“Money is Speech” August 10, 2011
“What is money, anyway,” asks my nephew
“Money is Speech.” answers the Supreme Court of the United States in Buckley v Valeo
Whoever controls words controls thoughts. Whoever controls symbols – and words are sometimes although not always symbols – has tremendous influence over thoughts. Whoever controls communication controls the thoughts of those who are most arrogantly and stupidly convinced of their intellectual independence and free will.
Money is a complex instrument, but it is among other things a means of communication. For the clever and the very wealthy, it is a means of storing wealth. For the foolish and the very poor it is merely a medium of exchange. For those who have enough, it is a means of communication.
In Buckley v Valeo, the Supreme Court ruled that money is speech. This decision has been grotesquely fortified by the The ruling, Citizens United v. Federal Election Commission, No. 08-205.
Whatever you or I want to think or to believe, regardless of whatever my friends in the blogosphere maintain, the Supreme Court has ruled, just as Adam Smith predicted they would. The interests of the masters are served by the laws because the masters make the laws. Or as Adam Smith says in words that timelessly describe conspiracies of the master class, “the law, besides, authorizes, or at least does not prohibit their combinations, while it prohibits those of the workmen.
But matters are even more sinister than that. As Jack Vance argues in his satirical and brutal novel The Languages of Pao, the thinking of people is controlled, with varying degrees of success, by the master class. Whoever controls vocabulary and syntax controls thought. Mao and Stalin and Freud’s nephew, Eddie Bernays understood this, as did the War propaganda office of Woodrow Wilson. Unfortunately there are many people walking around with prestigious degrees who don’t understand this.
It is not enough to get a masters degree in German, Chinese, or Hebrew. That doesn’t necessarily mean you understand how language works. One needs to understand the extent to which language controls perceptions of reality. This is the classic, but contested theory of the so-called Sapir-Whorf theorists. There is a great deal of discussion of this controversial theory, which should be discussed thoroughly, but not accepted dogmatically.
Rupert Murdoch understands this, and so does Michele Bachmann. But there are lots of otherwise smart people who don’t understand this.
The Koch brothers certainly understand that money is speech, whether they understand semiotics, I cannot say. But what does it matter? Eddie Bernays is working for them, and Sapir-Whorf offers food for thought as to why the Koch Brothers and Rupert Murdoch invest so much money in the control of language and syntax.
The people who are currently rioting in Britain are expressing discontent, but if they are capable of articulating the sources of this discontent, the press is not reporting it. The media portray them as inarticulate.
The 1% of the population who constitute the master classes are easier to organize and more aware of their interests. All of this discussion of the powers of the Fed, the volatility of the market, the behavior of the Obama administration are of relatively little importance when one reflects on the fact that it is the masters who control the government and make the laws.
Adam Smith noted this with sorrow, contrary to popular mythology, although he recognized that from his premise only a dismal prediction concerning the rights of workers could follow.
Robert Malthus proposed means of redistributing wealth, and his ideas were adopted a century later by John Maynard Keynes, but Keynes has few defenders today. Certainly the Obama administration is not willing to consider putting money directly into the hands of workers. They endorse the Friedman-Greenspan-Bernanke method of creating large sums of money and putting it in the hands of the upper classes, ie, the big banks.
It is sufficient, unfortunately, to proclaim by fiat that Keynes has been discredited, and the misguided working people unfortunately contribute to Keynes defamation, preferring the bromides of Hayek, von Mises, Friedman, Rand, Bastiat, and all the other intellectual brigands who conspire to reduce them to a state of poverty, ill health, and ignorance.
I receive emails from honors graduates of Michigan and Penn State, who earn less than $20,000, and are burdened with debt, but continue to believe that unleashing the free market will solve all their problems. The master class preach the free market, but sneer at the idea of a free market. They understand the necessity of controlling the market, and they make the laws in order to serve their ends.
The masters control the law, and they control the language. This, alas, is how it always has been. This, regrettably, is how it always will be.
Wilson J. Moses
Reaganism is the Suicide of the Government of the United States
Copyright©2011 by Wilson J. Moses, Thursday, April 14, 2011
Ronald Reagan’s cunning and mischievous National Suicide Doctrine, is the cause of our present economic crisis in the United States. His insane anti-American doctrine is exactly the opposite of the patriotism of that true Republican, Dwight David Eisenhower, who led the Allies to victory over the Nazis, shaped the Korean Truce, balanced the national budget, and assaulted the bastions of racial segregation. No more pernicious and divisive philosophy than Reaganism has appeared in American politics since the time of Jefferson Davis.
