"The first truth is that liberty is not safe if the people tolerate the growth of private power to the point where it becomes stronger than that of their democratic state itself. That, in its essence, is Fascism." - Franklin Delano Roosevelt.
This blog is an effort to simplify the basic nature of what is called ‘the corporatocracy’. Problems usually enter because the system is at once economic, social and political and contains many interlacing networks that are not given to facile, serial description. The result is that attempts at describing the system’s workings often break down, and after a time ‘eyes glaze over’. Following the basic aspects, I will include some 'questions and answers' from when I posted these on the alt.politics.forum of Usenet back in 1999.
First, let’s look at the different aspects of the corporatocracy:
1- Madison Ave. ‘Ad-hocracy’ and PR Establishment to spin, doctor the truth for facets 2-9. They also function to create wants in consumers, to fuel consumption, business, profits.
2- Banking system enables financing of all other parts, by loans, securities, etc. Also uses customer deposits to invest in debts, speculative and risky ventures.
3- Insurance system: works in tandem with banking, to force participants to add another threshold or layer (mostly of debt) for citizens to be a legitimate part of the system.
4- Energy (Oil, gas, electric utilities etc.) comprise a monopoly on energy and resources which are then sold at the highest amounts that the market will bear- with costs also passed on to consumers, taxpayers. Lobbyists in this niche regularly fight to prevent energy assistance from the government, such as home heating oil subsidies for the poor elderly as "Pareto inefficient".
5- Media-Telecommunications (control the information industry, from within six mega media-publishing conglomerates). Cable companies carve out their own monopolies and pricing (based on The 1996 Telecommunications Act).
6- Financial Industry –Wall Street: works in league with banking and insurance to direct investment toward lucrative securities (for themselves), or mortgage debt as well as foreign market speculation. Ultimately seeks to enrich itself via brokerage commissions, management fees, churning accounts, burning yields, credit default swaps etc. Wants to do the same with Social Security monies.
7- Medical (private health insurance conglomerates, e.g. United Health, Kaiser Permanente etc.) – control the distribution and access to health care, including having 'gatekeepers’ to determine whether services will be provided at all. Their basic imperative is to adjust the "medical loss ratio" to maximize their own profits even as they maximize out of pocket costs to patients, and send them into debt.
8- Pharmaceuticals: control all access, by pricing, to the drugs –prescriptions that people think they need to maintain health. But in 9 of 10 cases, the meds are only of marginal utility at best. What this branch really does is function as a rotating door between congress and K Street lobbies (Billy Tauzin is the classic case, and now a PhrmA lobbyist after steering thorugh the 2003 Medicare Prescription Drug act.) This link also features the largest number of lobbyists, nearly 3,500 and second only to the Defense contractors.
9- Governmental ‘assets’: the key players in Congress that enable tax subsidies and awards, loopholes to be paid to all of the above, in return for their election campaign contributions (‘soft money’). This currently amounts to some $155 billion per year, according to a public advocacy group, ‘Citizens for Tax Justice’. We call this "corporate welfare".
Note that all the foregoing parts comprise what I call ‘the corporatocracy’. The last element is equally important to the preceding corporate branches. It is the government connection which, in effect, converts what might be called generic ‘corporatism’ to a functioning ‘corporatocracy’ with legal standing and government backing, support.
Some Questions & Answers:
Q. Why is the corporatocracy so difficult to describe?
A. Because it contains so many diverse arenas, or parts. Understanding even one of its parts, say banking, is difficult enough, without having to comprehend all of them. And understanding what they do in concert that harms people is often more difficult. For example, in late 1996 investment banks paid $140 million to settle civil charges for a trick called ‘yield burning’. At issue, were some 3,600 U.S. Treasury bonds that were sold at excessive prices to state and local governments between 1990 and 1994 for municipal bonds.
By marking up the price of the bonds, the banks were able to ‘burn down’ the yield, allowing underwriters to pocket money that ought to have gone to the federal government, or to municipalities.
