From Adam Smith to Milton Friedman and beyond, it has been capitalist theology that the driving force of healthy and fairly distributed creation of national wealth is greed. There are nicer words for it, but that’s the real meaning of our euphemisms (“unfettered competition,” etc.). Whether it is Smith’s 18th century Wealth of Nations’ tomato farmer haggling with housewives over price, or Milton Friedman’s Monetary History of the U.S.’ seminal theology of the free market unchained, the underlying thesis of it all has been that what has made America great has been to keep government from restraining the ambition of individual entrepreneurs and corporations to make maximum money in their various ingenious ways.
The slogan has been that free market will free us all. It’s true that both Adam Smith and Milton Friedman said all bets are off if there is monopoly or fraud. Smith’s only tomato farmer within 50 miles was a monopolist and could name his price. So can a monopolistic modern corporation that has market domination power that can buy out troublesome upstarts or crush them with massive promotion and advertising.
We were supposed to be immunized against monopoly and fraud by memory of centuries of experience. Our MBA students learn all about the unrelenting history of successions depressions and financial disasters â€“ tulipmania in 17th century Holland and the 1929 Crash and Great Depression in the United States.
But in contemporary United States, something happened to the national memory. In the last ten years, top executives of a stunning number of very large corporations committed fraud and theft, doctored their books, created false entities designed to let insiders rake in billions when many of them knew their corporations were in crisis. For numerous firms the crisis was fatal and hundreds of thousands of their workers lost their jobs and were cheated of their old-age pensions. It was not only the Enrons and WorldComs but some of the most prestigious monuments of American capitalism â€” some of the country’s oldest and largest banks and accounting firms.
We were supposed to know better. How could they have become corporate crooks when Franklin Roosevelt’s New Deal created new agencies and empowered older ones to make sure it would never happen again. The Securities and Exchange Commission made publicly traded corporations expose their finances completely and candidly to their stockholders; the Fair Trade Commission clamped down on dangerous or misrepresented consumer goods; the National Labor Relations Board would establish the rules of fair and uninhibited union organizing if workers wanted to form a union, and so forth.
Is it possible that the public has trouble with the sudden multiplication of zeroes in corporate and government dollar figures. In the past “a millionaire” was rich, but now we speak in terms of billions, trillions and quadrillions, or 10-to-the-nth. Does that makes it all look unreal, like pieces of paper in the Monopoly board game? No. That’s too easy.
The main answer came when Ronald Reagan shifted the political and economic spectrum of the United States. With his genial, simpatico manner that reflected his sincere beliefs. They were the values expressed in the speeches that General Electric put in his hands and paid him to deliver to national audiences in the years before he became President. It has been the standard political rhetoric of late 20th century conservatives in both major parties that the demon is “government interference” with business and financial institutions. Only leaders of private business and finance that “understand the facts of life” compared with the double-dome academic economists and “bureaucrats in Washington.”
Once the Great Depression and World War II were over, the corporate drumbeat drowned out memories of the death wish behavior of capitalists in the 1920s and the corrections of The New Deal, which, in world terms, were relatively mild. By the 1980s and the Reagan Administration, the demons became specific â€” the NLRB was coddling labor unions (fire all the unionized air controllers), and income taxes prevented rich investors from creating jobs. The new slogan was “trickle-down theory.” The enemy was the Internal Revenue Service that stole money from the wealthy creators of prosperity. By taxing the richest people it slowed the new accumulation of wealth flowing to the top 1 or 2 percent of the richest families and biggest corporations who, so the theory went, were the people who needed even more money to invest in ever more factories and stores and thus keep working people working.
There were objections, of course, but these were by “liberals.” By the Reagan ascendancy, to be called a “liberal” was almost as politically risky as being called a “pinko” by Joe McCarthy. It took a very smart and witty academic, John Kenneth Galbraith to characterize the trickle-down theory: “If you feed the horse enough oats, something will be left for the sparrows.” But he was â€“ watch your language! — a liberal.
