Laissez Faire Capitalism: Except When It’s Not

Tom Tomorrow

In this heated season of GOP primaries, we hear, ad nauseum, about the virtues of “small government”, Adam Smith’s “invisible hand of the market”, and the almost holy power of “laissez faire economics”, which, in French, basically means “get the hell out.”  As in:  corporations are entirely capable of being self-regulating, both financially and ethically, and they don’t need no stinkin’ Feds looking over their shoulders.  For more elucidation on this sweet Fairy Tale, please see anything written by Ayn Rand.

What have been the results of deregulation in the past?  Let’s start with a familiar name – Leland Stanford – an infamous member of the Big Four (aka, “The Octopus”) which held a stranglehold on the nation’s transportation with their unabashed monopoly, The Southern Pacific Railroad.  It certainly gave Mr. Stanford enough money to endow a nice university in his name. And to earn the sobriquet “Robber Baron.”

Now onto the airlines.  You could say that prior to deregulation in 1978, fares were kept artificially high and the Friendly Skies loved it.  But what has happened since?  Nine major carriers have declared bankruptcy or are no more (including United, Delta, Braniff, American, Pan Am, Continental, and TWA).  The level of service has sunk beneath appalling – no food, baggage fees, potential carry on fees, seats that could barely hold a Hobbit, flight attendants who go postal due to increased layoffs and higher workloads.  Even pilots are having episodes mid-flight, and safety standards have inched down the inflatable slides.

Anyone remember Alaska Flight #261, which crashed into the Pacific because the jackscrew wasn’t properly greased?  I personally spent a fun-filled twelve hours in the Honolulu Airport (at least they had hula dancers) because my plane needed a new battery.  I didn’t realize it was like your car, where the AAA shows up with jumper cables.  Personally, I’d pay the higher pre-reg fares to get:  1) A decent meal (Alaska used to serve baked salmon!) 2) The peace of mind that some semblance of maintenance has taken place 3) A flight crew not collectively on the verge of a nervous breakdown.

Microsoft’s tech version of “laissez faire” was certainly unique.  Bill Gates, before his later, humbler period, was a hyper-aggressive bastard who either bought his competition or put them out of business.  Anyone remember Netscape?  At one point, they had the browser market sewn up.  Then Bill came along, bundling IE Explorer with Windows (which was at one time on 90% of desktops), and Netscape now occupies that place where FoxPro, Lotus 1-2-3 and WordPerfect gently sleep.  Of course, billg. and crony steveb. attained that market share by forcing PC makers to bundle their machines with Windows, or else.  Clinton’s DOJ brought this to the fore, and Microsoft was saved from breakup by the reign of King George W. Still, they must now abide by what are frequently known as rules.

Let’s look at the precursor to this Great Recession, one brought about by exactly the same factors:  deregulation, massive fraud, and greed.  In the 80’s, it was decided by the Wise Powers in Congress that Savings & Loans could now make risky real estate loans without undue supervision.  Why, they could even lend money to themselves!  This brought about the failure of 747 S&L’s.  Total cost of bailout?  A mere 87.9 billion. [1]  Those involved in one of the biggest financial scandals in US history?[2]  A certain Neil Bush (yes, from those Bushes) whose fraud was so great that he was forever barred from the banking industry; a Senator John McCain (one of the “Keating Five”), and a certain astronaut/Senator named John Glenn.  You will be happy to know, though, that the average sentence for those S&L execs who went to jail was 1/5th that of the average bank robber.[3]  Here’s another foreign phrase which should always appear next to laissez faire:  Caveat Emptor (“Let The Buyer Beware”).

Which brings us to these Modern Times.  Was it really just 2001 when Enron finally imploded?  Doesn’t that scandal seem almost quaint in the wake of 2008?  Due to greed, corruption, stupidity, and greed, the US economy tanked due to the implosion of the real estate market, subprime lending, and Wall Street’s unfailing knack for creating something (to be securitized) out of nothing.  The result?  Then-Treasury Secretary Henry Paulson going on bended knee before Congress, begging for a $700 billion bailout of “too big to fail” companies.  You may have heard of some of them:  Wells Fargo, B of A, CityBank, JP Morgan Chase, Goldman Sachs, Morgan Stanley, AIG, AMEX, Discover.