Reagan openly announced his doctrine in his First Inaugural Address, when he said: “government is not the solution to our problem; government is the problem.” Even more outrageous, the Reagan administration began to preach the slogan “Starve the beast,” in 1985, an idea later recycled by Sarah Palin in the 2008 Presidential campaign. Palin, who is married to a notorious Alaskan secessionist, is typical of Republicans, with her idea of cutting taxes until we have destroyed the national economy and the Government of the United States.
Reagan Republicans hate the Government of the United States. They call it a “beast.”
Ronald Reagan’s inaugural address, his doctrine of government suicide, is currently accessible at YouTube, and the text is at The Avalon Project of the Yale Law School http://avalon.law.yale.edu/20th_century/reagan1.asp. The phrase “Starve the Beast” applied to the government of the United States, originated with an anonymous hack in the Reagan White House, according to Michael J. New’s article in Cato Journal, (Fall 2009), published by the Cato Institute. Reagan’s words and his government destroying policy sets the tone for all subsequent discourses in American politics, and reignites the homicidal fires of American secessionism.
Republicans seek to validate a doctrine of localism, provincialism, and individual isolation that was openly rejected by Benjamin Franklin as early as 1754, repudiated by George Washington and Alexander Hamilton in 1787, and subsequently condemned by John Adams. But the quasi-populist fires of American secessionism were secretly stoked by the Machiavellian slaveholder and pseudo-egalitarian, Thomas Jefferson in his Kentucky Resolutions of 1798. The hypocritical and devious Thomas Jefferson was always covertly hostile to George Washington, to the Government of the United States, to its Flag, and to its Constitution. Regrettably his philosophy moved increasingly to the right over the years, until he repudiated the anit-slavery doctrines of his youth and supported the expansion of slavery into the territories. Jeffersonian thinking was among the contributing causes of the Civil War.
The United States had to fight a Great Civil War to extirpate “Jeffersonian Democracy.”
Capitalism is a necessary ingredient of all civilization, and capitalism is impossible without the existence of Law and Order. Government is necessary for property to exist. This is known to every college graduate who has read the works of Thomas Hobbes, John Locke, Benjamin Franklin, and Adam Smith. Without government, property is only an abstract and insubstantial theory. As Aristotle and John C. Calhoun pointed out, there has never been a human Society without government. And to this I would add that it is only within the context of Society. i. e. Government, that property rights can have any meaning, that capital can be accumulated, or that money can have any value.
All wealth derives from a social contract, and is inextricable from the idea of COMMONWEALTH.
Calhoun knew this was true, but he was intellectually dishonest, and worked to undermine the sacred institution of government that he knew was essential to human civilization, wealth, and happiness. His conception of culture was primitive, for he was not only a slaveholding racist, but contemptuous of the interests of the nascent industrial working class. Although he understood the necessity of strong government, he encouraged his constituents in refusing to pay their taxes, and for this, he was rightly upbraided by President Andrew Jackson.
Jackson was no paragon of statesmanship; he was a murderous, drunken brawler, a cold-blooded dueler, an Indian scalper, and a slave-driver. He stupidly destroyed the Second Bank of the United States, thereby causing a depression. But, to his credit, Andrew Jackson was the last American President to balance the budget and sink the national debt. He did this by asserting the principle that the federal government must collect taxes, at gunpoint if necessary. When South Carolina tried to nullify the Tariff of 1832, Jackson showed them he meant business. He demolished the extreme doctrine of states rights, announcing to the states rights deadbeats:
“The Constitution of the United States, then, forms a government, not a league; and whether it be formed by compact between the States or in any other manner, its character is the same. It is a Government in which all the people are represented, which operates directly on the people individually, not upon the States.”
Law and Order, are identical with Government; they are the basis of Property, of Capitalism, and of every other aspect of Civilization.