Fast forward to 2007 and banks immersed themselves in crazy bets called 'Credit default swaps" (CDS) which allowed any counter party to "bet" that a borrower wouldn't meet his obligations. In this case, $55 trillion in CDS were purchased to make bets that borrowers of sub-prime mortgages would default, and they did. Other banks were left holding the wrong end of the CDS deal and ended up with so many trillions of liabilities (toxic assets) on their books, they were unable to lend.
They then required bailouts from government.
99% of the population would probably greet such news with a yawn and glazed eyes, largely because they lack the understanding of finance and economics needed to be aware of the damage caused. However, that does not mean that there was no damage, that it wasn’t serious, or that what the banks did wasn’t criminal.
And yet it’s examples such as these that are required to get the gist of the corporatocracy. If the system were just a ‘one headed’ creature it would be fairly simple to grasp. Even as a creature designed with multiple financial artifacts it might be straightforward to grasp if its actions were comprehensible to the average person.
But it’s a many-headed Hydra that requires knowing what each ‘head’ is up to at a given time, and what it’s ‘up to’ may be arcane indeed. Especially since two or more heads may be interacting at once in covert ways and through financial or political vehicles that are baffling to the majority.
Most human brains aren't equipped for dealing with this degree of multi-level, parallel processing. Hence the owners find descriptions that invoke it ‘boring’ or ‘incomprehensible’. Language itself is more geared to serial or sequential description, so doesn’t lend itself toward embodying parallel issues. Or discussing a complex system that unfolds in parallel, simultaneous ways.
The most basic way to wrap one’s brain around it is to think m-o-n-e-y, and the role of it in contributions of all the listed facets to politicians or political parties. The key here is that money from the corporatocratic facets- whether banks, insurance companies, telecommunications giants or Wall Street- is used to defeat personal political power as well as democratic initiatives. In effect, $1 million contributions replace one person-one vote. Citizens become progressively cynical and disempowered, as they see their votes wasted election after election, their own interests ignored in place of those of the highest bidders.
2. What is corporate welfare, why such a big deal?
A. Corporate welfare is the standard term for the spectrum of benefits legally provided to corporations. These include tax write –offs, direct government subsidies, tax abatements, and the use of loopholes already built into a variety of tax codes. It currently amounts to some $155 billion per year and projected to run to $1.6 trillion over the next ten years, nearly all out of the pockets of the American taxpayer. (Source: Citizens for Tax Justice document). This is money which could have gone towards schools, repair of highways, sewers and other infrastructure that is now falling down around our ears in major urban areas. In other words, corporations steal the resources of citizens through this agency.
The Citizens for Tax Justice estimate that without this form of welfare corrupting our political and social system, the federal deficit would be halved. As it is, it will continue to grow no matter what else is done, until this insidious form of thievery is abolished.
3.. Why so important to eliminate it?
A. Because first of all, it corrupts the political process. The money is part of a loop that began when corporations contributed soft money to specific election campaigns. The loop looks like:
Corporation - > Congress Critter -> [corporate welfare in laws]
---------------------------------------------------V
!----------------- -----------------------(tax breaks etc.) -------!
This loop assures the governance of the nation is sold to the highest bidders. Obviously if our legislators accept money from corporations to get elected, they are obligated to those corporations afterwards. That means that these obligations have to made good, most often in passing laws that favor the corporations over the average citizen. In my area, this most recently came to the fore when legislators passed laws that: a) increased bank ATM fees, b) instituted late fee payments for companies that penalize the poor, or the unemployed.
Since ordinary citizens lack the monetary resources of corporations, they are excluded from the loop and receive no benefits. As one politician once stated: “If they want to be on our radar screen, they need to ante up the same amount of money as the corporations. Then they’ll get the attention.” Obviously, all this has been made much worse since the horrific "Citizens United" decision of 2009 which gave carte blanche to corporations to spend as much as they want in any election campaign. In 2010 they gave five times more to Republicans than Dems.
