[Biofuel] The Predator State = Enron, Tyco, WorldCom... and the U.S. government?
http://informationclearinghouse.info/article12880.htm The Predator State Enron, Tyco, WorldCom... and the U.S. government? By James K. Galbraith 04/29/06 Mother Jones -- -- WHAT IS THE REAL NATURE of American capitalism today? Is it a grand national adventure, as politicians and textbooks aver, in which markets provide the framework for benign competition, from which emerges the greatest good for the greatest number? Or is it the domain of class struggle, even a global class war, as the title of Jeff Faux's new book would have it, in which the party of Davos outmaneuvers the remnants of the organized working class? The doctrines of the law and economics movement, now ascendant in our courts, hold that if people are rational, if markets can be contested, if memory is good and information adequate, then firms will adhere on their own to norms of honorable conduct. Any public presence in the economy undermines this. Even insurance-whether deposit insurance or Social Security-is perverse, for it encourages irresponsible risktaking. Banks will lend to bad clients, workers will live for today, companies will speculate with their pension funds; the movement has even argued that seat belts foster reckless driving. Insurance, in other words, creates a moral hazard for which market discipline is the cure; all works for the best when thought and planning do not interfere. It's a strange vision, and if we weren't governed by people like John Roberts and Sam Alito, who pretend to believe it, it would scarcely be worth our attention. The idea of class struggle goes back a long way; perhaps it really is the history of all hitherto existing society, as Marx and Engels famously declared. But if the world is ruled by a monied elite, then to what extent do middle-class working Americans compose part of the global proletariat? The honest answer can only be: not much. The political decline of the left surely flows in part from rhetoric that no longer matches experience; for the most part, American voters do not live on the Malthusian margin. Dollars command the world's goods, rupees do not; membership in the dollar economy makes every working American, to some degree, complicit in the capitalist class. In the mixed-economy America I grew up in, there existed a post-capitalist, post-Marxian vision of middle-class identity. It consisted of shared assets and entitlements, of which the bedrock was public education, access to college, good housing, full employment at living wages, Medicare, and Social Security. These programs, publicly provided, financed, or guaranteed, had softened the rough edges of Great Depression capitalism, rewarding the sacrifices that won the Second World War. They also showcased America, demonstrating to those behind the Iron Curtain that regulated capitalism could yield prosperity far beyond the capacities of state planning. (This, and not the arms race, ultimately brought down the Soviet empire.) These middle-class institutions survive in America today, but they are frayed and tattered from constant attack. And the division between those included and those excluded is large and obvious to all. Today, the signature of modern American capitalism is neither benign competition, nor class struggle, nor an inclusive middle-class utopia. Instead, predation has become the dominant feature-a system wherein the rich have come to feast on decaying systems built for the middle class. The predatory class is not the whole of the wealthy; it may be opposed by many others of similar wealth. But it is the defining feature, the leading force. And its agents are in full control of the government under which we live. Our rulers deliver favors to their clients. These range from Native American casino operators, to Appalachian coal companies, to Saipan sweatshop operators, to the would-be oil field operators of Iraq. They include the misanthropes who led the campaign to abolish the estate tax; Charles Schwab, who suggested the dividend tax cut of 2003; the Benedict Arnold companies who move their taxable income offshore; and the financial institutions behind last year's bankruptcy bill. Everywhere you look, public decisions yield gains to specific private entities. For in a predatory regime, nothing is done for public reasons. Indeed, the men in charge do not recognize that public purposes exist. They have friends, and enemies, and as for the rest-we're the prey. Hurricane Katrina illustrated this perfectly, as Halliburton scooped up contracts and Bush hamstrung Kathleen Blanco, the Democratic governor of Louisiana. The population of New Orleans was, at best, an afterthought; once dispersed, it was quickly forgotten. The predator-prey model explains some things that other models cannot: in particular, cycles of prosperity and depression. Growth among the prey stimulates predation. The two populations grow together at first, but when the balance of
Re: [Biofuel] The Predator State = Enron, Tyco, WorldCom... and the U.S. government?
