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mugtang

National Interest: The US Economy Is Rigged

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Fascinating article about how the US economy is rigged.  It's a long read but I suggest everybody take the time to read it. 

Here are a few things that stood out to me:

Quote

IT SHOULD then be no surprise that Americans, who in many ways are very different from each other, find the existing corporatist system so obnoxious. Collusive economics is certainly contrary to past American practice. From this country’s beginnings, it has resisted the concentrations of power that typify the present system, whether in commerce or government. Our founders, of course, had little concern over commercial concentrations. Though Adam Smith’s 1776 bestseller, The Wealth of Nations, warned about commercial monopolies and state-sponsored corporations, these were less of a threat in undeveloped America than in Great Britain. The United States, having just won independence from the British crown’s abuses, worried mostly about concentrations of government power. James Madison, in The Federalist No. 10, made his concern about government monopoly crystal clear. If governments were administered by “angels,” he wrote, people would have no need to worry about concentrations of power. The natural goodness of government administrators would serve as a safeguard against abuse. But because human beings administer governments, he saw a need for institutionalized checks on power. A “greater variety of parties and interests,” Madison argued, “would make it less probable that [any one of them could] invade the rights of other citizens.”

 

Quote

WASHINGTON UNDER Franklin D. Roosevelt made the decision to shift from a competitive, market-driven economy toward a corporatist one that accepts, indeed embraces, concentrations of power. As with other manifestations of government-business collusion in this country, the approach grew out of the best of intentions—namely FDR’s heroic efforts to fight the Great Depression. It is ironic to think of FDR colluding with big business. His rhetoric was, if anything, openly hostile to business. In one of his famous fireside chats he expressed satisfaction with how much business leaders hated him. But for all his talk, Roosevelt nonetheless strove to co-opt corporate power. Nor did he make a secret of his model. Early on, FDR’s administration made clear its admiration for Mussolini’s Italian state. One of Roosevelt’s original “brain trust” of advisors, a Columbia University economist, Rexford Tugwell, openly spoke of his enthusiasm for the fascist leader, as did the man Roosevelt picked to head the National Recovery Administration, General Hugh Johnson, who several times referred to the “shining name” of Benito Mussolini. Roosevelt himself expressed interest in “bringing to America” the programs of “that admirable Italian gentleman.”

 

Quote

The auto industry is a case in point. Washington had long protected it—no doubt a legacy of the auto companies’ enormous cooperation during World War II, and later as part of the Cold War effort. In an earlier time, the government might have used anti-trust legislation to break them up, especially the behemoth General Motors. Indeed, for years there were calls to do just that. As it was, Washington allowed the industry to become what economists call an oligopoly, and what the public then referred to as the “Big Three”: General Motors, Ford, and Chrysler.

 

Quote

Rather than adjust to the market realities of Japanese competition, the collusive parties used Japan as a substitute for the Cold War to justify corporatist, fascist-like economics and secure the position of the corporate-government elite. A perfect example emerges from President George H.W. Bush’s late 1980s visit to Japan. In asking for concessions for U.S. auto manufacturers, his rhetoric focused on jobs for Americans. But that was a veil: by then, Toyota, Nissan, and Honda had already moved production facilities to the United States and were employing about as many people as General Motors, Chrysler, and Ford. Instead of protecting jobs, Washington was serving its well-established partners: American corporations, as well as the United Auto Workers, which had power in Detroit but not in the Japanese factories.

The entire part about the 2008 financial crisis is worth quoting but I'll leave that out since it's so long.

Anyway, I hope you read the entire article.  It's an eye opening article that lays out how the economy is rigged against the common people and the government is cooperating with corporations and elites to do it.  It also acknowledges that the rise of Trump and people like Bernie is the right & left's reaction to this rigging.  

@Rocket this is something I think you'll especially like.

 

https://nationalinterest.org/feature/us-economy-rigged-123326

thelawlorfaithful, on 31 Dec 2012 - 04:01 AM, said:One of the rules I live by: never underestimate a man in a dandy looking sweater

 

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Just curious what people think of the private companies they work for?  Or the government entity for that matter. I worked for two private companies, each for twenty years. One with 5,000 employees, the other with less  than 100. I have nothing negative of any significance to say about either from an employee  stand point.

Both managements cared about their employees and generously shared profits. Both cared about providing the best service possible (in some cases at the detriment to profit) and improving the environment which was not a surprise because that was our line of work. Both tried to keep as many employees as possible on in time of recession even though it hurt the bottom line. 