Oh yeah – GM and Chrysler.  Now, in the harsh land of Capitalism where workers can be decapitated – uh, downsized – by the thousands, to increase profits and offshoring, the Feds suddenly felt sorry for the automakers (they are after all, people), and kept them from closing their massive doors.  In the theoretical realm of laissez faire, their failure would have happened (Hey, they couldn’t compete, they stayed too long with SUVS, boo hoo).  Exactly the rhetoric that the Newts and Mitts spout every day.  However, in the real world, the results would have been disastrous:  thousands more losing their jobs; the death of two great American icons; the death of a U.S. city; stowaways in allied industries going down with the ship, no more Camaros, ever.  This simply could not be.

TARP put to the lie forever laissez faire as a consistent economic policy.  America will not let Coke go out – nor Disney, GM and Chrysler.  Who would sponsor the next Olympics?  The funny part is the attitude of the bailed-out execs themselves:  they are all for hands-off  government when it comes to things like safety and profits.  But the moment they risk going under, they accept corporate welfare with more eagerness than Ismay stepping into that lifeboat.  And unlike actual welfare recipients, they aren’t required to work for it.  In fact, the more they mismanage their business, the more cash (and bonuses) they’re awarded. Talk about failing upward.

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Why The Rich Have Less Empathy Than You Or Me

Recently, scientists conducted a series of twelve experiments, and discovered something that didn’t exactly knock me off my chair:  rich people have less empathy than you or me!  We 99% “…just show more empathy, more prosocial behavior, more compassion, no matter how you look at it.”[1]  Put another way, “upper-class rank perceptions trigger a focus away from the context toward the self….”[2]

In other words, most rich people are selfish bastards.  While watching a video about children with cancer: “The results of the study showed that participants on the lower end of the spectrum, with less income and education, were more likely to report feeling compassion while watching… In addition, their heart rates slowed down…—a response that is associated with paying greater attention to the feelings and motivations of others.”[3]

This lack of feeling toward others manifests itself in interesting ways:  luxury car drivers are far more likely to cut off other drivers or speed past pedestrians who are trying to cross.[4]  Believe me, I know.  I grew up in Encino, a wealthy L.A. enclave, and back then, it was the Cadillac drivers you had to look out for.  Now, the Asshole Awards go to those in Beamers, Benzes, and Lexii.  I can’t tell you how many times these One Percenters have given me the virtual finger, not letting me in and cutting me off as if spending $80k on a vehicle presumes some Constitutional right.  To them (and I mean this in the nicest way possible): I hope you’re pitchforked by demons in Hell.

It’s been determined that members of the upper class have a harder time reading people’s emotions.  “Upper-class people, in spite of all their advantages, suffer empathy deficits,” says Dr. Keltner, one of the scientists. “And there are enormous consequences.” [5]  When everyone is kissing your ass twenty-four hours a day; when you never hear that one little word, “No”; when the world is there to do your bidding and you are its  Creator,  why should you care what anyone thinks?  Wealth is a license for ill.

In one of the experiments, Dr. Keltner found that less affluent individuals are more likely to report feeling compassion towards others on a regular basis. For example, they are more likely to agree with statements such as, “I often notice people who need help,” and “It’s important to take care of people who are vulnerable.”[6]  How many times have you seen an Armani-clad exec clamber out of his Porsche and offer money to the homeless?  I thought so.  No, it’s usually people like you and me (struggling to emerge from my crumbling Saturn) because we can relate:  there but for the grace of God. . .

Which brings us to this chicken-and-egg question:  do people get rich because they are selfish, or do they become selfish after they get rich?  I think the answer is Yes, and Yes.  The desire to amass large stores of cash stems from an essentially “Me”-centric philosophy.  Expressed as: screw everyone else, I am going to get mine.  After you have the mansion and the Ferrari, the Trophy Wife and Robot Kids, why not toss some of that lucre toward the less fortunate:  the sick, the aged, the homeless?  Bill Gates finally ended up doing good, but it took decades (and perhaps Melinda?) to loosen the hand on his wallet.

Other philanthropists come from strange industrial backgrounds.  It was not until after Andrew Carnegie had his workers killed by Pinkertons that he built all those lovely libraries.  Henry Ford installed secret police in his plant before creating the Foundation that led to the genesis of Sesame Street.

Personal philanthropy makes the rich shudder.  They would rather see their mother on the street than give one penny of aid.   And when they do give, it comes with so many strictures and recriminations, so much judging and begrudging, that that mother ends up wishing she’d just signed up for a homeless shelter instead.

The rich make Silas Marner look like Legs Diamond.  Because they can’t relate to The Rest Of Us, they give paltry tips and miserly gifts.  Yet to themselves, they never fail to be generous.  In their minds, they deserve their wealth, and luck plays absolutely no part in it.[7]  Not the trust fund left by mommy and daddy.  Not the “lift all boats” family member who invents ketchup or opens a steel mill in China.  Not the ex who happens to be Steven Spielberg.