Even in so-called “primitive societies,” money has always been more than a mere medium of exchange. Money is, and must be, by definition, a means of storing wealth. Traditional African and Native American societies, long before the coming of European colonialism, created and used sophisticated money systems, in the form of wampum belts, and cowry shells, as means of calculating debt and storing wealth. One of the means employed by European colonialists to destroy African and Native American economies, was to counterfeit indigenous currencies. Inflation of wampum and cowries were among the gimmicks employed by Europe in destroying African and Native American economies.
Gradual inflation, as Benjamin Franklin knew, is sometimes good, for it may stimulate the flow of goods and services, and accomplish great public works. But unrestrained inflation is an evil, for it destroys money the most convenient means of storing wealth, and the basis of any predictability and stability in the exchanges of labor and commodities. James Madison viewed “a rage for paper money,” as evil and pernicious. In today’s terms, he would have to include, not only paper, but electronic money which is being recklessly generated by the Federal Reserve System, and leads to an inflationary expansion of the money supply. But a national debt, in the form of a stable national currency, and the governmental capacity to issue reliable bonds, is a national blessing, as the wise and fearless genius, General Alexander Hamilton well knew.
One purpose of the Constitution was to thwart “inflation, an abolition of debts, or for any other improper or wicked project.” (Federalist 10) The right wing of the Republican Party is presently calling for an abolition of the National Debt, for no other reason than to bring down the Government of the United States. They advocate the destruction of the Full Faith and Credit of the Government of the United States, because they hate the Government of the United States!
One of the great and tragic ironies or our time is that the Republican Party, once the champion of National Union and vigorous government, has become the party of weak government, fiscal irresponsibility and secessionism. The party of George Washington, Abraham Lincoln, Theodore Roosevelt, and Dwight D. Eisenhower has adopted the National Suicide policies of Jefferson Davis, and Robert E. Lee, and Ronald Regan. How did this happen? It has to do with the disgraceful heritage of slavery and racism, as I shall demonstrate in a forthcoming essay. — Wilson J. Moses, 2011-04-14
TEA-PARTY, SCHMEE PARTY: Dems, Reps and Baggers all Have the Same Effect
by Wilson Moses
Back during the Presidential campaign of 2008, many of those who opposed the Big Bank Bail-out were Old Reaganites, long-time supporters of the deregulation that allowed the banks to pull down the economy in the first place. Or they were Old-Goldwaterites, or libertarians, or small-government advocates who oppose the existence of the Federal Reserve System, the Security and Exchange Commission, the Federal Deposit Insurance Corporation, and every other mechanism that was established in the 20th century for the ostensible purpose of protecting the public from what Louis Brandeis called “The Money Trust.”
Of course, all the above agencies are controlled by the very entities they are supposed to regulate. This state of affairs was sardonically predicted in the 1880s by William Graham Sumner, a social Darwinist who insisted that Big Business would inexorably devour individual freedom and that there was nothing anybody could do about it. There was no point in progressive era reform “to make the world better.” Workers were inevitably doomed to become cogs in monopolistic industrial machines. As early as 1776, Adam Smith had noted, the progressive tendencies of society towards industrialization. Smith championed the “labor theory of value.” He believed in the moral and material rights of the working people as did Benjamin Franklin before him and Karl Marx after him. But Smith, although sympathetic to the rights of the emergent working class, recognized the difficulty of workers ensuring those rights. He feared that combinations of workers, i.e. labor unions, must always be doomed to failure because, “We have no acts of parliament against combining to lower the price of work, but many against combining to raise it.”
Smith’s statement seemed woefully outdated to anyone looking at the American economy in 1960, when the United Auto Workers was reaching its peak, wages were high, and the population of Detroit was close to 2 million. The collapse of the Detroit economy, and the concurrent withering of the industrial labor movement, make Smith’s observations tragically appropriate. Recent union busting activities of the Wisconsin, Indiana, and Ohio legislatures, aided by powerful combinations of anti-labor forces, such as the Koch Brothers, Fox Television, and Donald Trump demonstrate that Smith’s grim observations are every bit as valid today as they were 225 years ago. It is the “masters,” not the workers, who make the laws.
