Radical Concentration of Wealth is Destroying Both Capitalism and Democracy → Washingtons Blog
Radical Concentration of Wealth is Destroying Both Capitalism and Democracy - Washingtons Blog

Sunday, April 11, 2010

Radical Concentration of Wealth is Destroying Both Capitalism and Democracy

Note: If you wish, feel free to substitute the word "republic" for "democracy".

As I wrote in 2008:

The economy is like a poker game ... it is human nature to want to get all of the chips, but noted that - if one person does get all of the chips - the game ends.

In other words, the game of capitalism only continues as long as everyone has some money to play with. If the government and corporations take everyone's money, the game ends.

The fed and Treasury are not giving more chips to those who need them: the American consumer. Instead, they are giving chips to the 800-pound gorillas at the poker table, such as Wall Street investment banks. Indeed, a good chunk of the money used by surviving mammoth players to buy the failing behemoths actually comes from the Fed.

No wonder billionaire George Soros says that the way US Treasury Secretary Henry Paulson was handling the situation was "very reminiscent of the way the central bankers talked in the 1930s", the time of the Great Depression.

And no wonder Nobel-prize winning economist Joseph Stiglitz stresses putting poker chips back in the hands of the little guy ...

This is not a question of big government versus small government, or republican versus democrat. It is not even a question of Keynes versus Friedman (two influential, competing economic thinkers).

It is a question of focusing any government funding which is made to the majority of poker players - instead of the titans of finance - so that the game can continue. If the hundreds of billions or trillions spent on bailouts had instead been given to ease the burden of consumers, we would have already recovered from the financial crisis.

As FDR’s Fed chairman Marriner S. Eccles explained:

As in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.

As I pointed out last August, and again last month, fewer people have more of the chips than at any time since before the Great Depression. And see this.

When most people lose their poker chips - and the game is set up so that only those with the most chips get more - free market capitalism is destroyed, as the "too big to fails" crowd out everyone else.

And the economy as a whole is destroyed. Remember, consumer spending accounts for the lion's share of economic activity. If most consumers are out of chips, the economy slumps.

And our very democracy is destroyed.

Everyone knows that politicians are bought and paid for by the financial service giants. And the 800 pound gorillas just keep getting bigger and bigger.

Two leading IMF officials, the former Vice President of the Dallas Federal Reserve, and the the head of the Federal Reserve Bank of Kansas City have all said that the United States is controlled by an oligarchy. And Moody's economist Mark Zandi has said "the oligopoly has tightened."

As Supreme Court Justice Louis Brandeis said:

We may have democracy, or we may have wealth concentrated in the hands of a few, but we can't have both.

Dennis Kucinich said in January:

There's nothing liberal about the bailouts. There's nothing liberal about standing by and watching banks use public money to get their executive bonuses. There's nothing liberal about giving insurance companies carte blanche to charge anything they want for health care... Since when did that become liberal?

Every area of the economy is still about taking wealth from the great mass of people and putting it into the hands of a few. If you don’t have an economic democracy, you don’t have a political democracy.

Indeed, when wealth and power become too concentrated, capitalism becomes virtually indistinguishable from socialism or fascism.

Of course, antitrust laws were enacted to protect the economy and democracy, but - like the Depression-era laws separating depository banking from investment banking - are not being enforced.

And the government could use existing laws to force ill-gotten gains to be disgorged (see this and this), fraudulent transfers to be voided and - perhaps - even bonuses gained at the expense of taxpayers clawed back. Such actions would make the 800 pound gorillas a little smaller, helping to reduce concentration of wealth somewhat. But that would assume that America is still a nation governed by the rule of law.

Currently, it's not. Only courageous prosecutors and brave judges can restore the rule of law to America.


  1. "Dennis Kucinich said in January:

    "There's nothing liberal about the bailouts. There's nothing liberal about standing by and watching banks use public money to get their executive bonuses. There's nothing liberal about giving insurance companies carte blanche to charge anything they want for health care... Since when did that become liberal?"

    And yet, he voted for the Health Care Bill. Technocratic feudalism at it's finest.

  2. Worrying about the concentration of wealth is as old as the growing consciousness of wealth that began as the feudal age closed and the so-called Enlightenment began.

    The concentration of wealth, is only a symptom of a problem strangely denoted here as "destroying democracy". Huh?

    I must insist, it is only in part "democracy", the very ridiculous and propagandist assertion of its existence and efficacy -that is promoting the momentary possibility of an otherwise unsustainable breeding of an ever-larger class of professional-welfarites -counterbalanced by a parasitic-class-of-overseers- that provide an-ever-increasingly-less-sustainable-number-of-unnecessary-goods-and-services in an economic paradigm that is far more divorced from reality than Lemuel Gulliver ever dreamed was possible -when he scribed his 1726 book, "Gulliver's Travels".

    Take a look around. Okay, stop laughing. Is any of this necessary? Is any of this realistic over the long term? Is any of this representative of human progress?

    I rest my case.

    No. The total collapse of our culture is not just irretrievably imminent, it is the necessary course of a common human idiocy run mad with hubris.

    The government has -told all of us to put our money in the stock market, -given everyone with no financial means whatsoever carte blanche at the local hospital AND the grocery store so they can breed more of their kind, -while promising to spread non-existent wealth around, -clean up waste and corruption -AND- lead the country and the world, -no doubt to hell in a hand-basket on a road paved with good intentions and even greater authority...

    I'm sorry, folks. But I'm hoping the collapse is much worse than anyone has even dreamed it might be.

    It's simply not a world worth living in -that this course is building.

    The country and the world has lost its way.