There is an enormous disconnect between those cutting you off in their Benzes and you.  Even if the One Percent started off poor, they will do everything to cast off the past, the jettisoned cargo including noses, names, and family.   It’s inconvenient to look at someone and realize they once knew you as Sophie Goldberg who worked at the A&P.  Far more glamorous to do the L.A. and pretend that life starts Now.  And the newfound friends – the ass-kissers – see only that which is fabulous and not the cold hard truth:  that this person has as much empathy as a toad.

Right now, 80% of America’s wealth is held by the top 20%. But if you ask these people, they will tell you that the distribution of wealth is equal .[8]    The good news (for them) is that they don’t concern themselves about starving children or the gravely ill.  This unpleasantness dwells far away, in remote lands where their workers live; or in poor neighborhoods which they never enter, but is where the Help is from.  Nice to know that our most powerful citizens (including Congress) essentially don’t give a damn.  That might explain the GOP.  It certainly explains The Romneys.

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Opiate Nation

American exceptionalism is defined by many factors, some of them not so great.  No one would point to the nation’s millions of illegal drug users and smile with civic pride.  Yet there is another increasingly unhidden addiction – to prescription painkillers – that is killing our nation slowly.  Did you know that the U.S. consumes 80% of the world’s opiods, and 99% of hydrocodone, the active ingredient in Vicodin?[1]    That OD’s from Vicodin and its pals kill more people than auto accidents in seventeen states?[2]  The sheer numbers are staggering:  131 million doses of Vicodin are prescribed every year[3]; in 2001, U.S. sales of OxyContin exceeded $1 billion.[4]

Elizabeth Wurtzel, in what seems like an affectionate paen to a bygone era, wrote Prozac Nation in ’94.  Forget SSRIs.  The odds are higher that someone you know – your boss, co-worker, spouse, mom – is hooked on opiates, and your doctor is playing pusher.

Here’s how it goes:  we’ve all experienced pain at some point in our lives.  When I broke my ankle in  ‘98, I tried to take a Vicodin but the medication made me so ill that I lay down on the floor, not knowing how to get up (in a full fiberglass cast). Flash forward to 2010, when, after breast cancer surgery, I was prescribed the ubiquitous V.  This time, the pill was my friend.  I would count down the minutes until I could take the next one, my surgical site alive with pain.  I went through two prescriptions, but, being a rare American drug hater, stopped and never looked back.  Some people are not so fortunate.

There are stories upon stories of patients experiencing pain, getting the V. from Doctor, then realizing that if they get that “fuzzy warm” feeling after one pill, how much better will they feel after two?  Twenty? The allure of the drug is such that some addicts end up taking 75 pills a day.[5]  And why is that?  Because “opioids are essentially legal heroine.”[6]   And instead of getting a fix in the street, Americans feel so much better with a neatly packaged pharmacy bottle.

Of course, Vicodin and its cousin Percocet are mere dwarves when compared to the Sauron of the field:  OxyContin.  Introduced by Purdue Pharma in 1996, the drug maker initially told doctors that Oxy didn’t produce much euphoria, and that withdrawal wasn’t especially rough.[7]  Bullshit.   In 2007, Purdue ended up paying $634 million in fines for felony and misdemeanor misbranding.[8]  Oops!

Don’t think this enormous sum compensated for the mayhem left in Oxy’s wake.  Whole communities – even states – have been leveled by its scythe, espeically in rural areas.  Nearly every family in eastern Kentucky has been touched by prescription-drug addiction and death.[9]

Oxy abuse starts off like Vicodin, but with a bite:  Oxycodone is approximately 1.5–2 times as potent as morphine when administered orally.[10]   A woman named “Cheryl” reports that she became a full-blown addict in a week, started crushing and inhaling the pills, then, upon running out, spent days vomiting and dry heaving.   It wasn’t until she woke up in the hospital (her heart had stopped in the ambulance) that she could fully appreciate the insidious nature – and addictive allure —  of “hillbilly heroin.”  [11]  Another addict who started out with legitimate back pain got up to 240mg of Oxy a day by scoring prescriptions from his internist, pain management doctor, and surgeon.[12]  He ended up detoxing in a psychiatric hospital for 3.5 days.