The masters not only make the laws, but interpret them as well, sometimes turning progressive laws against their original progressive aims. Sumner observed that progressive laws seemed only to generate endless legal disputes, which ended in court decisions favorable to the bosses, not the workers. As early as the Slaughterhouse Cases of 1873, the 14th amendment was being used by a conservative Supreme Court, not to protect the rights of the emancipated slaves, but as a means of breaking the unions. It was far from the minds of the Justices that trade unions happened, incidentally, to discriminate against black workers; it was very much on their minds that the existence of unions was bothersome to the master class. The Supreme Court came to support an interpretation of the 14th Amendment that treated corporations as persons. In the Case of Santa Clara County v. Southern Pacific Railroad Company (1886). Thus, as historians Tindall and Shi have observed, “the fourteenth amendment became a judicial harbor for laissez faire.”
In Buckley v. Valeo, 424 U.S. 1 (1976), the Supreme Court of the United States ruled as Wikipedia summarizes, that “spending money to influence elections is a form of constitutionally protected free speech.” Most recently in Citizens United v. Federal Election Commission, No. 08-205 (2010), the Supreme Court has ruled that money is the same thing as speech. Thus every political position today reflects the interests of the master class. The Supreme Court has deregulated campaign donations, and state legislatures have crippled the labor unions. Big government no longer balances the interests of big business, and the individual American worker is left to his or her own devices. The historical tendency of the past 35 years is to carry the society in the direction of feudalism, towards an environment of absolute, unregulated “liberty,” in which life will become increasingly “nasty, brutish, and short.”
In the progressive era, a number of wise and temperate members of the elite, most prominently J. P. Morgan, Theodore Roosevelt, Franklin D. Roosevelt, and Dwight D. Eisenhower, recognized the usefulness of a balance between big government and big business, and the necessity of both. They saw that the anarchy of unbridled capitalism was injurious to the interests of the elite. For this reason, they worked to fashion a new commonwealth in which government would place limitations on the greed of shallow-thinking capitalists, but could also be used to protect the feckless mob from its own ignorance.
The progressive tradition seeks to protect the mindless masses from their industrial masters as well as from their commercial masters, the greedy banks, insurance companies. Government is the only instrument that can protect the masses from the free-wheeling robber barons and swaggering exploiters who silently tax them. As George Fitzhugh observed, the man of strong intelligence and unstable morality exerts at tax on every inferior he encounters. In a world without big government, the brilliant and immoral capitalist exists in the natural state of a feudal lord. He is a robber baron in a Hobbesian universe. He desires a state of anarchy in which the ignorant masses suffer under the laissez faire system which they mindlessly praise.
The Democrats, the Republicans, and the Tea Party are tools of the people of superior intelligence and superior economic resources. All men are not created equal. Some are born with more money, more brains, better looks, better social contacts, more powerful families, greater charm. Others achieve positions of power. Obama is among those who have brains enough to rise to the top, due to the intellectual gifts he inherited from his parents. But his rise was impossible without the assistance of elites who were already in power. Thus his vague progressivism, which was doomed from the beginning, is symbolized by his feeble efforts at creating a national health care system.
I was among the first to criticize Obama’s half-stepping approach to health care. In my view, he should have “thrown the Hail Mary Pass,” as soon as he took office, by insisting on Socialized Medicine. If he had done so, the current state of play would have been no worse than it is. In the political cycle, Obama was destined to face disappointment. He should have accepted that fact and taken a firmer stand for the principles that ostensibly drove him in the progressive tradition. Had he done so, the only consequence of Obama’s failure, would have been the right to say, “I tried.”
As it now stands we have a weak health bill that nobody understands, and which is disappointing to most progressives. A series of reforms that will not take effect immediately, and that has a good chance of being overturned, before it can take effect, humble as it is.
Progressive forces in America are scattered and disorganized, just as Adam Smith predicted centuries ago. Some Pan-Africanists and Afrocentrists are more concerned with defending Gaddafi than with defending the public employees unions. White workers are terrified of “big government,” suspicious of “big business,” and completely brainwashed by both. Intellectuals and progressive elites are in complete disarray, and their immediate destiny of weakness and ineffectuality is apparently ineluctable.
American political thought is dominated by the meaningless rhetoric of three parties, all of which stand ultimately for sinking the price of labor, raising the price of education, protecting the insurance companies, rewarding corrupt bankers, inflating the stock market, cutting taxes, devaluing the currency, and bankrupting the United States Treasury.
Dear Tunomukwathi Asino,
Journalists always want rapid responses. The following answers to your questions have been posted at my blog, where I express views on a variety of similar issues.
