Corporatist Boom, Democratic Bust

Rule by a corporate elite requires war, corruption, and a cowed populace; democracy requires an educated population loudly demanding transparent, responsive government. Make no mistake: this is war. Guess who is winning?

Corporate elites (i.e., CEOs, CFOs, VPs, board members) of top corporations want four things: freedom from regulation, rock-bottom wages for American workers, a stock market bubble, and political control. To be clear, “top corporations” means the major Wall St investment firms that pretend to be banks, the major energy and mining corporations, and the major arms manufacturers – i.e., the firms whose CEOs have been making a personal killing from both the trashing of Iraq by the US military and the Great Recession of 2008. Needless to say, they are getting exactly what they want despite the lessons of both the Iraq occupation and 2008 recession scandals. It is they who run the economy, not representatives of the social good. These key CEOs also pretty much run the government, sending their representatives to Washington to write the laws and, more importantly in many cases, the implementing guidelines. Corporatism is probably the best name for this system we have in the U.S.; it is certainly not capitalism (i.e., free competition), a method reserved for Mom and Pop, who are perfectly free to go bankrupt whenever they wish.

This exclusive band of the corporate elite does not see a problem with declining wages, disappearing benefits, millions giving up the search for work, millions of home foreclosures (a great investment opportunity!), endless war, and brutal treatment of whistle-blowers to repress dissent. The corporate elite is achieving exactly what it has been trying for much of the last generation to achieve: the abolition of the New Deal compromise to facilitate a wholesale transfer of national wealth and political power into their private hands. All the public lamenting by Obama and Bernanke about “remaining problems” in the economy is just so much fluff. The problems of the U.S. economy are not “bad luck;” they are the intended outcome. The U.S. is being transformed into a third world economy of people too busy looking for work to make trouble by sticking their noses into politics (the proper business of the elite) and too poor to risk striking for higher wages. Obama and Bernanke (and Geithner) have been supporting this process with meticulous care by avoiding any hint that any actual live corporate individual was in any way morally or legally responsible for the harm their corporations have caused the American people. 

Meek workers and meek citizens grateful for their Walmarts and the right to vote for either of two corporate candidates every few years is what the corporate elite wants. And they are getting exactly what they want. Remember how the protests in Wisconsin were shut down? Did you notice how fast the patriotic popular Occupy Movement disappeared? Are you watching how every whistle-blower gets bullied while the message they are trying to bring to the American public gets ignored? Snowden is at least the fourth NSA whistle-blower who has tried to alert Americans to the dangers of domestic spying over the last decade! Have we seen any official condemnations of NSA behavior, any independent investigatory commissions, any arrests or even admissions of guilt by senior officials?

The corporate elite and the citizenry have diametrically opposed interests. The corporate elite benefits from a stock market bubble, a main street depression, constant war, and discouraged citizens. In contrast, economic prosperity for the person, a vibrant democracy of involved citizens, transparency in government, regulation of corporations, and a foreign policy based on negotiated positive-sum cooperation are the components of a healthy society. Think of the things benefiting the corporate elite as food items in the corporate elite’s picnic basket and the starkly different items benefiting the population as foods in your picnic basket. You can’t mix items. Foreign war, domestic corruption, and an intimidated public are the legs on which corporatism towers over a democracy. In the long run, we the people really only have this simple choice: pick the basket you want…and if you want the democracy-peace-prosperity basket, hold on to it with both fists.


From American Dream to American Illusion

Rising government acceptance of corporate corruption, intensifying corporate control over politics, rising preference in Washingtonfor a foreign policy based on force rather than diplomacy, and accentuation of class divisions with rising inequality in the U.S.constitute a shift in direction away from the post-WWII growth of the middle class and democracy. The decline in the prospects of the average American have been so slow that most seem unconscious of the change, but in the space of one generation, the American Dream has been transformed into the American Illusion. 

