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General News    H3'ed 3/29/13

Is the present Plutonomy the endpoint of the Rand/Ryan/Friedman economic model?

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This author, in his book, "Who stole the American Dream?," reveals to us all of the facts that we already knew about but were just too afraid to face up to: that the American economy has been raped, pillaged and turned into a Plutonomy -- that is, into an ATM machine OF, BY and FOR the plutocrats. In his own inimitable way, Hedrick Smith, tells us again how the deck of American power, with considerable malice and forethought, has been carefully shuffled by the conservative forces of both parties so that it is now firmly "stacked" against the Middle class, against any changes in the direction of increased worker's rights and a fairer share of the economic pie, or towards a more progressive political agenda.

Through the data accumulated and exhibited in this book, it is now much easier to see how today's corporate world has become a new form of "predator capitalism," one in which the objective is always a short-term quick boost of stock prices; a quick turn of profits for the CEOs, followed by a bust out of the company by "turning out" the work force without even a minimal social safety net.

It turns out that this is the logical and inevitable endpoint of the Ayn Rand, Paul Ryan, and Milton Friedman Darwinian paradigm of economic success. It is this model that lies at the very heart of the rationale for downsizing, outsourcing and massive job layoffs. The logic that has been "force fed" to us is that only by laying off and outsourcing our jobs can American companies remain "mean and lean" and thus globally competitive. 

However this book says that the truth is otherwise. The author tells us that this carefully engineered short-term boost to the stockholders' bottom-line -- with its bust out "cut-and-run motif" -- is shortsighted, immoral and inefficient as a long-term business model. Yet, no matter how foreign it is to the traditional American business model, we have allowed this rigged zero-sum game for transferring huge amounts of wealth from the bottom of the economic pyramid to the top, to become the new model of the contemporary American economic and political experience. This book tells us in graphic details how we allowed this to happen.


We are all too familiar with the game, for it is one that GW Bush and Mitt Romney would be proud. As it is played on a chessboard tilted by incestuous and ruthlessly corrupt manipulation of the normal American economic and political processes: by lobbyists peddling influence with large sacks of money in the form of campaign contributions; through systematic political demagoguery on a 24-hour rightwing cable TV news cycle; lack of moral sensibilities or accountability by our greedy elite corporate managers; corrupt changes in laws that remove accountability from the portfolios of American corporations; and the consistent anti-Darwinian process of rewarding business greed and failure.

It is through this altered process that the normal American economic and political processes have been turned on their heads and forced into a new hyper-real self-destructive conservative ideological dead-end, one in which the American worker has received plenty of emotional "red meat" with which to fill his stomach, but little else in the way of economic, or political power or sustenance. The American worker has sold his soul for "the proverbial "thirty pieces of silver," that is for emotional red meat issues, and as a result no longer has a stake in the game, or a piece on the board, nor even a seat at the table, and thus has slowly but systematically been cut out of the American economic pie all together.

No less than Warren Buffet, one of the few remaining plutocrats who still seems to have a conscience, has dropped the gauntlet for the one per-center's in the epigram to chapter 5 of this book. To wit: "There is class warfare all right, " but it's my class, the rich class, that's making war, and we are winning." (Page 47). Buffet, could not have said it better, for there is indeed a war out there and this book tells us how it is being waged by the rich against the rest of us, and how we are resoundingly losing that war, and arguably, perhaps even may even have already lost it, permanently.

What Hedrick Smith tells us here is not a "pretty Picture." It is that for American business, the current "slash-and-burn" economic environment is the "wild West" all over again.   It is an environment that begins and ends with the treasonous shredding of the social contract between business and the American people -- a contract the author calls "the virtuous circle." The shredding of the Social Contract set off a chain reaction of events that led to a viciously destructive game plan established by Lewis Powell in 1971 just before Richard Nixon was about to appoint him to the U.S. Supreme Court. The object of the game plan has always been transparent: to destroy unions and to roll back every inch of the Roosevelt New Deal safety net and protections for the American worker. So far, it has nearly succeeded in completely shredding the social safety net -- using our own retirements funds to underwrite it, no less -- stripping workers of virtually all their rights, and their benefits like healthcare, retirement, and turning them into "Permtemp" contract employees, without even the minimum of workers' rights, benefits and protections.