How long have you lived in Centre County? (if not born here, then What caused you to move here?)
I moved to State College in 1992 to become a Full Professor of History at Penn State University. This is, however, a peculiar question. The chances of a university professor’s finding a job in the city where they were born is just about zero. I don’t know any university professors who work in the city where they were born. I was born in Detroit, and I tried once or twice to get positions at Wayne State University and University of Michigan, but nothing ever came of these efforts.
My first job was at the University of Iowa, and I liked it there, but I was uncertain about my future, so I took a step down and moved to Southern Methodist University in Dallas Texas, where I became the first black member of the history department of that “lily white” institution, and I believe the first black senior faculty member ever. Shortly after arriving at SMU I received a post-doctoral fellowship from the Ford Foundation, which made it possible for me to escape and live in England with my family for two years. I did not find Dallas a congenial social or intellectual environment for my children, and we were all much happier living in Cambridge, England.
From there, I was able to move to Brown University because I had produced two books. Then I went to Boston University, where I continued to publish. During the eighties, I also served as visiting Fulbright Professor at the University of Vienna and Fulbright guest professor at the Free University of Berlin. I improved my German and read 100 books in that language, meanwhile publishing two more books of my own.
What is/was your job?
I am a history professor, with interests in American, African, and European literary history, intellectual history, the history of political thought, the history of art, the history of theology, the history of classical music, Africana Studies, and opera. I decided on my career at the age of 14. I never seriously considered any other career, not even high school teaching or junior college teaching. I always knew I wanted to be a professor at a major research university.
Did you raise children here? (how many)
I raised no children here. My youngest son was 18 when I arrived, and he graduated from State College High School in 1993. He received earlier portions of his education in England, Germany, and Austria and in public and in the private schools of Rhode Island. My older son, who graduated from Yale in 1987, has never lived in Pennsylvania.
In your experience, has life changed for blacks in Centre County over the course if your time here?
I have seen no changes whatever in the status of blacks in Centre County during the 17.5 years I have lived here, but my perspective is extremely limited, due to the fact that my only tie to the community is the University. I have only once been called a “nigger.”
Can you point to key moments or events locally or nationally during your lifetime that had a significant impact on your life?
President Dwight D. Eisenhower had the courage to invoke the United Nations Charter and end de jure segregation in America. President Lyndon Johnson enforced affirmative action. Without their leadership, this country would still be a living hell, dominated by the likes of Senator Strom Thurmond, Republican from South Carolina, the great hypocrite, who seduced a young black girl and secretly had an illegitimate child by her, while preaching segregationist doctrines. Senator Trent Lott was rightly condemned for praising the evil racism practiced by Senator Strom Thurmond.
What is the most surprising thing related to being black that ever happened to you here? (this might be a good thing or a bad thing but follow up if necessary by asking how that turned out or what impact it had on the person)
I have had no surprises. Everything has gone exactly as I expected. I arrived here extremely well-advantaged, and have enjoyed a privileged and atypical life, unknown to most black people anywhere on this planet.
Is there more work to be done in the area of race relations here? If so, in what would you propose specifically?
I do not see any race-specific solutions to the problems of working-class black families, who earn less than $60,000 per year. I call for a national program of industrial revitalization, like the New Deal of the 1930s, which combined capitalism with socialism to improve the lives of white, black and other peoples in the United States. The best possible immediate solution to the problems of the working poor is a rebirth of American industry, but such a development is impossible without firm government support, such as the support that industry receives in China. Only with a rebirth of American industry will it be possible to raise interest rates, raise taxes, and to increase government spending in the public sector, as Franklin D. Roosevelt did. Industrial revitalization would also make it possible to have socialized medicine, with a private option, such as I enjoyed when I lived in England.
A good first step to improving the lives of working people – black, white, and other – would be to fire the fat cat senior executives who have been destroying the private sector, and working the puppet strings of Congress. They are obviously inadept, and have constantly demonstrated their lack of public spirit. Yet they claim that they deserve to be paid higher salaries than a dedicated public servant.
