech sector is busy celebrating the “gig” economy. Companies have simply stopped hiring employees and now conduct much of their work using “temps”, “1099ers”, part-time contract workers. The companies, and the champions of free markets, tout this as a wonder of flexibility and opportunity. For…

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A Note on Jobs & Unemployment
December 27, 2016

As the presidential campaign of 2016 fades away and the Trump Era begins, we find a national scene without any real discussion of the facts of jobs and unemployment and what the future might bring. Trump and others talk about bringing manufacturing back to the US. No plan, plausible or otherwise, has ever been mentioned for how to accomplish this. The Democrat are hardly better. Much has been made and…

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“Liberal”, “Progressive”, “Free Market”, “NeoLiberal” – what’s up?
November 15, 2016

A friend asked the following question of me on Facebook the other day:What’s wrong with the word LIBERAL …. This word … progressives … is only a diluted weak solution of the real thing …. the L word has become like the N word … it can’t be mouthed in public. I know what Liberal means I don’t have a clue what progressive means … you’d think Neoliberal has some…

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Inside Goldman Sachs with the Federal Reserve
September 27, 2014

Since the beginning of the 2008 Great Recession we have hoped that the government would return to applying some real rational restraints on the financial system. To be honest, with both political parties deep in the pocket of the industry, this is probably merely wishful thinking.

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Flash Boys cover by Michael Lewis
Flash Boys Doesn’t Ask the Important Question
April 7, 2014

We should demand that our financial markets serve their findamental purposes – connect investors with those who can deploy those resources to create new products and services and enable the flow of these goods and services. To call holding financial insturments whether stocks, bonds, or other assets for mere seconds investments is to beggar the mind.

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playing cards
Wall St – not about investing but fixing the game
July 9, 2013

photo courtesy of Chance Agrella, photographer An article in the NY TImes today reports2 that NY Attorney General Schneiderman is pursuing various information providers, Thomson Reuters in the immediate case, for their practices of selling market sensitive information preferntially. Those paying a premium get information several minutes before its release to the general public. This is more evidence that Wall St…

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The Job Creators – Who Are They? The Rich, Really?
May 19, 2012

In recent years a standard bit of political rhetoric in the US has included references to “the job creators”. This most usually  flows along the lines of higher taxes on the wealthy will injure the job creators. Or, government regulation is crushing the job creators. The presumption of course is that the wealthy, the 1% in the current rhetoric, create jobs (and those not created by the wealthy are created by small…

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Economic Inequality – Does It Matter?
May 9, 2012

It is fairly widely known that income and wealth inequality in the US is as high or higher than at any time except perhaps the Robber Baron period at the end of the 19th century. Lots of articles and books explain how this has come about over the last 30 years. In a recent NYTimes Magazine article, “The Purpose of Spectacular Wealth, According to a Spectacularly Wealthy Guy” by Adam Davidson, we…

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High Frequency Trading and Deeper Questions about Capitalism
March 27, 2012

A recent PBS Newshour report by Paul Solman on Thursday 3/15/12 in his series “Making Sense of Financial News” gave pause concerning the role of high frequency traders (HFT) on Wall St. (and doubtless on other markets around the world). First, you might ask what are HFTs? These are traders who use computer-based algorithms to select, buy, and sell shares on the markets. The speed of these transactions and the…

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Charts from Mother Jones Illustrate That the Rich Have Won the Class War
November 19, 2011

I came on a set of graphics in Mother Jones, “It’s the Inequality, Stupid: Eleven charts that explain what’s wrong with America” that illustrate what you probably already know. But, a simple refresher course in some of the reasons why the rich are rich. The 99% already have this base covered. Here are some of the charts I liked. Read the whole article at the Mother Jones website. Income (constant dollars) Note that if median family…

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Naomi Wolf’s The End of America – the movie
May 27, 2011

The End of America – a film by Annie Sundberg and Ricki Stern Here is a summary3 of the ten steps discussed and illustrated by Ms. Wolf in the movie. 10 STEPS THAT CLOSE AN OPEN SOCIETY 1. invoke an internal and external threatPeople who are afraid are willing to do things that they wouldn’t otherwise do. 2. establish secret (unaccountable) prisons where torture takes…

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Corporations as Persons – Freedom of Speech, now Right to Privacy – Bring on Three Strikes!
January 20, 2011

The case of the Federal Communications Commission v. AT&T4 now being heard before the US Supreme Court raises anew the craziness of the thinking that has position corporations to be “persons” in the first place. Noun vs Adjective! First we have several of the justices focusing argument around the difference between “persons”…

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Money floating around
Religious Doubt Spreads – Free Flows of Capital Seen as Dangerous to Some
November 12, 2010

