Saturday, March 15, 2014

THE PREDICTABLE FALL OF THE AMERICAN RULING CLASS

History shows us that if you bite off more than you can chew you end up choking on it.



That, in essence is what the 1% of our society have succeeded in doing over the last half century by sucking the life blood out of a once prosperous hardworking and consuming middle class in these United States of America.



What was once a "repub-cracy" has been transformed into  a "plutocracy" which ironically was the very thing that the founding Americans fought long and hard against.



There was a time when the creation of wealth was understood to be the result of a collective effort  by not only those at the top, but also the untold numbers of others who all pitched in and did their part in growing our economy.



One of the titans of American industry; and a very wealthy one at that, put it simply;


"There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible."
Henry Ford

In today's America the Golden Rule in American business has been twisted into something like this;
There is one rule for the industrialist and that is: Make the worse quality of goods possible at the highest cost possible, paying the lowest wages possible.
The end result is what we have today;
A handful of extremely wealthy and powerful individuals who are self-proclaimed elitist that flaunt their power by buying the political system, ignoring our laws, and hoarding as much wealth as possible with little or no regard for their fellow human beings or the planet. 
And the list grows each year
The Forbes World's Billionaires list is the definitive list of the world's wealthiest people, profiling and ranking billionaires from 69 countries by their estimated net worth.



The ranks of the world’s billionaires continue to scale new heights–and stretch to new corners of the world. Our global wealth team found 1,645 billionaires with an aggregate net worth of $6.4 trillion, up from $5.4 trillion a year ago. We unearthed a record 268 new ten-figure fortunes, including 42 new women billionaires, another record. In total, there are 172 women on the list, more than ever before and up from 138 last year.

Like Henry Ford, some of these people adhere to the belief that their fortunes were not created in a vacuum and that it was the end result of a collective effort of untold numbers of people; workers and consumers alike, that built these fortunes.

Some have even gone as far as "pledging" to share half or more of these fortunes back to society realizing that without a collective effort none of this would be possible and/or last. 

The Giving Pledge is a commitment by the world's wealthiest individuals and families to dedicate the majority of their wealth to philanthropy. (See the list here)

Unfortunately the list is much smaller than one would like to believe and there are a much larger number of the wealthy who are committed to just the opposite. Here's how they operate;

They evade paying taxes; both as individuals and the businesses they own; 

The largest American multinational companies parked an additional $206 billion of profits in offshore accounts last year, according to Bloomberg, bringing the total amount of profits stashed where U.S. tax officials can’t touch them up to about two trillion dollars.

The 307 companies that Bloomberg examined now hold a combined $1.95 trillion offshore, allowing them to avoid paying U.S. taxes on those earnings. The majority of the total is concentrated in just a few corporate hands. The largest 22 of those companies hold more offshore than the other 285 combined.

If you're one of the 1% of Americans who control over 40% of the country's wealth, life is full of choices. Among them - how best to keep all that money away from the government? The U.S. economic system offers no shortage of loopholes allowing the ultra-rich to shortchange Uncle Sam. The following infographic explains how exactly do the super rich hide that much money from the government every year?



The end result is alarming, and for lack of a better word, disgusting;

Almost half of the world’s wealth is now owned by just one percent of the population.

The wealth of the one percent richest people in the world amounts to $110 trillion. That’s 65 times the total wealth of the bottom half of the world’s population.

The bottom half of the world’s population owns the same as the richest 85 people in the world.
Seven out of ten people live in countries where economic inequality has increased in the last 30 years.

The richest one percent increased their share of income in 24 out of 26 countries for which we have data between 1980 and 2012.

In the US, the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer.

How do they get away with it, you might ask. Aren't there laws that protect us against monopolies, organized criminal behavior, and the like? Is this not a democracy governed by the rule of law?

The answer is simple. No. Because this once Democracy has been transformed into a plutocracy. 

In a plutocracy the ruling class exempts themselves from the laws which apply to everyone else. In a plutocracy the ruling class can invoke the "affluenza" defense if brought up on criminal charges. In a plutocracy the ruling class is considered "too big" to fail or jail.

Out of 300 million Americans, a few thousand wield disproportionate economic and political influence because of their positions at the pinnacle of America's corporate and media establishments or their roles as political allies (or puppets) of the corporate ruling class. C. Wright Mills described this group in his 1956 book, The Power Elite, G. William Domhoff has updated this analysis in his book, Who Rules America? (now in its 7th edition), and Jacob Hacker and Paul Pierson have described how the power elite wields its influence in Winner-Take-All Politics.

Many of them have overlapping memberships on the boards of the largest corporations, business lobby groups, universities and think tanks, foundations, and media conglomerates. They are not part of conspiracy. They do not meet secretly to plot America's future. And they disagree with each other on some issues, particularly same-sex marriage, abortion and gun control. Some are corporate conservatives and moderates; some are right-wing reactionaries and racists; others are lunatic libertarians.

But they agree on the essential concerns about the economy. The top Wall Street and Wal-Mart CEOs, the media monopolists and their talk-show agitators, the billionaire benefactors, and the business lobbyists share an antipathy toward unions, progressive taxes, and government regulations that protect consumers, workers, and the environment. They fund think tanks and hire college professors to promote their views and to cry wolf about government rules -- denying the reality of global warming, warning that raising the minimum wage or strengthening regulations on banks will "kill jobs," and attacking Obamacare (and Obama) as "socialist." They work closely with right-wing, conservative, and moderate politicians to carry out their agenda. They act on behalf of big business and the super-rich, but to translate their ideas into public policy they have to persuade voters that their agenda benefits middle class Americans -- a task that is getting harder and harder to do. Read more here.