General David Howell Petraeus has a Ph. D. from Princeton, and he earns less than $250,000, although he is exceedingly more competent that most people in the private sector who earn 10 times his salary. The executives in the private sector don’t know anything worhtwhile and they have nothing to offer. They are the cause of our problems. When will the American people understand that the emperor has no clothes? The fat cats corrupt government, and manipulate media to elect officials who do not believe in medicare, social security, paying the national debt, or even supporting the military. These are the same hypocrites who are currently destroying both the private and the public sectors of our economy. The executives at Chase Manhattan and AIG ought to go out and get honest jobs, such as cleaning rooms at Holiday Inn.
Prospects of a Revolution from the Right
February 28, 2009
Ethelbert Miller, the Washington poet, is right in expressing fears of a revolution-from-the-right. According to Southern Poverty Law Center, hate groups are on the rise. Meanwhile “respectable” conservatives are already blaming Obama for aggravating the economic crisis.
For a discussion of typical conservative doublethink as to what caused the housing and banking crisis.
Unfortunately I frequently have students informing me, that the banking crisis was caused by the Community Reinvestment act! That’s as big a joke as blaming minimum wage laws for unemployment, or blaming the Great Depression on the New Deal. But don’t laugh!
The above dogmas are currently being taught and accepted in most economics departments and MBA programs. The sad thing is that good kids regardless of gender, race, or class, are susceptible to such notions and absorb them indiscriminately. It is ironic to contemplate working class students rising up in anger and protesting that they can no longer afford to attend business schools that indoctrinate them with propaganda that is tailored to undermine their own class interests.
How can we win against this sort of thing?
We must continue to inform them that Roosevelt increased taxes and created government jobs, and that his only fault was not being aggressive enough until the war provided him an opportunity. One stage of his recovery plan was the Lend Lease Act, which kept the factories humming by building tanks and giving them to Stalin. Another part was the banking reforms, which kept us out of a depression for almost seventy years.
For thirty years under Reagan, Bush, Clinton, Bush, Democrats and Republicans conspired to dismantle the New Deal. Under Alan Greenspan, appointed Fed Chairman by Reagan, and renewed by Clinton, and both Bushes, the government followed a course of constant inflation, in the prices of health, education, and housing. The Congressional Budget office, Bureau of Labor and Statistics, Council of Economic advisers, etc., conspired to fudge the statistics and lie to us about inflation, telling us it didn’t exist.
In reality, real wages dropped constantly, tempting middle-class households to take out adjustable rate mortgages, foolishly hoping to benefit from constant inflation of housing prices to compensate for inadequate purchasing power — in other words speculating against the dollar
Meanwhile, their children were graduating from college owing tens of thousands of dollars, and unable to find jobs. It became increasingly difficult to afford the costs of health care for our grandparents, our parents, our children, or ourselves.
The housing bubble has popped, and I predict this is nothing compared to what may be coming if the credit card bubble busts.
When people start pushing wheelbarrows full of worthless money to the supermarket, they will blame Obama, and that should be enough to bring out the Nazi armbands. As it was in Germany, 1923.
General Motors and General Petraeus
by Wilson J. Moses, February 14, 2009
Americans have notoriously short memories, so I have to remind myself that the first $700 billion bail-out, the “Troubled Assets Relief Program” (TARP), was a product of the Bush administration. It was presented to the Senate by former Treasury Secretary, Henry Paulson, who isn’t stupid. Federal Reserve Chairman, Ben Bernanke, also not stupid, accompanied him on his trip to the Senate, but the proposal belonged to the Bush administration. Paulson graduated from Dartmouth, where he demonstrated sufficient agility and mental quickness to become an All-Ivy linebacker, and to make Phi Beta Kappa, as well. Paulson was obviously playing dumb, like a fox, in his intentionally inept responses to the questions of Richard Shelby (R-Ala) ranking member of the Senate Banking Committee.
Much as I oppose the ideology of Senator Shelby, I must give him credit for saying that “Even if the Paulson plan works perfectly, which many doubt, including nearly two hundred economists, it will not stimulate new lending, stop de-leveraging, help distressed home owners, or jump start the economy.” The Senator’s doubts were obviously well-founded, for, so far the plan has not worked. As many suspected, although Sen. Shelby did not say it, Mr. Paulson has shown himself to be no more than high quality stick-up artist. Many bankers have lined their pockets, with the bail-out monies, and so have the executives at General Motors.