So, when I hear of all these big nasty corporations that treat their employees badly, are profit hungry, and want to control all of us, I have a hard time relating. 

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Not going to take the time to read all of that but the parts you quote from make sense.

I know little about fascist Italy but a lot about fascist Germany. Was there ever a more deceptive name than National Socialist German Workers Party? From the get-go even before assuming power, Hitler persuaded virtually all the big industrialists to support him as a bulwark against the Communists. https://en.wikipedia.org/wiki/Secret_Meeting_of_20_February_1933

I don't recognize any names from that Wiki article except the Krupp family. I recall one of my history professors who was German himself lecturing on how significant it was for Hitler to get that family behind him. Among other things, he guaranteed the Krupps that he not only wouldn't nationalize the manufacturing sector as the Communists would have, he would assure that labor unions would not become strong and went even beyond that immediately after assuming power. https://www.peoplesworld.org/article/today-in-labor-history-nazis-destroy-unions/

Just like the English, in the early thirties, FDR saw the Nazis as being the lesser of two evils compared to the Communists. As it turned out, it wasn't the two German and Russian political parties which were the Devil incarnate so much as the raving lunatics which led them.

Boom goes the dynamite.

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5 minutes ago, SleepingGiantFan said:

Not going to take the time to read all of that but the parts you quote from make sense.

I know little about fascist Italy but a lot about fascist Germany. Was there ever a more deceptive name than National Socialist German Workers Party? From the get-go even before assuming power, Hitler persuaded virtually all the big industrialists to support him as a bulwark against the Communists. https://en.wikipedia.org/wiki/Secret_Meeting_of_20_February_1933

I don't recognize any names from that Wiki article except the Krupp family. I recall one of my history professors who was German himself lecturing on how significant it was for Hitler to get that family behind him. Among other things, he guaranteed the Krupps that he not only wouldn't nationalize the manufacturing sector as the Communists would have, he would assure that labor unions would not become strong and went even beyond that immediately after assuming power. https://www.peoplesworld.org/article/today-in-labor-history-nazis-destroy-unions/

Just like the English, in the early thirties, FDR saw the Nazis as being the lesser of two evils compared to the Communists. As it turned out, it wasn't the two German and Russian political parties which were the Devil incarnate so much as the raving lunatics which led them.

You really should take the time to read it. 

thelawlorfaithful, on 31 Dec 2012 - 04:01 AM, said:One of the rules I live by: never underestimate a man in a dandy looking sweater

 

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22 minutes ago, soupslam1 said:

Just curious what people think of the private companies they work for?  Or the government entity for that matter. I worked for two private companies, each for twenty years. One with 5,000 employees, the other with less  than 100. I have nothing negative of any significance to say about either from an employee  stand point.

Both managements cared about their employees and generously shared profits. Both cared about providing the best service possible (in some cases at the detriment to profit) and improving the environment which was not a surprise because that was our line of work. Both tried to keep as many employees as possible on in time of recession even though it hurt the bottom line. 

So, when I hear of all these big nasty corporations that treat their employees badly, are profit hungry, and want to control all of us, I have a hard time relating. 

You seem to have been very lucky.  I can't say I have ever worked for a company like that, or even close.

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42 minutes ago, soupslam1 said:

Just curious what people think of the private companies they work for?  Or the government entity for that matter. I worked for two private companies, each for twenty years. One with 5,000 employees, the other with less  than 100. I have nothing negative of any significance to say about either from an employee  stand point.

Both managements cared about their employees and generously shared profits. Both cared about providing the best service possible (in some cases at the detriment to profit) and improving the environment which was not a surprise because that was our line of work. Both tried to keep as many employees as possible on in time of recession even though it hurt the bottom line. 

So, when I hear of all these big nasty corporations that treat their employees badly, are profit hungry, and want to control all of us, I have a hard time relating. 

I work for a privately held company.  I view it as a business opportunity, just like one of my customers when I was working for myself.

It's a good company, and things are going well.  I just never forget that I can be easily replaced.  And I never forget that I have a set of skills that I can always use to make money somewhere else.

As long as you don't fall into the trap of thinking it's a "team", you're never disappointed.

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2 hours ago, mugtang said:

Fascinating article about how the US economy is rigged.  It's a long read but I suggest everybody take the time to read it. 

Here are a few things that stood out to me:

 

 

 

The entire part about the 2008 financial crisis is worth quoting but I'll leave that out since it's so long.

Anyway, I hope you read the entire article.  It's an eye opening article that lays out how the economy is rigged against the common people and the government is cooperating with corporations and elites to do it.  It also acknowledges that the rise of Trump and people like Bernie is the right & left's reaction to this rigging.  