His book is a wake-up call for everyone who believes that market forces alone will keep companies and their owners honest. The only question is who owns whom, or rather, do they run their companies or do their companies run them? On the one hand, you find yourself trying to use human nature to explain humans doing completely inhuman things as a matter of course, so human nature takes a downgrade, on the other, it's just a mechanism that's out of control, and that's how it works. Slaves will do slavish things but that doesn't make them inhuman, it's because they don't have any choice. Then they go home to their wives and families, who don't blame them for it. Especially not if they've got a $400 million golden handshake in their pocket, for instance. A company does not have a heart http://snipurl.com/pyog Re: [Biofuel] Eating (up) the World See also: For Richer, by Paul Krugman (8,100-word NYT article, good read) http://www.pkarchive.org/economy/ForRicher.html http://www.utexas.edu/utpress/books/blabes.html Black, The Best Way to Rob a Bank Is to Own One, University of Texas Press The Best Way to Rob a Bank Is to Own One How Corporate Executives and Politicians Looted the SL Industry By William K. Black This is an extraordinary bookNo other account gives a complete picture of the control fraud that occurred in the SL crisisThere is no one else in the whole world who understands so well exactly how these lootings occurred in all their details and how the changes in government regulations and in statutes in the early 1980s caused this spate of lootingThis book will be a classic. -George A. Akerlof, University of California, Berkeley, winner of the 2001 Nobel Prize for Economics This book is a must-read for anyone wanting to understand one of the darkest chapters in financial history in America. As Black clearly and expertly shows, the lessons we never learned are still importantHis book more than stands on its own against any other published on the SL crisis and is the most definitive account available. -Henry N. Pontell, University of California, Irvine, coauthor of Profit Without Honor: White-Collar Crime and the Looting of America William Black hits the bull's eye with his development of the concept of 'control fraud' in The Best Way to Rob a Bank Is to Own One. Calculated dishonesty by people in charge is at the heart of most large corporate failures and scandals, such as the savings and loan debacle, as Black points out. While people chase around for other explanations, these control fraud criminal acts are right there for all to see. Black does a great service by making us focus on this reality. We will better understand and possibly prevent the scandals as we see them in the spotlight of control fraud. -Elliott Levitas, former Commissioner, National Commission on Financial Institution Reform, Recovery, and Enforcement (FIRREA), and former Member of Congress At its root the SL scandal is about corrupting self-interest, political and economic. Bill Black's seminal treatment of the subject amounts, in effect, to a clarion call for the return to an old-fashioned notion of public interest. Without such an ethic, analogous transgressions will take place again and again. In this context, the story Black weaves is both historical and prophetic. -Congressman Jim Leach, R-Iowa The catastrophic collapse of companies such as Enron, WorldCom, ImClone, and Tyco left angry investors, employees, reporters, and government investigators demanding to know how the CEOs deceived everyone into believing their companies were spectacularly successful when in fact they were massively insolvent. Why did the nation's top accounting firms give such companies clean audit reports? Where were the regulators and whistleblowers who should expose fraudulent CEOs before they loot their companies for hundreds of millions of dollars? In this expert insider's account of the savings and loan debacle of the 1980s, William Black lays bare the strategies that corrupt CEOs and CFOs-in collusion with those who have regulatory oversight of their industries-use to defraud companies for their personal gain. Recounting the investigations he conducted as Director of Litigation for the Federal Home Loan Bank Board, Black fully reveals how Charles Keating and hundreds of other SL owners took advantage of a weak regulatory environment to perpetrate accounting fraud on a massive scale. He also authoritatively links the SL crash to the business failures of the early 2000s, showing how CEOs then and now are using the same tactics to defeat regulatory restraints and commit the same types of destructive fraud. Black uses the latest advances in criminology and economics to develop a theory of why control fraud-looting a company for personal profit-tends to occur in waves that make financial markets deeply inefficient. He also explains how to prevent such
Re: [Biofuel] The Predator State = Enron, Tyco, WorldCom... and the U.S. government?
It seems that James K. Galbraith is following in the footsteps of his late and very great father John Kenneth. It's delightfully ironic that James teaches at the Lyndon B. Johnson school. -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] Behalf Of Keith Addison Sent: May 3, 2006 3:17 AM To: biofuel@sustainablelists.org Subject: [Biofuel] The Predator State = Enron, Tyco, WorldCom... and the U.S. government? http://informationclearinghouse.info/article12880.htm The Predator State Enron, Tyco, WorldCom... and the U.S. government? By James K. Galbraith 04/29/06 Mother Jones -- -- WHAT IS THE REAL NATURE of American capitalism today? Is it a grand national adventure, as politicians and textbooks aver, in which markets provide the framework for benign competition, from which emerges the greatest good for the greatest number? Or is it the domain of class struggle, even a global class war, as the title of Jeff Faux's new book would have it, in which the party of Davos outmaneuvers the remnants of the organized working class... The doctrines of the law and economics movement, now ascendant in our courts, hold that if people are rational, if markets can be contested, if memory is good and information adequate, then firms will adhere on their own to norms of honorable conduct. Any public So, how can the political system reform itself? How can we reestablish checks, balances, countervailing power, and a sense of public purpose? How can we get modern economic predation back under control, restoring the possibilities not only for progressive social action but also-just as important-for honest private economic activity? Until we can answer those questions, the predators will run wild. James K. Galbraith teaches economics at the Lyndon B. Johnson School of Public Affairs at the University of Texas-Austin. He previously served in several positions on the staff of the U.S. Congress, including executive director of the Joint Economic Committee. ___ Biofuel mailing list Biofuel@sustainablelists.org http://sustainablelists.org/mailman/listinfo/biofuel_sustainablelists.org Biofuel at Journey to Forever: http://journeytoforever.org/biofuel.html Search the combined Biofuel and Biofuels-biz list archives (50,000 messages): http://www.mail-archive.com/biofuel@sustainablelists.org/ ___ Biofuel mailing list Biofuel@sustainablelists.org http://sustainablelists.org/mailman/listinfo/biofuel_sustainablelists.org Biofuel at Journey to Forever: http://journeytoforever.org/biofuel.html Search the combined Biofuel and Biofuels-biz list archives (50,000 messages): http://www.mail-archive.com/biofuel@sustainablelists.org/