This sort of attitude is endemic in both state and local governments. It says, in effect, that one man –one vote is archaic. It’s a million dollars (or more) and one delegate or congressional vote now. This makes a mocking joke of democracy.
Worse, they have to fund – via tax dollars- the corporate welfare provided, which is often against their best interests.
4. So, in a corporatocracy, the key evil is that money ‘votes’ and controls the political process, as well as the laws which flow from it?
Exactly so. Money, soft money, flows in obscene amounts from corporate influence peddlers to purchase the votes of lawmakers on Capitol Hill. The problem is that there is no regulation of this money, or accountability in the political process. In a number of other nations, any such external influence, or bribery- which is what it is, would be outlawed. In Egypt, perpetrators can have hands cut off, as well as jail time.
This is why campaign finance reform is genuinely the litmus test of whether we really want democracy in the country, or a de facto corporatocracy- government run by and literally for the corporations. (Since they must be rewarded by the right laws, or will stop giving money).
In this way, the intrusion of money pollutes and debases the whole political and economic infrastructure. It creates cynicism and de-politicization in the voters, who feel their vote is pointless. After all, no matter how they vote, or for whom- the candidates will eventually be bought by the highest corporate bidders once they reach DC, or their state house.
The people are thereafter dismissed, until the next time arrives to pander to them with meaningless mouthings during an election campaign. But in the next cycle the situation worsens and favors the corporatists even more because many more millions of citizens have usually dropped out, and they're often the more informed variety.
What happens as the voter intelligence-knowledge base erodes on account of frustration, is we end up with a Tea-Party-ized electorate. The very types Jefferson warned us about in his "Notes on Virginia" if citizens' minds aren't "improved". It is such an electorate that plausibly brought the likes of Hitler to power in Germany ca. 1932, and it is plausible an American version will bring another fascist to power again, perhaps even reincarnating Hitler and his vicious agenda.
Let's also bear in mind the links between fascism and corporatism. (See next Blog)
This blog is an effort to simplify the basic nature of what is called ‘the corporatocracy’. Problems usually enter because the system is at once economic, social and political and contains many interlacing networks that are not given to facile, serial description. The result is that attempts at describing the system’s workings often break down, and after a time ‘eyes glaze over’. Following the basic aspects, I will include some 'questions and answers' from when I posted these on the alt.politics.forum of Usenet back in 1999.
First, let’s look at the different aspects of the corporatocracy:
1- Madison Ave. ‘Ad-hocracy’ and PR Establishment to spin, doctor the truth for facets 2-9. They also function to create wants in consumers, to fuel consumption, business, profits.
2- Banking system enables financing of all other parts, by loans, securities, etc. Also uses customer deposits to invest in debts, speculative and risky ventures.
3- Insurance system: works in tandem with banking, to force participants to add another threshold or layer (mostly of debt) for citizens to be a legitimate part of the system.
4- Energy (Oil, gas, electric utilities etc.) comprise a monopoly on energy and resources which are then sold at the highest amounts that the market will bear- with costs also passed on to consumers, taxpayers. Lobbyists in this niche regularly fight to prevent energy assistance from the government, such as home heating oil subsidies for the poor elderly as "Pareto inefficient".
5- Media-Telecommunications (control the information industry, from within six mega media-publishing conglomerates). Cable companies carve out their own monopolies and pricing (based on The 1996 Telecommunications Act).
6- Financial Industry –Wall Street: works in league with banking and insurance to direct investment toward lucrative securities (for themselves), or mortgage debt as well as foreign market speculation. Ultimately seeks to enrich itself via brokerage commissions, management fees, churning accounts, burning yields, credit default swaps etc. Wants to do the same with Social Security monies.