@Rocket this is something I think you'll especially like.

 

https://nationalinterest.org/feature/us-economy-rigged-123326

Very good article.   Having worked for a large multinational for years I can attest to much of this article.   


* I think the business income tax should be eliminated as large enterprise firms use it to derive competitive advantage by shifting income.  

* Those who profit from return on capital should pay taxes equal to return on labor.   The differential rates only provide opportunities to game the system.   

* last we need to be concerned about lost rights not from government power but from corporate power. 
 

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2 hours ago, mugtang said:

Fascinating article about how the US economy is rigged.  It's a long read but I suggest everybody take the time to read it. 

Here are a few things that stood out to me:

 

 

 

The entire part about the 2008 financial crisis is worth quoting but I'll leave that out since it's so long.

Anyway, I hope you read the entire article.  It's an eye opening article that lays out how the economy is rigged against the common people and the government is cooperating with corporations and elites to do it. It also acknowledges that the rise of Trump and people like Bernie is the right & left's reaction to this rigging.  

@Rocket this is something I think you'll especially like.

 

https://nationalinterest.org/feature/us-economy-rigged-123326

It’s a great article. However, I don’t think Drexel Burnham, Bear Stearns, and AIG are going to be the go to example of how the system is rigged against the common people, at least for those that are concerned about that sort of thing. 

We’re all sitting in the dugout. Thinking we should pitch. How you gonna throw a shutout when all you do is bitch.

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Good summary of why Keynesian economics needs to be destroyed. When a government is controlling that much of your economy, it does so to the detriment of the taxpayer.

What the taxpayer wants is what the taxpayer wants, and a top-down directed economy rarely gives the people what they want. Instead, as the article points out, our system benefits governments favorite business partners and unions who shove shoddy products and services into the market, while destroying their competition, leaving consumers with less choice.

Like I've said before, the best business model should win, not the one given special treatment by the government. For all the fearmongering of laissez faire economics, we are currently nowhere near it, and could stand to go in that direction quite a ways.

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10 hours ago, mugtang said:

Fascinating article about how the US economy is rigged.  It's a long read but I suggest everybody take the time to read it. 

Here are a few things that stood out to me:

 

 

 

The entire part about the 2008 financial crisis is worth quoting but I'll leave that out since it's so long.

Anyway, I hope you read the entire article.  It's an eye opening article that lays out how the economy is rigged against the common people and the government is cooperating with corporations and elites to do it.  It also acknowledges that the rise of Trump and people like Bernie is the right & left's reaction to this rigging.  

@Rocket this is something I think you'll especially like.

 

https://nationalinterest.org/feature/us-economy-rigged-123326

thanks. This speaks to me. We've deliberately moved to concentrate power in the hands of oligarchs, weakening our market economy, and not enforcing anti trust legislation for... reasons. 

7 hours ago, thelawlorfaithful said:

It’s a great article. However, I don’t think Drexel Burnham, Bear Stearns, and AIG are going to be the go to example of how the system is rigged against the common people, at least for those that are concerned about that sort of thing. 

They all failed and most were bailed out.

For people who defaulted on their mortgage, how many were bailed out?

That's... a large difference. 

Remember that every argument you have with someone on MWCboard is actually the continuation of a different argument they had with someone else also on MWCboard. 

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1 hour ago, NMpackalum said:

This article could easily be used by Trumpists as validation for “Drain the Swamp”.

It could but like with most things he says it is opposite to what Trump the authoritarian actually does:

1) what Trump does is decrease capital gains taxes further and eliminates the inheritance tax.   The impact: more incentive for the rich to find ways to classify income as capital gains and for dynastic wealth to grow and corrupt.  
 

what should be done if you care: set capital gains tax equal to income tax and increase the inheritance tax.

 

2) what Trump does is impose a set of tariffs. The impact: gives government more power to bend industries to their will.

What should be done is tax cash flow earned in the US from operations and investments minus cash flow spent in the US on operations and investment.  
 

Like all things with Trump he said it was a rigged game and the proceeded to make it even more rigged!   

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23 minutes ago, sactowndog said:

It could but like with most things he says it is opposite to what Trump the authoritarian actually does:

1) what Trump does is decrease capital gains taxes further and eliminates the inheritance tax.   The impact: more incentive for the rich to find ways to classify income as capital gains and for dynastic wealth to grow and corrupt.  
 

what should be done if you care: set capital gains tax equal to income tax and increase the inheritance tax.

 

2) what Trump does is impose a set of tariffs. The impact: gives government more power to bend industries to their will.

