No, not Trump. As Fabius points out, the Donald is more accurately described as a populist reactionary than a revolutionary or even a fascist (“Fascists,” as Hitler himself noted, are revolutionaries.)
Weirdly, perhaps, today’s strident calls to storm the barricades comes from that bastion of conservative economics, The Economist. In “Too much of a good thing: Profits are too high. America needs a giant dose of competition” (paywall) the magazine lays out how America’s dysfunctional economy evolved and what it costs the vast majority of US citizens who don’t own large chunks of major corporations or occupy their C-level offices.
The article also makes a case for why the current situation is unlikely to change anytime soon. In the past, there have been periods of oligopoly (e.g., TR’s trust busting in the early 20th century) and abnormally high profits, but new entrants into the marketplace or severe recessions or technological change have broken them open. Today, however, there are at least two reasons why this process may be delayed. One is that a small group of super investors, mainly funds, owns significant percentages of all the major firms in a variety of industries. Thus it is in their interests to keep things as they are and even to force more mergers (the article lists several in the works).
As I noted in Certain to Win (p. 45 of the US edition), once firms get to oligopolistic size, they warp the market space analogous to how massive bodies warp space-time. You don’t need vast conspiracy theories or metaphysical speculations to explain what’s going on. As three dimensional space required the addition of the time dimension, so economics requires the addition of the political dimension. Giant organizations change the rules of the marketplace in their favor not so much through quality, innovation, or even price — these are well understood — but additionally through lobbying, campaign contributions (thank you SCOTUS), the revolving door, rewarding friendly congressional districts with plants and facilities and so on. Fans of defense procurement will recognize many old friends.
The ability of big firms to influence and navigate an ever-expanding rule book may explain why the rate of small-company creation in America is close to its lowest mark since the 1970s (although an index of startups run by the Kauffman Foundation has shown flickers of life recently). Small firms normally lack both the working capital needed to deal with red tape and long court cases, and the lobbying power that would bend rules to their purposes. A lack of lobbying clout and legal savvy may also help explain foreign firms’ loss of momentum. In the 1990s adventurers from abroad piled into America, with the share of output from foreign-owned subsidiaries rising steadily. But foreign firms seem to have lost their mojo. Since 2003 their contribution has been flat at about 6% of private business output.
There is hope. While “moats” as Warren Buffet calls such barriers to entry are certainly great for those who own the stock, and for the “elite employees” (as The Economist calls senior execs), they will prove fatal to the companies themselves. The reason is that while moats lock competitors out, they also lock current decision makers in, something Boyd, in his first unclassified briefing, New Conception for Air – Air Combat, called the “Maginot Line mentality.” (You can download all of Boyd’s briefings for free from our Articles page.)
As competitive pressure declines — the moat doing its job — management’s attention swings internally. Corporate politics becomes court politics. Whose office is closest to the CEO’s becomes a matter of vital interest. Projects are valued primarily for their patronage rather than their profitability or promise of future growth. Risks are evaluated primarily in terms of which corporate baron might be offended — or worse, embarrassed — by their likely effects. Eventually something unexpected will disrupt these cozy arrangements — think of the PC, digital phones, the Internet — and internally focused companies won’t understand in time.
As comforting as all this might be to the average consumer, it can take a long time. In the meantime, as the effects of corporate oligopilization cascade through the economy and concentrate wealth even more than it is today, the only way out may be political. And although Trump might indeed be a populist reactionary, he might also be the initial tremor of something much bigger.
” (“Fascists,” as Hitler himself noted, are revolutionaries.)”
But then he would, being a fascist.
Fascists are not revolutionaries, but in the environment they exist in, they believe they are.
Fascists want to build big tents with everyone under one brand. Conformity is not really very revolutionary.
Revolutions require many brands all joined together to be the same. In a revolution, those not able to join are quickly isolated (let them eat cake).
Fascists want one brand held by many, but the brand is able maintain resources to survive in isolation from the environment it exists in, because it gets those resources from the brand it evolves from (decentralised network).
One can cross edges through evolution or revolution and Fascist cross those edges through evolution.
Socialists cross those edges through revolution (and a distributive network), and it scares the hell out of the Fascists.
Thanks — Fascists are indeed revolutionaries because they want to change the existing social system to something completely different. This does not mean that you will like it when you get there.
Just because they, or anyone else, want to change the existing social system to something completely different doesn’t make them revolutionaries. Evolution also can change an existing social system to something completely different.
The difference between evolution and revolution is time and space.
In other words, what makes someone a revolutionary is the speed in time (fast) and structural damage (extreme) of the structural space that was caused in the moving across the gap from one edge to another, between social systems, that makes them revolutionaries.
While the speed in the change of moving the US to a fascist social system may be fast, the structural damage caused by the change doesn’t have to be, given that corporations are people, extreme and so any fascist movement in the US can be classified as evolutionary.
Trump is a part of the evolution of the US, but I can say it is not something I will like, even as my given DNA structure came back as mostly European West.
