Unmaking a Killing: Rooting out entitlement, parasitism, fraud, rapacious greed, and other guarantors of destruction (Part 3) (guest essay) (October 14, 2011)
Oftwominds.com is honored to present a profoundly forward-thinking three-part essay by frequent contributor Zeus Yiamouyiannis, Making a Living vs. Making a Killing: Creating a Healthy Democratic Foundation for Economies. Part 1; Part 2; today we present Part 3.
Without a distinction between productive activities and parasitic activities there is no viable way forward economically. This three-part essay (“Part 1: Introduction”; “Part 2: Making a Living”; and “Part 3: Unmaking a Killing”) will begin to make those distinctions and provide recommendations on increasing healthy productive capacity and eliminating harmful parasitic activities. If the sick care industry is booming due to a dramatic increase in obesity and diabetes in the population, this ought not boost the GDP if one is interested in macro indicators reflecting the health of the economy and its people. You would not treat a cancer patient by considering cancer cells on par with healthy ones, and you should not attempt to heal economies without analogous distinctions.
Part 3: Unmaking a killing: Rooting out entitlement, parasitism, fraud, rapacious greed, and other guarantors of destruction
“The mission of cancerous economic organizations is to maximize profit, withdraw as much energy as possible, and give as little back as possible. When “maximizing (financial) profit” is allowed to gain power without reference, balance, challenge, or duty, no other cherished capitalist principle can long endure.” (https://www.oftwominds.com/blogjun10/zeus06-10.html)
“We no longer have a global economic system that is tethered to concrete reality. Parasitic, amoral, slight-of-hand value-shuffling (what I would call the “unreal economy”) has effectively trumped the “real economy,” the production and exchange of meaningful goods and services.” (https://www.oftwominds.com/blogmay10/market-unhinged-from-reality05-10.html)
What constitutes value has migrated from actual value, based in something you earn and related to something you can actually concretely use, to “references to value,” some number merely assigned to some financial instrument attached to some good or service somewhere several degrees removed from its source. (https://www.oftwominds.com/blogmay10/market-unhinged-from-reality05-10.html)
“We cannot live on bets. We require healthy air, food, water, reasonable housing, and real health care to live.” (https://www.oftwominds.com/blogjun10/zeus06-10.html)
Unrest in Greece, rebellion against bank bailouts in Iceland, expanding Occupy Wall Street citizen resistance in the U.S. all signal the coalescing of national grievances into increasingly international movements to bring accountability to the global economy.
Right now the injustices are apparent and the basic call to action is plain: “Stop the looting. Start the prosecuting,” as summed up nicely Karl Denninger of The Market Ticker. Banks have, to growing public awareness, engaged in multi-tens of trillions of dollars of outright fraud.
Failure to stop the looting and failure to prosecute is quickening the hemorrhaging of world economies, accelerating poverty, depressing asset values, and further creating opportunity for “disaster capitalists” to profit from their own misdeeds and the suffering of others. If this were only about moral hazard, it would be much more manageable.
Instead it is about a system, sanctioned and rewarded at the highest levels of international government, actively abusing and victimizing citizens for greater financial profit. This is full-scale class warfare of the financially powerful against free enterprise capitalism and against citizens: “We will take your money, and you will eat our losses, even if we are the ones who created failure.”
This Marie Antoinette-style “let them eat cake” arrogance and disconnect has started to make unlikely allies out of working class conservatives and shaggy-haired progressives. This cartoonish ignorance and double-speak by an hyper-entitled class of multi-trillion dollar corporate welfare recipients is only further amplified by images of Wall Streeters pouring champagne on the heads of protesters from balconies and Republican primary contenders fawning over and defending Wall Street crimes against accountability.
One hopes citizen voice and action only gain strength under these conditions. The most direct way to clean out rot in the system, of course, is to pursue criminal prosecutions. Those companies and individuals who profited from fraud are receivers of stolen property. Investigate, indict, prosecute, and turn state’s witness. Squeeze them. Freeze them-- their houses and other assets. Audit their Swiss bank accounts. This would send a strong message that financial terrorism will be no more acceptable than political terrorism.