But he was one of the lucky ones.  Accidental overdoses involving Vicodin and Oxy rose by nearly 115 percent in just the four years between 2001 and 2005.[13]  They have taken to their grave teens, and many “ordinary” Americans who got hooked before they had time to process what was happening.

Some states operate as “pill mills” for others, as in the case of Florida, which supplied so much Oxy to Appalachia that it was known as the “flamingo express.”[14]  In 2011, Florida doctors prescribed 10 times more oxycodone than those in the rest of the states combined.[15]  Governor Rick Scott (R) at first opposed shutting down the pill mills, but things got so bad that regulation was finally passed in March 2011.  Of course, the drug suppliers just pick up and move elsewhere.  Purdue, which wrought this evil upon the land, has tried to prevent Oxy users from crushing and snorting the pills by adding additional binders but it’s not known how effective this is.   In the meantime, Oxy is considered a “gateway” drug to heroin, and you know why?  Cause smack is cheaper.[16]

The moral of the story – and it’s a microcosm of U.S. business practice — is that Big Pharma like Purdue will lie and cheat to get their product on the market, and if thousands die in the process, oh well,  they can just pay a fine.  Of course, if you or I commit a homicide, we will be put away for life (at the least) but we apparently don’t have the level of “personhood” granted to rich corporations.

So next time you have pain, and your doctor hands you that V. prescription, think before you take the first pill.  This stuff is not child’s play.  It is a semi-synthetic opiate, produces the same euphoria as heroin before the elation fades and the hell of being hooked crawls into its place.  William S. Borroughs said it best:  “Junk is the ideal product… the ultimate merchandise. No sales talk necessary. The client will crawl through a sewer and beg to buy.”  Something Purdue knows all too well.

 


[2] Ibid

[3] Ibid

[4] Ibid

[5] Ibid

[6] Ibid Lewis Nelson , on FDA panel to revise Risk Evaluation and Mitigation Strategy of prescription drugs

[13] Ibid

[15] Ibid

A Modest Proposal: How To Stop The BS On Wall Street

Wall Street Bull

We’ve all seen the image of the Charging Bull on Wall Street:  a symbol of virile Capitalism, nostrils flaring and body poised at a perilous angle as it attempts to ram up stock prices.

We also know that it was the avarice of Wall Street, which, by virtue of creating exotic “securities” which bundled (often toxic) mortgages to investors, led directly to the economic meltdown and general reign of misery known as The Great Recession. (2008-??).

As I’ve discussed elsewhere on this blog, nary a Wall Street or Big Bank CEO has seen the inside of a clinker – not even the cushy Club Fed, where they could swap Rolex stories with Bernie.  No, they are all doing just fine, dancing in their French chateaus, passing the Beluga on their yachts with the white-clad crew as the Pernod-Ricard flows.

It must be nice to perpetrate the white-collar crime of the century and get off Scot free.  Others of course do not have the power of money (and lobbyists, and politicians, and judges) behind them, and are hence foreclosed upon and thrown into the streets with the grimness of a scene from Dickens. There are no jobs to go to, so they collect Unemployment as long as they can (99 weeks for the fresh kill of 2008), pawn everything they own, and suffer painful rope burns as they slide down from the middle class into the trenches alongside the poor.

But what if, in a sudden blast of dark fantasy, actual justice was meted out?  What would be the appropriate punishment for those who made hundreds of millions from legalized fraud and displaced millions more?

My suggestion is simple, and apt.  Take the bronze bull of Wall Street and build into its side a small door.  Throw in five CEOs at a time.  Light a fire beneath the faux animal, until it turns the metallic belly a cheery shade of yellow.  The screams of the guilty will emanate from out the bull’s mouth, hooked up with a series of tubes to create an amazing facsimile of bellowing.  Once Group A is dispensed with, Group B is moved into place.  In ancient times, this torture device was known as the Brazen bull, and the word’s double meaning has a delightful connotation here:  put the brazen frauds inside the brazen bull and, in five years’ time, they won’t be free to invent a new shady scheme which brings down the world’s markets.

Harsh, you say?  So is years-long unemployment, foreclosure, bankruptcy, repo, pawn shops, and poverty. Trust me, I know. I seek justice, and The Bronze Bull of Perillos is one way to send a message.  The Greeks, its inventor, might want to resurrect it.

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The Two Americas Part I: Justice

Lady Justice

I’ve been thinking lately about the Greed that oozes down Wall Street and the Too Big To Fails: you know, the folks who make million-dollar bonuses and wrecked the U.S. economy by bundling toxic loans and selling them to Muppets –uh, investors.

