Wednesday, May 23, 2012

Our criminally bankrupt economic system

We've heard President Obama defending his campaign strategy to go after Romney's record at Bain Capital. He makes clear it's not capitalism or business per se to which he objects, just the kind of vulture capitalism in which Romney participates. Naturally the conservatives, unable to see nuance, shout that he's anti-business or anti-capitalism. But is the kind of capitalism Obama says he supports still in existence? And is his claim that private equity, whose goal is to maximize profits, truly "a healthy part of the free market?"

First off, recall Reich's expose on the nature of private equity investment with its profit-first motive. The money they use isn't their own, often coming from our pension or 401k funds. They do little to no due diligence with our money and have no legal repercussions if/when their investment goes bad, again leaving the people to pick up the dime. They drain companies of the money, fire employees, take their pensions and benefits and leave them loaded with debt so that they go bankrupt. And this is "a healthy part of the free market?" This is what private equity is. Perhaps it wasn't always this way, but the corrupt business/government loop has made this the rule rather than the exception.

But this is a specific example of a more general trend in big business, where lack of punishment for criminal behavior has led to a degenerate morality where money talks and to hell with the rest of society. All supported by corrupt government regulations, or rather lack thereof. When Obama says this might be morally wrong but not illegal it is because of his own complicity in not making it illegal, and deregulating what once was.

Charles Ferguson, who directed the film Inside Job, has a new book, Predator Nation, which he previews in this blog post. He documents this slide from heretofore legal criminality to merely immoral, and how such a slide only reinforces continued degeneration into blatant disregard for humanity. This is what big business has become, lock stock and barrel. Ferguson lays out countless specific examples on ongoing criminal behavior over a long period that goes unpunished. Well, financial slaps on the wrist in the form of fines totaling less than 1% of the profits corporations made on these crimes can hardly be called punishment. Please see the article, where he names names and gives the facts on these crimes, and how they are getting away with impunity.

I'd be glad to give back $100,000 after robbing a back for $1,000,000 instead of going to jail, having netted $900,000. Good deal. You think a bank would go for this deal when I rob them? Think again. Yet this is exactly what they are doing to the public but on a vast scale much, much larger than this. And this form of "punishment" only reinforces the behavior. Hence they continued lobbying to prevent a return to laws where this behavior would be illegal, again. Where they might have to return to the kind of responsible business practices of a bygone era, an era now just a figment of Obama's imagination when he talks of banks and corporations being "a healthy part of the free market." We'll never get there without criminal prosecution and reinstatement of reasonable regulation Mr. Obama, so quit dreaming and get to work.

1 comment:

  1. Paul Krugman notes this shift in business beginning in the 80s,* where greed was considered a good that drove prosperity for everyone, increased productivity and made us more competitive in world markets. Krugman shows the facts, which of course set straight these specious claims. Greed has resulted only in an increased disparity of income at the expense of the middle and lower classes. Period. And all from this sea change of greed, which changed the way business used to be.



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