However, actual concrete reforms must undergird ousters or criminal convictions. These in turn must reflect productive commitments. Primary among them is the simple notion that people are more important than money. Further, quality of life is more important than profit. Direct, pure productivity is better than diluted productivity. The fewer intermediaries taking their unwarranted chunk from productive effort the better. If we can all contribute from deeper talent, effort, and aspiration, if we can directly connect with and maintain the sources of a good life minimizing supply chains, commissions, bureaucracies, taxes, and other drains of value, we will all be that much richer.
Now we have to walk our talk and imagine some ways to rehabilitate an entrenched habit of making a killing as a substitute for making a living. Here are some recommendations for getting rid of those parasitic bad habits, money sinkholes, productivity drains, and the twin idiocies of savior state entitlements and corporate welfare:
Transparent and accountable markets: Government regulatory agencies were not and are not asleep at the switch; they simply have not been doing their jobs—there is a difference. During the Bush, Jr. administration, regulatory agencies were staffed by deregulators whose sole purpose was to eliminate safeguards rather than enforce them. This was done amid a deluded Ayn Randian notion that completely unrestricted markets would regulate themselves and produce maximum benefits for all.
The attitude appeared to be: “Everyone can get wealthy by riding the Ponzi scheme of a stock market. Hey let’s privatize Social Security too, so old ladies can get in on the action!”
Under the Obama administration, the Department of Justice and regulatory agencies have been essentially instructed to ignore rather than undermine regulations and proper accounting. This was all done under the ironic rubric of “not hurting the little guy” and preventing economic collapse. Mark to market accounting rules have been suspended. Not a single major financial player or institution has been investigated even amid hundreds of thousands of proven forged documents in the robo-signing scandals around foreclosures.
Without any federal champion, liberal or conservative, effectively looking out for citizens, it will fall on voters to insist on citizen-empowered groups at the highest levels to ensure financial rule of law. This is where it would be helpful to have a citizen-accountable board to not simply make recommendations but make actual decisions on pursuing criminal, civil, and bankruptcy proceedings.
In addition it would be a very wise investment to have a public tax payer team of Elliot Ness-style financial forensics officers like Harry Markopolos (https://en.wikipedia.org/wiki/Harry_Markopolos), who specialize in detecting the double-speak and technical smoke screens in financial reports. Lastly, citizens must have a publicly funded, publicly accountable board to oversee stock and bond ratings. Moody’s, Fitch, Standard and Poor’s have proven to be dangerous shills, not ratings agencies. Their collusion makes any trust in their ratings irretrievably compromised.
Get rid of all outright government subsidies and convert them into investments: Government should not be in the business of being Santa Claus. Either a “subsidy” is an investment where the government or other entity gains a stake or it should not be done, period. Seven billion dollar tax subsidies to oil companies like Exxon who were netting at one point 40 billion dollars profit a year is not a break; it is a giveaway.
If taxpayer money is being used to sponsor cutting-edge research that gets monetized by drug companies or technology companies, then the taxpayer (represented by government) should claim patent or intellectual property rights as well as a capital stake in the monetized enterprise. As with venture capitalism, a nice chunk of the profits harvested could be re-invested into other innovations.
We do need champions of innovation (energy, medicine) and infrastructure (paved highways to internet highways). The government in collaboration with research universities and non-profits are often the only entities big and broad enough to design and fund these innovations. Innovation, around alternative energy, for instance, is also in the national security interest and could make society healthier, more self-reliant, and more efficient.
But currently government uses taxpayer money to fund research or subsidize a solar company but gets effectively nothing in return. Jobs? Very few jobs come out. Stake in the company? Currently no. If a subsidized company goes bankrupt, the government/taxpayer gets nothing, which is also what they are getting now even when the company is successful.