    People are sick. We are all in line for a sharp purgative dose of reality. Pray it comes soon, and that the cure is strong enough to end the pandemic of western ideological idiocy that plagues the world today.

  3. And year by year the US comes to resemble the oligarchies of South America more and more.

  4. destroying democracy, representative government
    values, integrity, culture, creativity, education, health, science, time and soul.
    the human experience. humanity itself, the idea and the thing.
    keiser, max.
    and this one is good concerning the bond
    vigilantes and the destruction of greece for
    fun and profit (ph). i wonder if the fed/res
    balance sheet has a stake in this cds casino.?
    as he says these are political markets, not
    economic markets. it looks like war by other means or financial means, replete with
    terroristic weapons of mass financial destruction. bubblenomics dynamics resulting
    in a "bad rash". m.k.
    and it is not accumulation of "wealth" perhaps
    but the capturing of the powers of governance by
    vampires masked to "appear" as people, tossing around hinky debt as if it were money.
    ( oh yea, it is )....
    decanting of personhood, court decision, lurching toward global governance accomplished through
    financial terrorism, scamonomics gone bad.

  5. http://www.youtube.com/watch?v=Sq5j0ba034M&feature=related
    virtual currency and fiat currency.

  6. The reality is that the ruling class wants America to become like Mexico. I have read it again and again. We can't compete with the world because our wrkers demand too much in compensation. Why won't America help Mexico? They need the slaves. If we/they continue this march towards total Plutocracy they won't even need that. Tea partiers, hardcore GOP, and Libertarians that regulary vote against their best interests are traitors to the ideals most of us believe and that they regularly tout. Freedom? Not possible in a Plutocracy. Opportunity? Only at their whim. Democracy? Nope, we live in a Republic, haven't you heard this a lot from the right lately? Uh-huh.

  7. Very good article. I agree with, well, all of it as far as I can tell.

    It's of great import that we recognize the 'power behind the throne'. The fact that special interests - primarily massive corporations - control our government and most aspects of our lives is lost on a majority of the American people.

    Thank you for writing and article that helps shed some light on the growing concentration of wealth and its destructive effect on that concept we so fondly mistake as the 'free market'.

    If you're interested, please feel free to check out more thoughts along these lines at my blog:

    ...And Justice for All - www.andjusticeforallblog.com

  8. It makes you wonder, what is the endgame for these people? The last time they ran the economy into the ditch (the Depression), they were jumping out of windows. This time, they got pulled back from the brink kicking and screaming the whole way. What happens next time?

    Are they fundamentally incapable of grasping the truth of the consequences of their greed? Are they like the Titanic crew, drunk on their own hubris and greed and utterly disbelieving they can be sunk? Or do they have a backup plan?

    Somehow, the rest of us have to wrest the wheel away before the next iceberg is hit.

  9. Complete BS, grow up.

  10. We have an issue with role models.....yes we all want to be successful...provide something of value to our fellow countryman....make a reasonable profit....then share our good fortune with those that helped us attain them....raising their standard of living as well...the role models we get...lie, steal, cheat, take no responsibility, exercise incredible greed, and walk away totally justified... they could care less about anybody but themselves(great thing to teach our kids) ....the American way

  11. Parallels to the Depression-era:
    * long Republican control of government (Reagan/Bush/Bush -- centrist Clinton had a Republican congress most of his tenure)
    * record concentration of wealth
    * dangerous financial practices -- leveraged banking/brokerage & speculative asset bubbles

    * Control of media
    -- Reagan abolished the fairness doctrine
    -- Reagan cut funding for Public Media
    -- FCC relaxed concentration of ownership rules
    -- "Conservative" media strategies developed for manipulating masses eg: Sound Bites (a near end to the thoughtful logic characterized by the William F. Buckley style conservatives)

    * Lobbyist penetration into government at unprecedented levels

    * Energy/Environmental issues as an Achilles heal of the right

    I agree with the poster who painted TEA as betrayers, but they are unknowing having drunk from the well of media poison. This highlights the media/education issues. If TEA people were informed they would be expanding government as the best/only bulwark against corporate fascism when that government is properly accountable -- instantaneous when voters exercise their informed will.

  12. Do we need a Referendum For A New Democracy?

    Are you concerned about the future of democracy? Do you feel democracy is under attack by extreme greed in countries around the world? Are you sick and tired of: living in fear, corporate greed, growing police state, government for the rich, working more but having less?

    Can we use both elections and random selection (in the way we select government officials) to rid democracy of undue influence by extreme wealth and wealth-dominated mass media campaigns?

    The world's first democracy (Athenian democracy, 600 B.C.) used both elections and random selection. Even Aristotle (the cofounder of Western thought) promoted the use random selection as the best way to protect democracy. The idea of randomly selecting (after screening) juries remains from Athenian democracy, but not randomly selecting (after screening) government officials. Why is it used only for individual justice and not also for social justice? Who wins from that? ...the extremely wealthy?

    What is the best way to combine elections and random selection to protect democracy in today's world? Can we use elections as the way to screen candidates, and random selection as the way to do the final selection? Who wins from that? ...the people?

  13. no shortage of people who think wealth is too concentrated. i think wealth and political power are tied together so intimately that the concentration of wealth is the natural result of the concentration of political power.

    the cure is democracy. but americans grow up in a culture where political change is unthinkable, where there is a religious horror of discussing change. this appears to be the result of ignorance, a self reinforcing loop of social insanity.

    so there is endless talk about america's problems, but never any action, there is no established means to action. first getting citizen initiative and then considering individual problems is just to much for the yokels to grasp. they can see that you must first get tools before being a carpenter, but can not extenf that to first getting citizen initiative before being a citizen.


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