Four core trends have combined fundamentally to alter the course of U.S.society over the last generation. Under the cover of a flood of elitist propaganda equating corporate growth with social good and circus-like elections with democracy, in one brief generation, the social, political, and economic prospects of U.S.society have tragically dimmed. Individuals have reacted with resignation by opting out of politics (precisely what the rich wanted) or self-defeating anger by blaming Moslems or liberals for their own failures (again playing into the hands of the rich), becoming increasingly focused on the present when careful consideration of the long-term impact of our behavior and government policies are the key to reversing the decline.
Corruption. Corruption is rapidly eroding the quality of governance in the U.S., with a complacent Federal Government attitude toward war profiteering,  environmental, and financialcrime leading the way. Most striking is the shift government behavior from the 1980s, when the FBI ran a vigorous and successful campaign following the S&L crisis resulting in the imprisonment of hundreds of financial criminals, to the Bush Administration’s war against regulation and the Obama Administration’s refusal to bring to justice the financial criminals at the heart of the 2008 Financial Crisis.
Corporate Rule. The continuing popularity of the Corporate Party and its strengthening chokehold on government in the aftermath of the blatant misbehavior of Big Finance in 2008, even with the supposedly pro-people party in power, attest to the growing shadow of corporate power over U.S.democratic institutions. With even the Supreme Court upholding the shockingly anti-democratic principle of “one dollar, one vote,” it is clear that democracy is not just under attack but being soundly defeated.
War Is the Answer. The increasingly blatant use of violence, open calls for aggression under the thin veneer of “preventive” war, and the rising tendency of officials to brag about economic warfare, terrorist attacks against foreign scientists, and drone bombings of individuals whose identities may not even be known with the justification that the victims “may” have been fighting against some pro-U.S. foreign regime all point to the institutionalization of a policy of violence by choice as the preferred method of solving all problems. The War Party remains nearly as powerful as it was following 9/11 despite a decade of disasters that were incredibly costly to all but the rich, and the U.S.currently pursues a belligerent policy toward not just Iran, Pakistan, and Afghanistanbut also desperately poor Latin America and Africa. Gore Vidal’s characterization of the system as one party with two conservative wings seems more accurate every day.

Return from the Dead of a Class Society. The post-WWII rise of the American middle class to the point where Americans broadly felt that they lived in a middle-class (i.e., a class-free) society has now clearly been reversed and is well documented by the Congressional Budget Office. With home-ownership under attack by corrupt banks, jobs increasingly part-time, contracts being broken by both corporations and governments, unions weakened almost to the point of irrelevance, wages declining, pensions a dream of the past, and a massive new class of unemployed people simply written off as superfluous even as a new super-class of billionaire financial manipulators arises, there can no longer be any doubt that the U.S. is evolving backwards into a new class society that Marx would have no trouble recognizing.

Although Americans have of course always faced problems, U.S.society has been distinguished by “the American Dream,” the belief that progress toward equality, liberty, and peace would occur. These four trends–government acceptance of corporate corruption, corporate rule undermining democracy, the international use of force rather than persuasion, and the return from the dead of a class society predict the end of the American Dream. The probability of that sad prediction coming true is only strengthened by the evident decline ineducation; the alienation of Americans from participation in public affairs (reminiscent of the stereotypic “long-suffering Russian serf”) that hands victory on a silver platter to the exploitative international corporate elite (prime recipient of Iraq War largesse Halliburton, for example, is no longer a U.S. corporation); and a general refusal in American society to think about long-term consequences.
Given the wealth of the country (if not of the population) and the historically demonstrated ability of U.S. society to rise to meet major challenges, this last point—the unwillingness of Americans to think about the long-term consequences of their behavior—may be the most serious weakness of all.
All of the four trends identified above are–from the perspective of a society that thinks only about the present, sneers at history, and forgets almost everything more than a few years old—very much long-term processes. Other fundamental threats to American security, most obviously global warming, are considerably longer-term processes. If one cannot even remember the S&L crisis, how can one see the shift by Washingtontoward acceptance of financial crime? In a few years, will Americans have forgotten that diplomacy used to be the method of choice for exercising influence in the world? Will Americans be watching drone warfare in our own skies as the whole world copies the U.S.innovation of illegally bombing with drones wherever it wants? Will corporations be openly handing voters envelopes filled with cash to make “democracy” function “properly?”
Before Americans can figure out how to correct this decline in their fortunes, they will have to recognize the nature of the decline that has occurred over the last generation so they can see the impact of current behavior on future prospects.

Corporate Subversion of Democracy

You elected those politicians to represent you. Are they, or are they perhaps colluding to enrich themselves by creating a corporate state or, even worse, a fascist state? One of the best clues to this shadowy operation is government facilitation of corporate corruption.

No one, and certainly no government, is perfect, so “perfection”–e.g., the absence of corruption in government–may be a nice ideal but is hardly a realistic standard for daily performance. Therefore, it is perhaps a bit unfair to condemn a government for exhibiting corruption. A more realistic standard for daily performance would be this:

Does the government facilitate or combat corruption in its own ranks and among the broader corporate elite?