Incentivize stewardship over “owning”: Laws preventing abuse of public-contingent, “private property,” and policies encouraging responsible, productive use could be enacted to support in real concrete terms the principle of stewardship.
Pay corporate farms not to grow crops? No. Allow them to overproduce using damaging shortcuts like toxic pesticides that poison ground water and cause massive bee die-offs. Also no.
Land should be used responsibly. Why not encourage tax abatements and even job creation and income streams by leasing fertile empty land through an on-line exchange for organic farming, or other healthy, sustainable resource generation purposes. Best practices allowing regenerating land to lie fallow, or to be planted with trees, could also be part of a sane system of maximizing health and productivity for land.
Tax deductions for interest payments on mortgages to support home ownership, on the other hand, are nothing more than a direct subsidy to banks. This privatizing perk should be eliminated. In fact, home ownership should not be the goal; responsible stewardship should be.
Current “ownership” does not promote the community stability promised by its advocates. People are renting money from banks hoping to pay houses off with interest payments that often exceed the value of the house. Banks bundle up mortgages into impenetrable securities, which are now tanking and creating a nightmare of forged titles and transfers. That’s not stability. Creating a system where home prices are lower (because interest rates are unsubsidized) and peer-to-peer lending is encouraged would insure affordability and recirculation of interest money into the economy.
In addition, market distorting laws like California’s Proposition 13 (which artificially suppresses taxes for some and loads tax burdens on others), should be constitutionally overturned as a violation of equal protection, equal treatment, and equal opportunity. Young couples in a newly purchased “starter” home should never be paying several times more in taxes than million dollar homes bought a long time ago. Nor should corporations be paying pennies on the dollar for their property taxes because they can somehow transfer ownership of commercial properties without actually selling them.
Hit disaster capitalism hard: Have life necessities be stewarded by the public and administered by cooperatives: When one has a healthy respect for humanity, one accepts that no money ought to be made from people’s fear or misery. The best way to do this is to have the public take control of necessary resources. Public utilities should in fact be public-- controlled and maintained by public cooperatives for public use. Water should not be privatized, but rather conserved and shared by stakeholders in mutual trust, again for the future of the planet and of our children.
Whether land or air or water, even food and housing, the necessities of life never were and never are truly owned. They are all produced from resources that are nature’s “property,” and therefore a gift and nobody’s to own. They are also public, and must be managed in the public’s interest. Stewardship in this sense means that you can’t do whatever you want with nature’s property. You have a primary stewardship obligation to the planet and future generations even if you have a present nominal claim to ownership through a deed or other document. That deed does not give you the right to endlessly extract, defile, or otherwise exploit property that was nobody’s to begin and never can be truly owned.
Encourage giving over receiving: If someone chooses to privately give a gift to worthy and legitimate charitable organization then, yes, tax advantages should apply because it is a low public cost, productive way to provide support and address need. Again, the working principle involves investing one’s self--one’s commitment, ones’ money, one’s support, one’s effort in survival (addressing need) and thriving (aiding opportunity) for others and therefore one’s self.
No guarantees on return for speculative investment or government contracts. It seems heretical, but there should be very little in the way of “guarantee” for returns that are contingent on emerging world and market conditions. “Cost-plus” accounting, no-bid contracts, etc. should simply be disallowed as anti-free enterprise. Guaranteed retirement benefits, 401(k)’s, and even social security payouts have to be responsive to changing conditions in much the same way dividends in companies are reduced or expanded in correspondence with revenue. Even savings are not guaranteed when monetary policy can devastate purchasing power.
Returns have to be pegged to emerging realities and not past promises. If scarcity emerges or can be shown to emerge in the future (i.e. baby boomer bubble), then conservation is called for. Artificial scarcity caused by companies looting pensions or banks flooding economies with fake-asset exotic derivatives, needs to be addressed through prosecution and bankruptcy, where the remaining assets of offending companies are sold off to pay for their scams and the convicted officers of those companies stripped of ill-gotten personal assets and required to do lifetime community service.