I find it interesting that even though the tea leaves are so obviously obvious, the nexus of Wall Street, lobbyists and the DC power brokers still are not about to do anything about the plain unvarnished truth that the citizenry of the United States is so fed up with the fact that the US Government is for sale to the highest bidder and that the public is of little if any interest to it, that that same citizenry, is willing to do something akin to shooting itself in its collective head to get the point across.
The Tea party and the occupy movement were actually two sides of the same coin, both evinced a deep seating discontent with the management of the country. Admittedly these two movements were the right and left side of the coin respectively, but the fact remains that both grew out of a deepening opinion that the people were being disenfranchised and that the power elite didn’t give a toss about them. Sadly the, by design, poorly organised tea party, became coopted by the lunatic fringe, Bachman, Palin and other intellectually challenged fools took it over and it has been forever discredited through their efforts. “Occupy” fizzled out, but spring is coming so perhaps we shall see them again.
Perhaps we will see an “American Spring”, but I fear that, like the Arab version, the lack of a cadre of brilliant leaders and statesmen, would cause it to be a small bang, quickly forgotten.
Chet referenced TR and this is funny because I have been reflecting over the last six months that what the USA really needs right now is just such a man or woman, to shake up the power structure and give the little guy a stake at the table again. One of the ongoing arguments I have with my group of friends is that TR was the last great American President, Roosevelt minor notwithstanding. TR, reviled by the oligarchy as a “traitor to his class”, represents the last time that an American leader went toe-to-toe with the Wall Street bully boys and won.
I heard Obama mention “Wall Street fat cats” exactly one time, and one time only. One wonders who whispered what into his ear that prevented such statements from ever being repeated again.
The fact remains that Chet is correct and unless the power elite get back to their charter to represent the interests of the people, that the people may do something about it themselves.
Of course, and I am paraphrasing H.L. Mencken here, the job of a government is to keep us frightened by threatening us with a series of mostly illusory boogey-men, so that we will let them do whatever they want to without a whimper because the are “protecting us” and we are scared.
The Donald is a existential scream. Will anybody in Washington or New York hear it? Stay tuned.
“The Tea party and the occupy movement were actually two sides of the same coin, both evinced a deep seating discontent with the management of the country.”
They may be two sides of the same coin, but the war in the US was never really about Conservatives and Liberals. The war was about the Left and Right.
In that context, both the Tea Party and the Occupy movement was structured, network wise, as the Right.
In other words, both were decentralized networks, in that they were not dependent on the resources in the environment they were observed in for existence.
The network of the Left does depend on the resources available in the environment they exist in, and they take those resources from wherever they can.
So in a way, the Left is a tribe, but the Right is a clan, and the Tea Party and the Occupy movement are both clans in separate environments, because they don’t need anyone except those at the center of their decentralized movements (the base).
Triumphant plutocracy; the story of American public life from 1870 to 1920 (former member of congress) … lots of formats, all free
Amazon kindle version currently 99cents
besides robber barons and oligarchy … it also overlaps some of “War Is a Racket”
There is Pecora hearings (30s senate hearings into crash of ’29) that resulted in criminal convictions and jail time
also at wayback machine (scanned the fall 2008 at Boston Public Library)
Jan2009, I was asked to HTML’ize the Pecora Hearings with lots of internal xrefs and URLs between what happened then and what happened this time (comments that maybe the new congress will have an appetite to do something). I work on it for awhile and then get a call saying that it won’t be needed after all (reference to enormous piles of wallstreet money totally burying capital hill).
“There Is Regulatory Capture, But It Is By No Means Complete”
I don’t consider myself an expert on the financial industry, but the fact that the financial industry is responsible for something like 30 percent of all profits seems rather remarkable. I am startled by the size of the financial industry and what it means. I can’t believe this is really needed for the allocation of resources. A lot of it is going to be rent-seeking. It creates a diversion of resources, especially human capital, and not only does it create problems for the legitimacy of income distribution, but that also means resources diverted for this purpose [rent-seeking] can’t be used elsewhere.
… snip …
Joe Stiglitz Blasts Our Wealthy-Coddling Tax System for Increasing the Returns on Rent-Seeking
And then the good professor turns to corporate tax breaks, citing poster child GE, which has paid on average less than 2% of its income in taxes since 2002. The picture is likely even worse than these figures suggest since corporations and wealthy individuals can hide income tax havens.
… snip …
The economist Joseph Stiglitz has argued that rent-seeking contributes significantly to income inequality in the United States through lobbying for government policies that let the wealthy and powerful get income, not as a reward for creating wealth, but by grabbing a larger share of the wealth that would otherwise have been produced without their effort. Piketty, Saez, and Stantcheva have analyzed international economies and their changes in tax rates to conclude that much of income inequality is a result of rent-seeking among wealthy tax payers.
… snip …
Also sometimes Wallstreet and Financial industry have been represented as beneficial parasites in symbiotic relationship with the US Economy host. However there is danger of the parasite getting greedy, going rogue and threatening to kill the host … as described in the account of financial industry accounting for 30% of all profit (and accounts of how the Financial industry has “captured” their regulators)
However, there have similar accounts of other beneficial parasites in symbiotic relationship with the US Economy host, like Eisenhower’s warning about the Military-Industrial(-Congressional) complex Similar accounts of Drug industry (Medicare Part-D coming to be long-term $40T item totally swamping all other budget items) as well as Healthcare Industry becoming dominate portion of GDP.