It led to the 1994 Gingrich Revolution, perhaps the most violent sudden alteration of the country’s political economy in this century. Ultimately, it wrecked Gingrich as a politician, but his bad works survived him and the country’s political spectrum’s shift to the right remains locked in today. The Republican chant of the government as enemy, intended or not, encouraged fascistic “militias” to spring up around the country and increased the drumbeat of a violent “taking back the government.” The climax was the Oklahoma City Federal Building destroyed with a horrendous death toll of innocent federal civil servants.
Almost the next day, conservative Republicans whose words were suddenly remembered, denied that they had anything to do with giving the Timothy McVeighs of the country permission to see themselves as heroes in the war cry — “the government is the enemy.”.
The Democratic Party , once thought of as FDR’s legacy, was taken over by the Southern Democratic Leadership Council, whose leadership insisted that the party must look more conservative, or “centrist.” The trouble was that the spectrum had changed. What was “centrist” before Reagan and Gingrich was now conservative. What once was called “the far right” became the core of the Republicans and what had been the foot-dragging, reactionary “Southern conservatives” became the theoreticians of the Democratic Party. By 1990, Nixon”s economic and political policies looked, in retrospect, downright liberal.
“Liberal” is now a curse word in both Republican and Democratic parties. Citizens and leaders serious about reforms that benefit the mass of ordinary people have had to adopt the term “progressive.” The new political spectrum was partially obscured by Bill Clinton who, despite the Lewinsky and impeachment case, had a warm and winning personality and was forgiven his social policy rhetoric. Oddly, he left office with an unexpected wave of affection by most of the country.
The new Democratic Party leader was Al Gore, at the time one of the most trusted leaders of the conservation movement. But Gore made three fatal political errors. He changed his political image. Fifteen years as a Washington correspondent had made it clear to me that prominent politicians who disappear in the wings and reappear in a different role end up being shed of whatever familiarity and acceptance they had with the voters and leave supporters confused and angry.
Second, Gore, faced by a stumbling, vapid George W. Bush, made another fatal error: he treated his opponent with contempt and ridicule in TV debates. Any sensible debater knows that if your opponent is digging his own grave, you don’t interrupt him. And third, he kept an icy rhetorical and personal distance from Bill Clinton, a separation so complete that the name of the retiring incumbent was scarcely uttered in the campaign by Clinton’s own Vice President.
Frightened by both Bush and the new Gore, Ralph Nader and his followers launched a third party in the hopes of ending the falling percentage of eligible voters who went to the polls on Election Day. It was clear that a growing number of voters saw no one they liked in either major party and stayed home on the first Tuesday after the first Monday of Novembers. Scared by Gore’s shrinking lead, there was a growing fear of the unthinkable — a reactionary rich kid whose intellectual stretch stopped in the country-club locker-room, might actually win. Most Naderites defected in order to avoid a Bush victory.
Bush’s “victory” (there are still bumper stickers about the U.S. Supreme Court’s shocking decision on the Florida balloting: “He Wasn’t Elected/He Was Selected”) along with a Republican House and Senate has led to the rapid retrogression of social and civic policies of the United States: the NLRB became even more pro-management; the Environmental Protection Agency has been headed by an anti-environmentalist; the steady shrinkage of the progressive tax and drastic cuts in budget and staff of the Securities and Exchange Commission, reversal of the Roe v. Wade Supreme Court decision legalizing abortion was clearly on the agenda and would be a litmus test on new court appointments. Among other things it was open season for tax avoidance by the wealthy and by corporations.
Even before these retrogressions, the United States still had the widest gap among industrial nations between the rich and the rest of the country. It was still the only developed country in the world without universal health care. Among industrialized democracies it has the highest permanent shortage of affordable low-cost housing with consequent growing populations of homeless families and individuals living in the streets. It still led the world in emissions into the atmosphere that threaten global warming and disastrous climatic devastations by floods, hurricanes, and droughts.