Next, the labor unions, if not completely destroyed, have been shattered, neutered and rendered impotent and ineffectual; left to die on the vine without a proper funereal. And then as the Ayn Rand, Paul Ryan and Milton Friedman's army marched closer to the goal line (somewhere around the 20-yard line during the 1990s under Bill Clinton), the "credit trap" was sprung to make "debt slaves" out of all but the most wary of us. Student loans and credit card debit replaced home mortgages as the quickest way to ground the Middle-class into the poor house. The floodgates to usurious interest rates (credit card interest rates were allowed to float up to 30%) were opened, bankruptcy laws were changed to box-in those already deeply in debt. And finally, to add insult to life-threatening injury, the "Wall Street bust out" using the "Credit-default swap scheme" was then skillfully engineered and executed to take away the very center piece of the American dream, the American home. Lured into another debt trap by cheap financing based on bogus loan paperwork, this turned out to be the final denouement, the proverbial nail in the coffin to the American Dream, one that resulted in the transfer of the lion's share of the wealth in America to the richest one percent. We were all witnesses to this reckless and greedy maneuver because it almost brought the global economy to its knees. But as GW Bush would say, that's is how the West was won: "Mission Accomplished!"

I had several problems with the book. One is that the author's data suggests unmistakably that these changes are systemic. Thus, I believe that the author's suggested fixes of going back to the activism of the 1960s betrays a serious attempt to stand back and analyze and extract exactly the correct meaning that the systemic nature of these changes, portend? To wit: We now have an out of control economic system in which those who have finagled their way into power are ensconced there. These are power-hungry people, who are completely without a moral conscience and with no one above them to call them to account? Does the author expect them to give up this power willingly? Or by a few more demonstrations along the lines of "Occupy Wall Street?

  Through wedge politics --- non-whites against whites; and wedge economics, pitting the poor against the rich -- and the "WallMartization of American business, these wedges are now looking more like a permanent American fault line than anything else? As a result, it is not unreasonable for one to conclude that "we the people" have finally completely forfeited our sovereignty and   "agency" over to the "One Per-centers, who have become Gods unto themselves: They not only shredded the long-standing "social Contract" between American business and the American worker, but also by turning all of our elected politicians into political whores, they are now allowed to engineer both the economic and social rules to suit their own endless and mindless greed.

How is it that the author has failed to see that once the one per-centers have been allowed to acquire the kind of unimaginable power and wealth that we have allowed them to acquire, there are no known mechanisms within the American political process (as it has been currently deformed) that could reverse this process? The author's suggestion that we go back to the social movements of the 60s is just lame and unconvincing. Those movements worked in the 1960s precisely because (and only because) that was a different time and a different economic, political and moral environment. As we have seen by the "Occupy Wall Street movement," which has been completely ignored by the "powers that be," it is not easy to un-ring that economic bell.  It seems to me that we undeniably  have finally crossed some strange Rubicon into a quasi-Fascist new economic and political hyper-space?

I am old enough to see a much deeper pattern to this business game plan of shredding an implied social contract, turning workers into debt slaves, and using greed to permanently block all exits to a better life? Is it not easy to see that it is "cheap colored labor" wherever on the globe it can be found that serves as the axis upon which the American economy always seems to turn? 

Indeed, it is not difficult to recall that two centuries ago in the U.S. this was the same modality used to institute slavery and Indian removal. Now that same virus has only changed colors and leaped a couple of rungs up the economic ladder: As it has metastasized, it has been ratcheted up a notch from the poor (blacks, whites, Native Americans and now latino immigrants) to middle-class whites. By my way of thinking the formula has not changed one iota; the virus is still part of the same disease: It is still based on cheap colored labor wherever it can be found; and on greed of the Ayn Rand, Paul Ryan, Mitt Romney, Milton Friedman's style of economic immorality.   That said, this is still a must read. Five Stars



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Retired Foreign Service Officer and past Manager of Political and Military Affairs at the US Department of State. For a brief time an Assistant Professor of International Relations at the University of Denver and the University of Washington at (more...)
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