There is more evidence that the current run of religious mania about “free markets” is finally giving way to a more fact-based approach to this important human invention, many countries are now applying capital controls on the flow of monies into  their economies. The world flood of money seeking higher rent districts is terrorizing smaller economies like a tsunami. Fears of speculative bubbles burgeoning and then bursting with disastrous consequences for local economies are…

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The Mortgage Debacle – Redux
October 10, 2010

The current tsunami of revelations of misbehavior, if not outright criminality, by the banking industry in their pursuit of mortgages gone bad, is further evidence of how fundamentally corrupt and cynical this industry continues to be. On the front end of this global economic disaster the financial system engaged in misleading sales tactics using financial products that were baroque in their complexities. Aided by governments seduced by the siren songs of free market…

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Krugman Asleep at the Wheel of History ….. the elite has not been interested for forty years…
August 2, 2010

The August 1st New York Times carries the latest Paul Krugman opinion piece, “Defining Prosperity Down”. He is depressed because it is dawning on him that the elite is in the process of redefining the level of structural unemployment that is normal to adjust to the significant likelihood that we will be living with 9%+unemployment on into the future. Where has Krugman been? He is old enough to remember that…

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Free Markets – free? markets? – lessons not learned
June 6, 2010

“Free market” has always struck me as a rather strange phrase. Never more so than in this period of financial market disasters. The phrase ‘free market’ continues to be used reflexively. Just as commentators go right on speaking of Wall St. as a source of capital and innovation, few want to ask out loud why we need most of  Wall St.’s “services”; few people are openly using the most obvious words to…

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Do We Need Wall St. and all the other gamblers in the financial services world?
April 20, 2010

What Is the Function of Wall St.? The global financial meltdown of 2008 – 2009 with its ongoing sequelae seems not to have definitively demonstrated the dangers of our continuing belief in the religion of “free markets” nor shaken, especially it seems in the Obama administration, our thrall with Wall St. and all things financial. We are seeing the combined effects of Wall St.’s funding of the Democrats and Republicans,…

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How Did We Come To Consider Corporations to Be Natural Persons? – What To Do Next?
January 25, 2010

This week’s decision by the US Supreme Court to allow corporations, including unions, to hold full rights to free speech and political action under the First Amendment to the Constitution once again reminds me of the strange practical and ethical relationship we have with corporations. In the 1886 ruling, Santa Clara County v. Southern Pacific Railroad Company1, the court reporter wrote in a summary: “The court does not wish to…

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Controlling Gambling by Wall St. and the Big Banks – Bad for Business?
January 22, 2010

Anti-Wall St Does Not Mean Anti-Business President Obama’s proposals to break up the “too large to fail” mega banks and otherwise reapply the Glass Steagall Act to the financial sector has predictably brought loud complaints that this is populist and anti-business. Even the rhetoric of the reporters and expert talking heads reflects a general bias that anything that we might do to prevent a re-occurrence of last year’s global financial…

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Manias,Panics,and Crashes by Kindleberger
Book Review: Manias, Panics, and Crashes: a history of financial crises by Kindleberger
November 13, 2009

Manias, Panics, and Crashes: a history of financial crises, fourth edition by Charles P. Kindleberger (New York: Wiley 2000) A recent Wall St Journal article described this book as a “must read” classic for anyone involved in financial markets. I have been involved directly in financial markets in two ways recently. First, I spent a year chasing around chasing angel investors and venture capitalists during the DotCom boom to fund Valuedge…

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Just Another Cost of Doing Business? – Pfizer’s $2.3 billion penalty and fine
September 4, 2009

Is $2.3 billion really a lot of money? The Obama administration is touting the action taken this week against Pfizer for illegal promotion of several of its drugs. The $2.3 billion sounds like a lot of money to me, and I suspect most people. Is it really a lot of money or just an annoyance to a large company, just another cost of doing business? Take a look at Pfizer’s…

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Enron, Trust and Malfeasance
January 29, 2002

January 23, 2002 (revised 1/29/02) The collapse of energy giant Enron over the last six months has produced a surprising level of outrage especially for a cynic like me. As this drama continues to unfold, I have been trying to understand how Enron structured their business and made money. Until just last night I was operating on the belief that the cleverness and sophistication of Enron’s managers simply outstripped my…

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  1. corrected from 60% on 4/20/17 []
  2. Regulators Examining Early Sales of Financial Data http://nyti.ms/12hDF3t []
  3. from the endofamericamovie.com website – 05/27/2011 []
  4. See the NYTimes,  “Court Weighs Whether Corporations Have Personal Privacy Rights” By ADAM LIPTAK Published: January 19, 201 []

Delusions of American Life

Delusion – fixed false belief that is resistant to reason or confrontation with actual fact.