7- Medical (private health insurance conglomerates, e.g. United Health, Kaiser Permanente etc.) – control the distribution and access to health care, including having 'gatekeepers’ to determine whether services will be provided at all. Their basic imperative is to adjust the "medical loss ratio" to maximize their own profits even as they maximize out of pocket costs to patients, and send them into debt.
8- Pharmaceuticals: control all access, by pricing, to the drugs –prescriptions that people think they need to maintain health. But in 9 of 10 cases, the meds are only of marginal utility at best. What this branch really does is function as a rotating door between congress and K Street lobbies (Billy Tauzin is the classic case, and now a PhrmA lobbyist after steering thorugh the 2003 Medicare Prescription Drug act.) This link also features the largest number of lobbyists, nearly 3,500 and second only to the Defense contractors.
9- Governmental ‘assets’: the key players in Congress that enable tax subsidies and awards, loopholes to be paid to all of the above, in return for their election campaign contributions (‘soft money’). This currently amounts to some $155 billion per year, according to a public advocacy group, ‘Citizens for Tax Justice’. We call this "corporate welfare".
Note that all the foregoing parts comprise what I call ‘the corporatocracy’. The last element is equally important to the preceding corporate branches. It is the government connection which, in effect, converts what might be called generic ‘corporatism’ to a functioning ‘corporatocracy’ with legal standing and government backing, support.
Some Questions & Answers:
Q. Why is the corporatocracy so difficult to describe?
A. Because it contains so many diverse arenas, or parts. Understanding even one of its parts, say banking, is difficult enough, without having to comprehend all of them. And understanding what they do in concert that harms people is often more difficult. For example, in late 1996 investment banks paid $140 million to settle civil charges for a trick called ‘yield burning’. At issue, were some 3,600 U.S. Treasury bonds that were sold at excessive prices to state and local governments between 1990 and 1994 for municipal bonds.
By marking up the price of the bonds, the banks were able to ‘burn down’ the yield, allowing underwriters to pocket money that ought to have gone to the federal government, or to municipalities.
Fast forward to 2007 and banks immersed themselves in crazy bets called 'Credit default swaps" (CDS) which allowed any counter party to "bet" that a borrower wouldn't meet his obligations. In this case, $55 trillion in CDS were purchased to make bets that borrowers of sub-prime mortgages would default, and they did. Other banks were left holding the wrong end of the CDS deal and ended up with so many trillions of liabilities (toxic assets) on their books, they were unable to lend.
They then required bailouts from government.
99% of the population would probably greet such news with a yawn and glazed eyes, largely because they lack the understanding of finance and economics needed to be aware of the damage caused. However, that does not mean that there was no damage, that it wasn’t serious, or that what the banks did wasn’t criminal.
And yet it’s examples such as these that are required to get the gist of the corporatocracy. If the system were just a ‘one headed’ creature it would be fairly simple to grasp. Even as a creature designed with multiple financial artifacts it might be straightforward to grasp if its actions were comprehensible to the average person.
But it’s a many-headed Hydra that requires knowing what each ‘head’ is up to at a given time, and what it’s ‘up to’ may be arcane indeed. Especially since two or more heads may be interacting at once in covert ways and through financial or political vehicles that are baffling to the majority.
Most human brains aren't equipped for dealing with this degree of multi-level, parallel processing. Hence the owners find descriptions that invoke it ‘boring’ or ‘incomprehensible’. Language itself is more geared to serial or sequential description, so doesn’t lend itself toward embodying parallel issues. Or discussing a complex system that unfolds in parallel, simultaneous ways.
The most basic way to wrap one’s brain around it is to think m-o-n-e-y, and the role of it in contributions of all the listed facets to politicians or political parties. The key here is that money from the corporatocratic facets- whether banks, insurance companies, telecommunications giants or Wall Street- is used to defeat personal political power as well as democratic initiatives. In effect, $1 million contributions replace one person-one vote. Citizens become progressively cynical and disempowered, as they see their votes wasted election after election, their own interests ignored in place of those of the highest bidders.