Paulson got away with playing dumb, but he knew exactly what he was doing when he got $750 billion from the government for his Wall Street bail out. He knew the heads of insolvent banks had no intention of addressing the economic melt-down. He knew the money would disappear into the pockets of brilliant, but incompetent executives. Paulson himself, formerly employed by Goldman Sachs, one of the banks he arbitrarily selected for salvation, is estimated to have earned over $16,000,000 in the year he became Secretary of the Treasury. His estimated worth is around $700,000,000. Fair enough everybody wants to be rich, but why should I pay him, or people like him for performing no detectable public service, and lining their friends pockets?
President Barack Obama seems to think that people like Henry Paulson have expertise for which we must pay whatever astronomical salaries the market supposedly demands. Compensation in the $15 million range is the unavoidable cost of the superior expertise of people like Stan O’Neil, who ran Merril Lynch into bankruptcy. But Ben Bernanke, presumably an expert of similar acuteness, draws a salary of only $191,300, and we trust him to clean up the mess. It seems unlikely the quoted figure is Bernanke’s entire annual income, but if he is willing to serve the Fed for such a reasonable salary, why can’t the government find other people of his caliber to work in banking for similar amounts?
General David Howell Petraeus does his job for less than $250,000 per year
General Petraeus, who holds a Ph.D. from Princeton University, isn’t stupid, but he too works for a reasonable salary. Even his critics must admit that he is capable, intelligent, ambitious, and loyal. He has shown far more competency at his job than the people who have been managing General Motors, Chrysler, Bear Stearns, Lehman Brothers, Freddie Mac, Fannie Mae, Wells Fargo, Bank of America, Morgan Stanley, or Goldman Sachs. Most of them are compensated with salaries and bonuses in the multi-millions.
And General Petraeus does his job for less than $250,000 per year.
I say nationalize all corporations that benefit from any government bail-out, and immediately rescale all executive salaries to correspond to salaries paid in the United States Military. If senior business executives don’t want to work for $250,000, then let them walk. Every year a considerable number of military officers, above the rank of major, but below the age of fifty go into retirement. Why cannot we dip into this reservoir of talent to replace the parasites who are currently leeching off the taxpayers? This question is somewhat rhetorical, for retired colonels and brigadiers are not the only pool of available talent. There are other persons in this economy, besides younger military retirees, who are capable of running businesses and industries for reasonable salaries. But the candidate pool for a nationalized business or industry would logically include military retirees, many of whom have demonstrated administrative ability along with their records of commitment to public service.
Thomas Friedman? Benjamin Franklin? Which do you Trust?
Copyright©2008 by Wilson J. Moses
Thomas Friedman, the author of “All Fall Down” NY Times (Nov 25, 08) often gets things wrong, before getting them half-right. He is unfair in placing any blame for this real estate bubble on the “People who had no business buying a home, with nothing down and nothing to pay for two years.” People who fall into that category are of ordinary intelligence, and have need, as we all do, of “the kindness of strangers,” in order to survive. Although some people with IQs of 90 are capable of graspin household microeconomics, others with IQs above 140 are not. Our current crisis provides incontrovertible evidence that, most Americans, including college graduates with high achievements on standardized tests, lack a basic understanding of saving and investment.
Benjamin Franklin created Poor Richard’s Almanack to teach many things, among these, a non-confrontational class-consciousness, an appreciation for saving, and an awareness that personal prosperity sometimes, if not always, requires a moderate parsimony. Serviceable as it is, few Americans today can put Poor Richard’s common-sense ethic into practice, to guide an enlightened self interest.
It is thus necessary and proper for a civilized nation to sustain such structures as fire departments, public schools, a well-regulated banking system, social security, and public health, in order to protect the masses, both bright and dim, from clever but unscrupulous risk-takers.
Another category of Friedman culprits, “people who had no business pushing such mortgages,” did not for the most part make “fortunes doing so.” Most of these are people of mediocre understanding, honest, but credulous, who work at the local bank on Main Street. These people also lack class consciousness and have never learned from Poor Richard’s catechism how to serve their own interests. These people did not make millions, but currently find themselves in danger of losing their homes, victims of their own irrational exuberance and blind faith in the conventional wisdom of their leaders.