Every society creates delusions, myths and stories, that explain where it came from and how it works. These are so engrained in the culture that they form a central base for how members interpret their relationship to the environment and to family, neighbors, and society at large. These delusions are taught to us by our parents, extended families, schools, religions, government, and corporations. Mass media reinforce them continuously. The rich and corporations understand this quite well and seek to exploit our need to understand our place in society and how that society works. They support and, as required create, delusions that shield or justify their activities and the gains from those activities.

This series, Delusions of American Life, seeks to describe important delusions, contrast them with the facts surrounding them and explore how these delusions fit into a pattern that sustains the organization of our society in its present form.

Free-market capitalism (neoliberalism) is at the center of our delusions

The free-market (neoliberal) ideology has dominated every aspect of American life for the past 40 years and more. It is a truly global ideology that is supported by global corporate and financial interests, implemented by many governments, some at the direction of local government and in many other cases driven by World Bank and other financial institutions’ policies.The mass media and education system reinforce free-market thinking in a comprehensive manner. Our culture is interpenetrated by the underlying concepts and rhetoric. 

Therefore we start with this topic and recommend it to you. Understanding what the claims of free-market capitalism are and developing a critical point of view will arm you for many of the other topics.

The Delusions

Included are discussions of the following topics (many forthcoming):

  • Free Market (Neoliberal) Ideology
  • US Economy – structure and results
  • Education
  • Environment
  • American Empire
  • The Family
  • Healthcare
  • Infrastructure
  • Justice and the Judicial System – Incarcerated America and the War on Drugs
  • Political System – big money – big dysfunction
  • Racism
  • Security State

The Global Context of the US Healthcare Debate

The solution to our healthcare fiasco is first to recognize its true nature and then to face down those who are consuming a fifth of our economic output while producing profoundly bad results. We need to take a much broader view in order to see that, compared to the rest of the developed countries, a) our current healthcare results are abysmal and b) our current healthcare costs are obscene.

Regulations vs Protections – more than just words

In a recent stream of comments about a post in GossipsOfRivertown, “More about Dumped Cement” Virginia Martin wrote to me: 

Mark Orton said “This is why we have government regulations.” Linguist George Lakoff would say the term “regulations” is ill-considered. He’d say they’re protections. This is why we have government protections.

I thanked Virginia for pointing this out and promised to try out “protections” in place of “regulations”. The word “regulation” has been used as an epithet and rhetorical sledge hammer by Republicans and the centrist Bill Clinton Democrats as part of a general campaign to discredit anything that the government might do. This is part of the decades long political strategy of the rich and corporations to puff up the delights of “free markets”.1 One might wonder what word we might use in place of “de-regulation” ? De-protect? Un-protect? Deregulation is so often projected as inherently a positive action yet that is hardly so. There is a parallel with the current efforts by the Republicans to “reform” health care laws.

The story of government regulation is complicated by the way in which the rich and corporations have come to dominate the writing of regulations.

  1. Here we are avoiding another word, “neoliberal” that most academics and political wonks use to describe the ideology of Thatcher, Reagan, and Clinton. The first time I came across this word I was totally confused. Liberal meant Roosevelt, unions, public education, etc. Then I realized that “liberal” in “neoliberal” referred to the use of that term as applied to 19th century liberals like Locke, Mill, Bentham and so on. Small government, maximum individual freedom thinkers. []

Dumping Concrete: a law of capitalism In action – a local example

Thanks to GossipsOfRivertown for the image.

The May 3rd post “Unbelievable” on our favorite local blog GossipsOfRivertown.blogspot.com caught our attention. This F.H.Stickles concrete truck dumping waste concrete next to a stream running into the Hudson River is a local demonstration of one of the central laws of capitalism.

For more pictures of this incident go here.

Every company seeks to get someone else to pay for as many of its costs of doing business as possible. The laws of capitalism require this. If all of Stickles’ competitors are similarly avoiding the costs of disposing of their waste concrete they must do likewise. Otherwise their cost of doing business would be higher. In the short term their profits will be lower. In the longer term they will be forced out of business because they will have to charge higher prices. This is so regardless of the moral values or sense of community of the owners of F.H.Stickles. This how capitalism works.

Building the New American Economy – Not

The title of this short book, only 130 pages, Building the New American Economy: smart, fair, & sustainable by Jeffrey D. Sachs with a foreword by Bernie Sanders (Columbia University Press, 2017) is unfortunately misleading. There is much here about the new economy. The misleading part is that there is very little about its construction, the building of the new economy.

Sachs covers many important issues in a thorough, efficient fashion. If you need a primer or a tune up about the economy this is a good place to start. These include: investment in our society, infrastructure, Federal budget, income inequality, healthcare, energy, military and the empire (not his phrase), and innovation. If you have been reading my postings over the last 5 or so years much of this will seem a bit deja vu.