Social Security as insurance against poverty, not a bonus or a retirement plan. This almost speaks for itself. When we are concerned with the welfare of others, we realize that certain minimal payments can pull the elderly out of destitution. That was the only historical purpose for Social Security and should remain its purpose. It’s not a retirement subsidy. It’s there to make sure the elderly, disabled, etc. have sufficient subsistence resources upon which to get up in the morning with a roof over their heads, clothes on their backs and food on their plates.
Currently Social Security has become something other. For many it is their only retirement income. Demands by a growing pool of retirees to support them in a life to which they have grown accustomed would bankrupt younger generations. It would be better to develop housing and community cooperatives with a portion of social security payments so that resources can multiplied and enjoyment can be increased in old age.
Single payer health care, period, primarily administered by local cooperatives. The U.S. pays twice what other countries pay per person for health care and has among the worst actual statistics on important health indicators. Adverse health is one of the leading causes of personal bankruptcy. Small businesses are sagging under the enormous costs of health insurance for employees and thus hire fewer people. American businesses and workers are made less globally competitive because health care costs must be taken out of revenues. Non-transportable health coverage tied to employment gums up the economy by constraining job mobility and geographic movement. Oh yes, and single payer health insurance would save the U.S. over 400 billion dollars a year, most of it in reduced overhead (https://www.pnhp.org/facts/single-payer-resources). This could be combined with tough, large-scale, big discount negotiation with drug companies.
These up front savings would be even more enhanced if local cooperatives staffed and supported programs around smoking cessation, weight loss, and nutrition and lifestyle education. If people wanted expensive diagnostics, gold-plated hospital stays, unnecessary plastic surgery, or million dollar interventions to eke out a few more months at end of life then they are welcome to pay for supplementary insurance or use their own cash. Public responsibility for health involves redressing serious injury and illness, helping others maintain productive, vital lifestyles and emphasizing prevention.
No exemptions from anti-trust laws. Be it baseball or health care or other, either there is competition or you break companies up like AT&T.
About the only guarantee we have in life is one another. We are alternately stuck with or blessed with others. We can make the latter a true resource by developing good will and democratic mechanisms that support a shared productive life.
False “greatness” is also a guarantee--of destruction. Before the catastrophic civil war that erupted in Ancient Greece between Athens and Sparta, the only way to become immortal was to become a war hero. So, what better way to give everyone a chance at immortality then to start the endless wars? Well, this mentality essentially wiped out formerly prosperous Athens. (https://en.wikipedia.org/wiki/Peloponnesian_War).
The modern equivalent is probably the material American Dream, where everyone could strive for a McMansion and a riding mower. Of course this was always a false dream, dependent upon unsustainable growth and resource use, and eventually simply debt upon debt to maintain. It too has crashed spectacularly.
Self-serving dynasties are a very poor substitute for mutually serving care. They create great injustice and need, and eventually consume themselves. You cannot own the seas or the lands, much less the heavens. You can only own a title, an assignation of a right to live upon or use something. This is really conferrable stewardship. If stewardship has always been the requirement for our fruitful co-existence, and mutually serving care its medium, then we need to open our hearts, spirits, and minds to a very exciting possibility....
We have undiscovered talents to develop and exert. We who were once distracted, occupied, and oppressed by a glut of consumption must now use different means to avoid self-destruction and to reach a new frontier. In stepping forward, we take our place in a lineage of generations building something better, higher quality, and more sustainable for our children and the earth upon which we depend to live.
This is never about bombing others into submission, nor about banks creating fictitious financialized wealth so we can be sold on endless riches. Instead, global interest and personal integrity call us to be invested in the social and individual enterprise of a creative, industrious life.
When a false dream is lost, a new and exciting reality is possible.
Zeus Yiamouyiannis, Ph.D.
Thank you, Zeus, for contributing to our understanding of an alternative economy based on common sense and community rather than exploitation, self-serving fiefdoms, looting, parasitism and an oppressive partnership of Financial Elites and the Central State.
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