i say LET IT FAIL. let it fail like a drunk acrobat with no net. if anything we should try to accelerate the process. the faster we hit bottom, the faster we can re-establish something decent. there are very few ways to repair this mess without a total demolition and refurbishment.
----- Original Message ----- From: "Keith Addison" <[EMAIL PROTECTED]> To: <biofuel@sustainablelists.org> Sent: Wednesday, May 03, 2006 2:17 AM 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 > 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 power shifts toward the > predators (through rising interest rates, utility rates, oil prices, > or embezzlement), both can crash abruptly. When they do, it takes a > long time for either to recover. > > The predatory model can also help us understand why many rich people > have come to hate the Bush administration. For predation is the enemy > of honest business. In a world where the winners are all connected, > it's not only the prey who lose out. It's everyone who hasn't licked > the appropriate boots. Predatory regimes are like protection rackets: > powerful and feared, but neither loved nor respected. They do not > enjoy a broad political base. > > In a predatory economy, the rules imagined by the law and economics > crowd don't apply. There's no market discipline. Predators compete > not by following the rules but by breaking them. They take the > business-school view of law: Rules are not designed to guide behavior > but laid down to define the limits of unpunished conduct. Once one > gets close to the line, stepping over it is easy. A predatory economy > is criminogenic: It fosters and rewards criminal behavior. > > Why don't markets provide the discipline? Why don't "reputation > effects" secure good behavior? Economists have been slow to answer > these questions, but now we have a full-blown theory in a book by my > colleague William K. Black, The Best Way to Rob a Bank Is to Own One. > Black was the lawyer/whistle-blower in the Savings and Loan and > Keating Five scandals; he later took a degree in criminology. His > theory of "control fraud" addresses the situation in which the leader > of an organization uses his company as a "weapon" of fraud and a > "shield" against prosecution-a situation with which law and economics > cannot cope. > > For instance, law and economics argues that top accounting firms will > protect their own reputations by ferreting out fraud in their > clients. But, as with Enron, Tyco, and WorldCom, at every major S&L > control fraud was protected by clean audits from top accountants: You > hire the top firm to get the clean opinion. Moral hazard theory > shifts the blame for financial collapse to the incentives implicit in > insurance, but Black shows that the large frauds were nearly all > committed in institutions taken over for that purpose by criminal > networks, often by big players like Charles Keating, Michael Milken, > and Don Dixon. And there's another thing about predatory > institutions. They invariably fail in the end. They fail because they > are meant to fail. Predators suck the life from the businesses they > command, concealing the fact for as long as possible behind > fraudulent accounting and hugely complex transactions; that's the > looter's point. > > That a government run by people rooted in this culture should also be > predatory isn't surprising-and the link between George H.W. Bush, who > led the deregulation of the S&Ls, his son Neil, who ran a corrupt > S&L, and Neil's brother George, for whom Ken Lay sent thugs to > Florida in 2000 on the Enron plane, could hardly be any closer. But > aside from occasional references to "kleptocracy" in other countries, > economic opinion has been slow to recognize this. Thinking wistfully, > we assume that government wants to do good, and its failure to do so > is a matter of incompetence. > > But if the government is a predator, then it will fail: not merely > politically, but in every substantial way. Government will not cope > with global warming, or Hurricane Katrina, or Iraq-not because it is > incompetent but because it is willfully indifferent to the problem of > competence. The questions are, in what ways will the failure hit the > population? And what mechanisms survive for calling the predators to > account? Unfortunately, at the highest levels, one cannot rely on the > justice system, thanks to the power of the pardon. It's politics or > nothing, recognizing that in a world of predators, all established > parties are corrupted in part. > > 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/ > > > -- > No virus found in this incoming message. > Checked by AVG Free Edition. > Version: 7.1.385 / Virus Database: 268.5.2/329 - Release Date: 5/2/2006 > > _______________________________________________ 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/