What should be done is tax cash flow earned in the US from operations and investments minus cash flow spent in the US on operations and investment.  
 

Like all things with Trump he said it was a rigged game and the proceeded to make it even more rigged!   

Tax policy is part of it for sure. But the author of the article also writes, regulatory reform is drastically needed. At least Trump has put a small dent in that. As far as the alternative, Obamacare and new CMS regulations has increased my regulatory burdens ten fold and has definitely picked winners and losers in the industry. I just listened to the president of the National Home Builders Association who stated that up to 60% of home construction is for regulatory compliance and higher in California. The average time for a home built there from inception to completion is 9 years. Imagine Green New Deal and Medicare for all administration and you can imagine crony capitalism at its worse.

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59 minutes ago, sactowndog said:

It could but like with most things he says it is opposite to what Trump the authoritarian actually does:

1) what Trump does is decrease capital gains taxes further and eliminates the inheritance tax.   The impact: more incentive for the rich to find ways to classify income as capital gains and for dynastic wealth to grow and corrupt.  
 

what should be done if you care: set capital gains tax equal to income tax and increase the inheritance tax.

 

2) what Trump does is impose a set of tariffs. The impact: gives government more power to bend industries to their will.

What should be done is tax cash flow earned in the US from operations and investments minus cash flow spent in the US on operations and investment.  
 

Like all things with Trump he said it was a rigged game and the proceeded to make it even more rigged!   

And the modest savings for the middle class from his tax cuts go away after 10 years. Then there's the fact that the national debt has risen significantly as a result.

All smoke and mirrors and Mr. Grumpy knows it and he's laughing all the way to the bank. But more power to him if Joe 'Murica keeps letting him get away with it.

Boom goes the dynamite.

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39 minutes ago, SleepingGiantFan said:

And the modest savings for the middle class from his tax cuts go away after 10 years. Then there's the fact that the national debt has risen significantly as a result.

All smoke and mirrors and Mr. Grumpy knows it and he's laughing all the way to the bank. But more power to him if Joe 'Murica keeps letting him get away with it.

The tax cuts for the middle class aren’t going away. They will be renewed like most of the Bush tax cuts were.

Well that was the thinking at the time at least. Who knows what the political landscape is going to look like in 8 years.

We’re all sitting in the dugout. Thinking we should pitch. How you gonna throw a shutout when all you do is bitch.

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1 hour ago, NMpackalum said:

Tax policy is part of it for sure. But the author of the article also writes, regulatory reform is drastically needed. At least Trump has put a small dent in that. As far as the alternative, Obamacare and new CMS regulations has increased my regulatory burdens ten fold and has definitely picked winners and losers in the industry. I just listened to the president of the National Home Builders Association who stated that up to 60% of home construction is for regulatory compliance and higher in California. The average time for a home built there from inception to completion is 9 years. Imagine Green New Deal and Medicare for all administration and you can imagine crony capitalism at its worse.

Yes I agree.  It’s partly why I’m not currently associated with either party.   Big Business likes over regulation because it stifles the little guy but no regulation is a problem also.  

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44 minutes ago, SleepingGiantFan said:

And the modest savings for the middle class from his tax cuts go away after 10 years. Then there's the fact that the national debt has risen significantly as a result.

All smoke and mirrors and Mr. Grumpy knows it and he's laughing all the way to the bank. But more power to him if Joe 'Murica keeps letting him get away with it.

Yeah and god forbid your middle class in the Bay Area.  Your taxes probably increased.

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3 hours ago, happycamper said:

thanks. This speaks to me. We've deliberately moved to concentrate power in the hands of oligarchs, weakening our market economy, and not enforcing anti trust legislation for... reasons. 

They all failed and most were bailed out.

For people who defaulted on their mortgage, how many were bailed out?

That's... a large difference. 

It’s a neocon argument in a neocon publication taking a 10,000 foot view of the landscape arguing for a more laissez faire environment. It’s one I agree with. It’s one I’ve argued for in trade and pharmaceutical discussions here.

But yeah, it’s going to ring hollow if one doesn’t already take the view that the bailed out bankers weren’t the bad guys.

We’re all sitting in the dugout. Thinking we should pitch. How you gonna throw a shutout when all you do is bitch.

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It's interesting what people choose to read in to articles. The article describes 70 years of government corporate consolidation of the economy and then somehow it's Trumps fault. Whether he is to blame or to his credit, the median family income has increased the more in 2019 than any other year in the last 20. On a small scale, the average person can still prosper whether the economy is rigged or not.

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