Now, when a member of the 99% (that’s you or me) commits a crime, we are generally punished.  If you’re African-American, you’re punished at a ratio of 3.5; if you’re Latino, nearly 1.5.  Whites are a straight 1:1. Roughly translated, this means that relative to their population, blacks and Latinos get the short end of the stick – from their jailers.

On Wall Street, where “Greed Is Good” and everyone is too smart for their own good, criminality has not only been legalized but lauded.  Manipulate the silver market and plunge S&L’s into crisis?  Great job!  Come up with the concept of “junk bonds” which proves as trashy as its appellation, and you’re a billionaire who builds schools with your name on them. OK, so you might do some time at Club Fed, and not be allowed to wear your toupee, but that’s a small price to pay for Livin’ Like A Rock Star, right?

These days, the short  stint behind bars has become déclassé (unless you’re Bernie, and then they have to put you away).   Kerry Killinger, erstwhile CEO of Washington Mutual, received a $24 million bonus the year the bank failed (the biggest one in US history, but who’s counting?).   Angelo Mozilo, the Mob-like boss of Countrywide, settled with the SEC for $67.5 million on charges of insider trading and fraud – fraud so pernicious that it made WaMu’s stinking loans smell laundry-fresh.

John Thain, the Last Emperor of Merrill  before it was annexed to B of A, was removed by Ken Lewis (soon to be beheaded himself) for granting huge executive bonuses just before Merrill fell.  Oh, and he also redecorated his office to the tune of $1.2 million while his firm was going down by the head.  But  everyone needs an $18,000 George IV desk, don’t you think?  He has been punished by becoming head of CIT Group (not be confused with Citigroup), the latter of which is still around thanks to Uncle Obama.   BTW, Lewis “retired” from B of A in 2009 with pension benefits totaling $53 million.  I hope that’s enough to get him through.  If not, he can always buy B of A stock  – hoping it rises from $9.00.  Maybe he can just buy the Board of Directors a nice bottle of Chevas.

You’ve probably heard about Dick Fuld, The Tool Who Started It All, whose compensation from Lehman before his dismissal was said to be $500 million (from no less than authority than Congressman Henry Waxman).  A company lawyer swears that this Brobdingnagian sum was understated by some $200 million. [1]   After all, what’s a few mil between friends?

The ex-head of AIG, Maurice Greenberg, is actually suing the U.S. for $25 billion since he feels that the initial bailout ($182 billion) wasn’t big enough.  You know, I don’t feel I’m compensated enough at work. Maybe the Feds can set aside a paltry million or two so I can buy a George IV desk.  To end with a nuclear bang, Bernie M. is thought to have perpetrated his  Ponzi scheme for forty years before a whistleblower finally made himself heard by the SEC.  As long as those investors were “making” money, it was a Great Big Beautiful Tomorrow. . .

Here in my state, California, we have a Three Strikes Law which puts a person away for life if their third “strike” happens to be stealing a pizza (thankfully, this  sentence was later commuted to six years by a judge with a heart where Dick Cheney’s ought to be).  My friend Anthony has been pulled over by the LAPD for “driving while Latino” and I think we’re all acquainted with Rodney King.   In the L.A. Rampart scandal, a cop admitted to shooting a black gang member, then placing a gun in his hands to “stage” the scene.   Not sure if that was before or after the cop’s theft of a cache of cocaine. On a white-collar note, If I’d stolen millions from my vanished ex-employer, WaMu, I’d be playing backgammon with Bernie right now.  And we’d be having a laugh over all those idiot “Muppets.”

My point, Dear Reader, is that the Masters of this Recession, whose financial machinations bore the stamp of 33rd Degree Masons, who have plunged a fair portion of the populace into poverty, hunger, misery, and foreclosure, are still out there, enjoying the fruits of their greed.  Not a one has gone to prison.  They are all still multi-millionaires and more.   In the Old White Boys Club, they either go through the turnstile to another lucrative job, or retire among Bond girls and yachts.   The drooling avarice of Kerry Killinger and his lieutenant, Steve Rotella, personally cost me a ten-year career, my house, my credit, my car, and my health.   Yet those two are unscathed – along with all the others – doing The Happy Dance  while families sleep in their van and use the bathroom at Wal-Mart.

Truth, Justice, and The American Way – and the way of America is that if you’re rich, you have your own justice and your own truth.  Even if it completely conflicts with reality.  And destroys countless lives.  Emile Zola was right, when he has the artist Claude Lantier comment at the end of Savage Paris, “What scum respectable people are!”  Indeed.