2. What is corporate welfare, why such a big deal?
A. Corporate welfare is the standard term for the spectrum of benefits legally provided to corporations. These include tax write –offs, direct government subsidies, tax abatements, and the use of loopholes already built into a variety of tax codes. It currently amounts to some $155 billion per year and projected to run to $1.6 trillion over the next ten years, nearly all out of the pockets of the American taxpayer. (Source: Citizens for Tax Justice document). This is money which could have gone towards schools, repair of highways, sewers and other infrastructure that is now falling down around our ears in major urban areas. In other words, corporations steal the resources of citizens through this agency.
The Citizens for Tax Justice estimate that without this form of welfare corrupting our political and social system, the federal deficit would be halved. As it is, it will continue to grow no matter what else is done, until this insidious form of thievery is abolished.
3.. Why so important to eliminate it?
A. Because first of all, it corrupts the political process. The money is part of a loop that began when corporations contributed soft money to specific election campaigns. The loop looks like:
Corporation - > Congress Critter -> [corporate welfare in laws]
---------------------------------------------------V
!----------------- -----------------------(tax breaks etc.) -------!
This loop assures the governance of the nation is sold to the highest bidders. Obviously if our legislators accept money from corporations to get elected, they are obligated to those corporations afterwards. That means that these obligations have to made good, most often in passing laws that favor the corporations over the average citizen. In my area, this most recently came to the fore when legislators passed laws that: a) increased bank ATM fees, b) instituted late fee payments for companies that penalize the poor, or the unemployed.
Since ordinary citizens lack the monetary resources of corporations, they are excluded from the loop and receive no benefits. As one politician once stated: “If they want to be on our radar screen, they need to ante up the same amount of money as the corporations. Then they’ll get the attention.” Obviously, all this has been made much worse since the horrific "Citizens United" decision of 2009 which gave carte blanche to corporations to spend as much as they want in any election campaign. In 2010 they gave five times more to Republicans than Dems.
This sort of attitude is endemic in both state and local governments. It says, in effect, that one man –one vote is archaic. It’s a million dollars (or more) and one delegate or congressional vote now. This makes a mocking joke of democracy.
Worse, they have to fund – via tax dollars- the corporate welfare provided, which is often against their best interests.
4. So, in a corporatocracy, the key evil is that money ‘votes’ and controls the political process, as well as the laws which flow from it?
Exactly so. Money, soft money, flows in obscene amounts from corporate influence peddlers to purchase the votes of lawmakers on Capitol Hill. The problem is that there is no regulation of this money, or accountability in the political process. In a number of other nations, any such external influence, or bribery- which is what it is, would be outlawed. In Egypt, perpetrators can have hands cut off, as well as jail time.
This is why campaign finance reform is genuinely the litmus test of whether we really want democracy in the country, or a de facto corporatocracy- government run by and literally for the corporations. (Since they must be rewarded by the right laws, or will stop giving money).
In this way, the intrusion of money pollutes and debases the whole political and economic infrastructure. It creates cynicism and de-politicization in the voters, who feel their vote is pointless. After all, no matter how they vote, or for whom- the candidates will eventually be bought by the highest corporate bidders once they reach DC, or their state house.
The people are thereafter dismissed, until the next time arrives to pander to them with meaningless mouthings during an election campaign. But in the next cycle the situation worsens and favors the corporatists even more because many more millions of citizens have usually dropped out, and they're often the more informed variety.
What happens as the voter intelligence-knowledge base erodes on account of frustration, is we end up with a Tea-Party-ized electorate. The very types Jefferson warned us about in his "Notes on Virginia" if citizens' minds aren't "improved". It is such an electorate that plausibly brought the likes of Hitler to power in Germany ca. 1932, and it is plausible an American version will bring another fascist to power again, perhaps even reincarnating Hitler and his vicious agenda.
Let's also bear in mind the links between fascism and corporatism. (See next Blog)
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