Friedman’s third category, the people who were “bundling those loans into securities and selling them to third parties,” are somewhat more culpable. These products of the Wharton, Chicago, and Stanford MBA programs, and lesser institutions, are capable of understanding their errors, and might have known better, but they are so lacking in creativity, imagination and skepticism (despite their vaunted grade point averages and standardized test scores) that they really are not to blame either. They were simply following the teachings of their mentors in business school. They are ideologically screwed up and dreadfully spoiled, but not bad people at heart. It is simply that the typical MBA began with the intelligence of a playboy bunny, and was further dumbed-down by their business school.
More to blame are the professors, in the humanities and social sciences, who abandon the field of political economy to a few “experts” in the “appropriate departments”. We stick to our syllabi, and allow our students to be mislead that the reforms of the New Deal were the cause, not the cure of the Great Depression of 1929-1940. We fear to confront our colleagues who “validate” their positions with mathematical models, so elegant as to outdo the most artful constructions of classical and medieval astronomers. These hire teams of graduate students to crunch numbers to “prove” that the sun circles the earth, and the rest of the planets move in exotic epicycles.
Mathematicians and physicists, are thus blamable because, despite the lessons of the Long Term Capital debacle of the 1990’s, they collaborated in the credit swap fantasies, inventing hypothetical choirs of angels to dance on the heads of hypothetical pins. Professors in the liberal arts and sciences betrayed ourselves and our students by our cowardly silence. A little faith in our own common sense might have led us at least to suggest, that the empire’s clothiers were half-naked themselves.
These sorcerers and their Mickey Mouse grad students have interests overlapping those of their Wall Street chums, who did indeed make a lot of money from pumping up the real estate balloon. Also culpable are the Federal Reserve bankers, the Secretaries of the Treasury, the House and Senate committee members, whose buddies marketed and rated the bonds, sold them, bought them, refused to regulate them, and convinced ordinary people that unrestrained price inflation (whether in real estate, commodities, or securities) is inevitable, eternal, and benevolent.
There are plenty of Americans who really do try to live within their means; people who are content to have fixed-rate, 30-year mortgages at reasonable rates, who establish monthly budgets, who drive modest cars for a decade or more, pay their taxes, and try to accumulate capital by thrift and saving.
Controlled inflation can be beneficial to small capitalists, small farmers, and even to wage earning people. Benjamin Franklin realized as much when, at the age of twenty-one, he called for an increase in the colonial money supply. But the American dream of a perpetually expanding “South Sea Bubble” of the sort that Mr. Henry Paulson and his Wall Street cronies seek to restore is unrealistic.
Americans’ realistic expectations during our most prosperous era, were solidly grounded in the Henry Ford principle of a living wage, and the Thomas Malthus principle of public spending towards development of public infrastructure. No restoration of economic security will be possible if we start with the assumption that these principles, which eventually came to be called “Keyneanism,” have been entirely discredited.
The Roosevelt-Truman-Eisenhower economy provided a factory worker with a thirty year mortgage at 8%. It also provided a four percent return on a pass book account at a Main Street bank. An eighth grade graduate could afford to send two or three children to college, without taking out loans, and a young couple could afford a 20% down payment on their first home. Evolving world conditions may never allow for America to revert to that economy,
Thanks to Reaganomics, the Roosevelt structure has been so mindlessly vandalized that Eisenhower Era expectations are no longer realistic. But whatever the cause of our present ills, no cure will be found in the pseudo-patriotic bravado of so-called “conservative” think tanks, or in the pep talks of MSNBC pundits. Any solution must be found in a completely new appreciation of those areas of the economy that are actually productive, including industry, agriculture, communications, transportation, and trade. We need producers like Ford and Rockefeller, Carnegie and Gates, who despite their predatory tendencies, at least created material industries.
Finance is not an industry but a service, where we do not need those who commit the semantical crime of referring to securitized mortgages as “products.” The demand of the hour is not for buccaneers or risk-takers, but for sober anti-inflationists like Nicholas Biddle and J. P. Morgan to guard against the speculative borrow-and-spend bubbles that accompanied Reagan’s voodoo economics.
Friedman states an obvious and almost redundant truth, obvious to at least some of us. The system is broken, and the American dream, insofar as it is based on a perpetual spiral of borrowing to speculate, is completely unrealistic. Friedman admits that certain irrational aspects of the dream may not be retrievable in the short run. My reading of Poor Richard’s Almanack leads me to the common-sense assumption that they are not realizable in the long run either.