 
Having decimated the middle class leaves little for those at the top to exploit and so we begin to see the first signs of the fall of the ruling class. 

The rhetoric in Congress foretells the direction in which this is going;

Two weeks ago, the normally mild-mannered Senate Majority Leader Harry Reid (D-NV) caused a stir when he used some harsh words to describe the Koch brothers and the big-dollar ad campaign their organization, Americans for Prosperity, is mounting against politicians who voted for Obamacare. ”It’s too bad that they’re trying to buy America,” he said on the Senate floor. “And it’s time that the American people spoke out against this terrible dishonesty of these two brothers who are about as un-American as anyone I can imagine.”

The statement wasn’t an off-the-cuff remark, and Reid isn’t alone in calling out the Kochs. Today, Greg Sargent of The Washington Post’s Plum Line explained that there’s more than meets the eye in the Democrats’ rhetoric.  Read more here.

The banks are also now under the spotlight; especially when it comes to the role the play in aiding and abetting the 1% engage in massive multi-billion dollar enterprises designed to evade taxes, and a myriad of other schemes to protect their wealth.  Many of these crimes can easily fall into "organized crime" and it's surprising that the RICO statutes are not being invoked. 

But at least some progress is being made in shutting down these operations;

Five years on, that line of thinking may be due for an update. It remains the case that no high-ranking Wall Street executives have been criminally prosecuted or seen the inside of a courtroom since 2008. But with JPMorgan Chase (JPM) on the cusp of multiple multibillion-dollar settlements with regulators for selling bad mortgage securities, and Bank of America’s (BAC) Oct. 23 mortgage fraud trial loss likely to yield another headline sum, government efforts to bring banks to account are yielding serious money.

Since the end of 2010, the six major Wall Street banks—JPMorgan, BofA, Citigroup(C), Wells Fargo (WFC), Goldman Sachs (GS), and Morgan Stanley (MS)—have agreed to pay $67 billion in settlements and penalties related to the financial crisis, according to research firm SNL Financial. Three more deals expected soon—including JPMorgan’s proposed $13 billion omnibus settlement, a pact between the bank and investors seeking $5.75 billion, and a BofA payout of as much as $8 billion to a housing regulator—would swell the total to $93 billion to be paid to the government, homeowners, and investors. More civil cases, criminal investigations, and lawsuits are on the way.

Even though many more crimes are coming to light prosecutions of the individuals responsible continues to be conspicuously rare. The best authorities seem to be able to do is slap a few wrists and take back a token of the money made in these criminal undertakings. Justice remains blind in the majority of these case though it's becoming more obvious as to why. 

Regulators around the world have been probing whether firms colluded to manipulate interest-rate benchmarks including Libor, which affects more than $300 trillion of securities worldwide. Financial institutions have paid about $6 billion so far to resolve criminal and civil claims in the U.S. and Europe that they manipulated benchmark interest rates.

The cost for global investment banks could climb to $46 billion, analysts at KBW, a unit of Stifel Financial Corp., said in a report last year. JPMorgan Chase & Co. and HSBC Holdings may face a European Union complaint as soon as next month from the bloc's antitrust chief.

Investigators claim the banks altered submissions used to set the benchmark to profit from bets on interest-rate derivatives or to make the lenders' finances appear healthier.

In the suit filed Friday, the FDIC claimed the fixed rates caused the failed banks to pay higher prices for Libor-based financial products and to get lower interest payments from the defendants and others.

The FDIC alleges the banks committed fraud and violated U.S. antitrust laws in fixing the U.S. dollar Libor benchmark. It seeks unspecified damages on behalf of the failed banks, including punitive damages and triple damages for price-fixing.

Spokesmen for the banks declined to comment. 
Read more here:
What also remains a not so mysterious mystery is why those committing these crimes (the 1%) and their middle men (the banks) are not being rounded up at a faster pace.

Corruption is endemic to the capitalist system and has not been successfully regulated away. Perhaps a system change is warranted?

Nearly daily, mass media report political corruption across the world. Government bureaucrats, from local to national to international, are exposed for having abused their offices for personal gain. That gain is usually financial, but can involve career advancement. Much of that corruption is driven and financed by capitalist enterprises. In that kind of corruption, officials enable tax avoidance, provide subsidies, make purchases and sometimes sales, and decide many other "public" matters (e.g. locating roads, zoning cities, constructing state facilities, repressing strikes, investigating corruption, negotiating international agreements, etc.).

Official decisions are corrupt when they aim (in exchange for personal gain) exclusively or chiefly to benefit individual firms or groups of enterprises rather than any broad social or public purpose. Corruption can be illegal (when prohibitive laws apply) or legal if such laws were repealed or never passed. Political corruption, when not hidden or secret, occurs under a protective cover (or disguise) as if done for public purposes or benefits. Read more here:

All of these events point to one thing. The era of the ruling class in America is coming to an end. 

What is going to determine how long it takes depends entirely on the American people and the decisions they make in the coming elections.  The middle class has been severely wounded but it is not dead and all it takes for it to recover is a willingness to fight; not with guns and Molotov cocktails, but with their vote which is what distinguishes a democracy from a plutocracy.