Interestingly, the Finance Industry apparently having gone rogue and looking around at their competitors have taken to buying up some of their competitor parasites. This is seen in the articles about private-equity taking over MICC and beltway bandits, hospitals and public health firms, as well as drug firms … in order to suck them dry.
reference to private-equity moving in on various government contractors (including Snowden’s employer)
The Great Deformation: The Corruption of Capitalism in America
loc11313-16: Yet the stunningly aggressive manner in which KKR and Bain have literally plundered cash from HCA since the mega-buyout implies just the opposite. After loading HCA with $28 billion of debt to fund the original buyout, KKR and Bain have since extracted dividends and stock buybacks amounting to another $7 billion. These massive payouts to the sponsors have absorbed every dime of available cash and borrowing capacity at HCA.
loc11365-69: THE HCA PRIVATE EQUITY PLUNDER: STATE POLICY RUN AMOK At the end of the day, the circumstances of the $33 billion HCA buyout are a screaming indictment of current policies of the state. HCA is the nation’s largest hospital chain, but it thrives only by dint of the $15 billion it collects each year from Medicaid and Medicare. These revenues are vastly inflated compared to what HCA would obtain if it had to compete for patient dollars in an honest consumer-driven market.
loc11398-401: The estimate at the time was that this sweeping change in the Medicare reimbursement régime could have reduced its hospital payments by 30 percent and would have struck a mortal blow at high-cost general hospital chains like HCA. Stated differently, much of the inflated EBITDA which was absorbing HCA’s $2.0 billion annual interest bill would have been clawed back to the benefit of taxpayers.
“I don’t consider myself an expert on the financial industry, but the fact that the financial industry is responsible for something like 30 percent of all profits seems rather remarkable.”
But, considering the economy of the US (although changing) is based on the consumer, is it really remarkable? 30% consumer, 30% supplier, and 30% finance sounds pretty much the norm.
Perhaps what is remarkable is that we, as a nation at war, were lead into this economy by the Conservative Nixon administration and now some conservatives are having buyer’s remorse, i.e. Trump. 🙂
Securitized Mortgages had been used during the S&L crises to obfuscate fraudulent mortgages (posterchild were office bldgs in Dallas/Ft.Worth that turned out to be empty lots). Late 90s I was asked to try and help prevent coming economic crises by improving the integrity of mortgage supporting documents. However, the sellers discovered that they could pay the rating agencies for triple-A rating (when the rating agencies knew they weren’t worth triple-A from Oct2008 congressional hearings into the major role that rating agencies played in the economic mess). Triple-A rating trumps supporting documents and they could start selling no-document, liar loans. The triple-A rating largely responsible for moving mortgages out of traditional market and into the bond market, allowing them to sell to operations restricted to only safe investments, like large private & public pension funds (claim responsible for 30% hit to the funds and trillions in pension shortfall), largely response for over $27T done 2001-2008 (where they skimmed possibly $4T-$5T). Claims is that the financial industry tripled in size (as percent of GDP) during the economic mess, also the NY state comptroller reported that wallstreet bonuses quadrupled in size during the same period. The reward for fraudulent activity was so enormous that it easily overcame any concern that they might have had about the effect it would have on their firm, the economy, or the country. The S&L crises had 30,000 criminal referrals and 1,000 criminal convictions (with jailtime). The economic mess was 70 times larger than the S&L crisis and there have been *NO* criminal referrals or convictions (proportionally there should be 70,000 criminal convictions with jailtime).
VP (and former director of CIA) claims no knowledge of
because he was fulltime administration point person deregulating financial industry … creating S&L crisis
along with other members of his family
and Jeb during S&L crisis
who then: Lehman’s Gift To Jeb Bush For Funneling Pension Money: A $1.3 Million Consulting “Job”
and another family member presides over the economic mess, 70 times larger than the S&L crisis
Triva: when investors started to realize that “triple-A” ratings were for sale and rating agencies might not be trusted, the muni-bond market froze. Then Warren Buffett steps in and starts offering muni-bond insurance to unfreeze the market.
Fraud Key Profit Center For Wall Street-William Black
Why have a totally fraudulent financial system? Dr. Black, who is an expert in white-collar crime, says, “It’s hard to make money with competition. It’s really hard. People who have never been in business don’t understand how hard real competition is. Real competition makes it hard to prosper, but if you rig the system, it makes it easy. The reward for rigging is phenomenal. We are talking every year, hundreds of billions of dollars in bonus compensation. It’s far more than their straight salaries, and it is going to folks that it wouldn’t go to them if they didn’t rig the system. And, no one is prosecuted. They don’t even give back the fraud proceeds, even when they catch them red-handed.”
Note Black was the regulator
that got Keating in the S&L crisis,
along the way, Keating sic’ed the “Keating Five” to try and take out Black