That standard is one that separates good governance, i.e., government for the people, from bad governance, i.e., government for the elite. That standard also directly addresses the more particular issue of whether or not a government is moving toward corporatism, i.e., the enrichment of corporate elites at the expense of the society as a whole. That standard also exposes rising fascism, a particularly pernicious form of corporatism.

In this context, consider the recent remarks of muckraking journalist Matt Taibi about Bank of America:

This gigantic financial institution is the ultimate symbol of a new kind of corruption at the highest levels of American society: a tendency to marry the near-limitless power of the federal government with increasingly concentrated, increasingly unaccountable private financial interests….
Conservatives should be outraged by Bank of America because it is perhaps the biggest welfare dependent in American history, with the $45 billion in bailout money and the $118 billion in state guarantees it’s received since 2008 representing just the crest of a veritable mountain of federal bailout support, most of it doled out by the Obama administration.

Liberals should also be outraged. The goal of liberalism is to take care of those who need it, not to feed obese welfare queens. As a liberal, I can testify that government bailouts of rich, corrupt banks violates the ideals of liberals; conservatives can speak to their own values.

Taibi explains:

Conservatives believe that a commitment to free market principles and limited government will lead us out of our economic troubles, but Bank of America represents the opposite dynamic: a company that is kept protected from the judgments of the free market, and forces the state to expand to take on its debts.

Feeding the greed of “too big to fail” corporate welfare queens has become a major financial drain on the U.S. economy; the unemployed and those defrauded out of their mortgages are paying for this. Beyond the financial cost to society of corrupt corporations lies the specter of corporatist or outright fascist subversion of democracy. If the citizens are so generous that they choose to provide welfare to billionaire CEOs, so be it. My concern is far more with the political implications. To put it briefly, the more the regime becomes the financial partner of corrupt corporate leaders, the greater will be their tendency to collude to undermine citizen oversight of their misbehavior, which will inevitably lead to a police state, i.e., a corporatist dictatorship.

It is important to note that the issue of whether or not the government is colluding with the corporate elite to defraud society is a separate issue from government creation of healthy conditions for business. Smoothly running, productive corporations can be useful social tools as long as the government understands that its purpose is to protect the larger interests of society. The string of economic crises (S&L, Latin defaults, Asian tiger collapse, Long-Term Capital Management’s collapse) culminating (so far) in the 2008 Financial Crisis–all caused by out-of-control corporate greed facilitated by complicit regulators–does not prove that capitalism is an unacceptable form of government; it does, however, pretty conclusively prove that capitalism in the absence of strict government regulation backed up by energetic popular oversight is suicidal

Now every human with a brain can see that capitalism is a very hot torch; without great care, it will burn you, but socialism–albeit better in theory as, by definition, a system to protect “society” rather than “capital”–has its own problems, which are perhaps best described in Solzhenitsyn’s brilliant chapter “The Law As a Child” in Gulag Archipelago, where the collapse of Soviet socialism into communist dictatorship in the absence of a rule of law that would provide regulation over government) is exposed. The fundamental issue is not “capitalism vs. socialism” but whether or not the population has the education, commitment, and capability to keep watch over the elite.

If (a big condition) the citizenry is sufficiently awake to defend itself, the standard approach of a government trying to establish a corporatist dictatorship is to whip up national security fears, wave the bloody flag, and terrify the population into bowing down before a “great leader” who promises to “protect” them. That is the point at which corporatism transforms into fascism, and one of the clearest initial clues that this process has been launched by an elitist regime is government facilitation of corporate corruption.
“Corruption!” is an easy charge to make; is it fair?

  • Bank overdraft scam: BoA settled a court case accusing it of running a bank overdraft scam for $400 million. That may well have been a tiny portion of the total amount stolen from depositors, but even for BoA, $400M would presumably constitute a line item in their budget. Would they have paid such a fine if they were innocent?
  • Mortgage fraud: Three years after the “2008 Financial Attack on the One Percent,” the Federal Government is finally bringing legal charges against BoA for mortgage fraud. BoA has already paid a cool $22M to avoid complicity for defrauding…soldiers!!! That is called “corporate patriotism.” (Corporations, you recall, are now “persons,” so one should presume that they could be expected to be patriotic just like the rest of us “persons,” but of course personhood for corporations only pertains at their convenience.)
  • Selling elections. Even the Supreme Court, last defense of the Constitution, has joined the game, twisting the Constitution in its Citizens United v. Federal Election Commission ruling to allow corporations to buy elections. When campaign time on TV is made free and passed out fairly, then we will know that the government is protecting democracy rather than promoting a corporate state.