These existed before the Bush people took over the government. Bush proceeded to make it all worse. He backed out of international remedial treaties on a number of global crises. He blunted or cancelled conservationist programs. He wanted public health even more privatized. He swore he would privatize Social Security (working families, he said, would retire with far more money if they used their Social Security payments to invest in the stock market). He further opened up banks to playing the market without depositors’ permission or knowledge.
What swept through the country was a culture of no limits and no social conscience. Make as much money as you can and don’t let the bureaucrats stop you. Success is honored by income. Taxes are a form of theft, so do everything you can to evade those gangsters in the I.R.S. The heroes were the people who made lots of money, anybody, from the kids in sneakers and jeans in Silicon Valley garages to the biggest and most prestigious bankers in the country. Winning is everything. Sneer at the losers. It was like TV wrestling. No rules. But win.
Capitalism is always in danger of doing just that. But centuries of experience had taught a lesson of intelligent restraint. But the New Economy (the world is full of people who declare a “new economy” when they are the beneficiaries) threw out of the old rules. Look at the kids in Silicon Valley. But don’t look too closely at the grown-ups in the big banks and the accounting firms and the global entrepreneurs. Remember that government is the enemy. Screw the rules. Winning is everything.
Enter the culture of uninhibited greed, of joyful freedom from legalistic rules. CEOs heroism was based on which had the biggest compensation packages and stock options cashable at once for a few billion. It is as natural in Bush’s capitalism to cheat and steal when there are no applicable rules as it is for wandering boys to pick apples from a roadside orchard.
El Paso gas? Cut back 20 percent on natural gas going to California electrical generators and blackouts will justify gorgeous increases in price. Make “independent” accountants your business partners and they will look the other way when you cook the books. Corporate Boards of Directors, who are themselves usually CEOs of other big companies, let their CEO get ever-larger salaries and other compensations along with the private fleet of jets and flexible rules, and forget ordinary stockholders. Since no one was looking, they cooked the books, calling obligations profits and hand out goodies while the company rushed toward bankruptcy, with a few executive insiders cashing their stock just before the company went over the cliff.
The uninhibited lust for money success was not limited to the corporate world. It seemed to infect every part of society. A mutated form has been the rush to public fame that has involved some of our most prestigious scientific laboratories in the rush to Nobel Prizes led to faked experimental data. Even the admissions office of an Ivy League university, Princeton, hacked into Yale’s highly private web site for students to see which prized students picked “the other university.”
Hundreds of thousands of workers remain unemployed, more than the official statistics show because discouraged job-seekers eventually stop or can’t afford to keep looking. Middle managers who had planned to pay for paid their hefty mortgages and their kids’ college tuitions, ended up flipping burgers at the local fast food franchise– officially, they are employed..
When the glistening bubble of ever-rising new money finally burst, disappearance of the shimmering, shiny surface revealed shocking amounts of dirty linen. With good reason, you couldn’t trust anybody. The stock market began its plunge. The economy went into recession.
Problem: the crucial 2002 congressional elections are only a couple of months away. So suddenly, out of the blue, Osama bin Laden and his Al Qaeda and Jihad are not the threat. It’s Saddam Hussein. Remember Hussein? President Bush’s father fought a “bloodless” technological war against him but let Hussein’s best armed force escape as a way of keeping Iraq pressure against Iran and maintain Iraq as a major largest exporter of oil to the United States.
Hussein is a good poster boy for evil. He does, indeed, commit chilling atrocities to sustain his power, but so does Syria, North Korea, and even our good friend President Musharaff of Pakistan. Hussein has been a cruel tyrant fora long time before the 2002 Congressional elections he was suddenly a threat to American security.
There was once a movie called “Wag the Dog.” A political leader is in trouble with shoddy deals and possible damage in the coming election. He hires a consultant. What to do? The consultant says you need a war to take peoples’ minds off problems at home. I think George Bush may not read books, but he goes to the movies.