The four business gangs that run the US

Wish everyone a happy and healthy new year !

Following is an interesting article from Ross Gittin. He is the economics editor of the SMH papper, and I have read several of his articles in the past and find them to be rather good read.  The economics writers as a whole are much better than those who write about politics, particularly on foreign policies. In fact on foreign political matters, the SMH is just the Australian equivalent of the NYT – written by ideologues with religious zeal.

IF YOU’VE ever suspected politics is increasingly being run in the interests  of big business, I have news: Jeffrey Sachs, a highly respected economist from  Columbia University, agrees with you – at least in respect of the United  States.

In his book, The Price of Civilisation, he says the US economy is  caught in a feedback loop. ”Corporate wealth translates into political power  through campaign financing, corporate lobbying and the revolving door of jobs  between government and industry; and political power translates into further  wealth through tax cuts, deregulation and sweetheart contracts between  government and industry. Wealth begets power, and power begets wealth,” he  says.

Sachs says four key sectors of US business exemplify this feedback loop and  the takeover of political power in America by the ”corporatocracy”.

First is the well-known military-industrial complex. ”As [President]  Eisenhower famously warned in his farewell address in January 1961, the linkage  of the military and private industry created a political power so pervasive that  America has been condemned to militarisation, useless wars and fiscal waste on a  scale of many tens of trillions of dollars since then,” he says.

Second is the Wall Street-Washington complex, which has steered the financial  system towards control by a few politically powerful Wall Street firms, notably  Goldman Sachs, JPMorgan Chase, Citigroup, Morgan Stanley and a handful of other  financial firms.

These days, almost every US Treasury secretary – Republican or Democrat –  comes from Wall Street and goes back there when his term ends. The close ties  between Wall Street and Washington ”paved the way for the 2008 financial crisis  and the mega-bailouts that followed, through reckless deregulation followed by  an almost complete lack of oversight by government”.

Third is the Big Oil-transport-military complex, which has put the US on the  trajectory of heavy oil-imports dependence and a deepening military trap in the  Middle East, he says.

”Since the days of John D. Rockefeller and the Standard Oil Trust a century  ago, Big Oil has loomed large in American politics and foreign policy. Big Oil  teamed up with the automobile industry to steer America away from mass transit  and towards gas-guzzling vehicles driving on a nationally financed highway  system.”

Big Oil has consistently and successfully fought the intrusion of competition  from non-oil energy sources, including nuclear, wind and solar power.

It has been at the side of the Pentagon in making sure that America defends  the sea-lanes to the Persian Gulf, in effect ensuring a $US100 billion-plus  annual subsidy for a fuel that is otherwise dangerous for national security,  Sachs says.

”And Big Oil has played a notorious role in the fight to keep climate change  off the US agenda. Exxon-Mobil, Koch Industries and others in the sector have  underwritten a generation of anti-scientific propaganda to confuse the American  people.”

Fourth is the healthcare industry, America’s largest industry, absorbing no  less than 17 per cent of US gross domestic product.

”The key to understanding this sector is to note that the government  partners with industry to reimburse costs with little systematic oversight and  control,” Sachs says. ”Pharmaceutical firms set sky-high prices protected by  patent rights; Medicare [for the aged] and Medicaid [for the poor] and private  insurers reimburse doctors and hospitals on a cost-plus basis; and the American  Medical Association restricts the supply of new doctors through the control of  placements at medical schools.

”The result of this pseudo-market system is sky-high costs, large profits  for the private healthcare sector, and no political will to reform.”

Now do you see why the industry put so much effort into persuading America’s  punters that Obamacare was rank socialism? They didn’t succeed in blocking it,  but the compromised program doesn’t do enough to stop the US being the last rich  country in the world without universal healthcare.

It’s worth noting that, despite its front-running cost, America’s healthcare  system doesn’t leave Americans with particularly good health – not as good as  ours, for instance. This conundrum is easily explained: America has the  highest-paid doctors.

Sachs says the main thing to remember about the corporatocracy is that it  looks after its own. ”There is absolutely no economic crisis in corporate  America.

”Consider the pulse of the corporate sector as opposed to the pulse of the  employees working in it: corporate profits in 2010 were at an all-time high,  chief executive salaries in 2010 rebounded strongly from the financial crisis,  Wall Street compensation in 2010 was at an all-time high, several Wall Street  firms paid civil penalties for financial abuses, but no senior banker faced any  criminal charges, and there were no adverse regulatory measures that would lead  to a loss of profits in finance, health care, military supplies and energy,” he  says.

The 30-year achievement of the corporatocracy has been the creation of  America’s rich and super-rich classes, he says. And we can now see their tools  of trade.

”It began with globalisation, which pushed up capital income while pushing  down wages. These changes were magnified by the tax cuts at the top, which left  more take-home pay and the ability to accumulate greater wealth through higher  net-of-tax returns to saving.”

Chief executives then helped themselves to their own slice of the corporate  sector ownership through outlandish awards of stock options by friendly and  often handpicked compensation committees, while the Securities and Exchange  Commission looked the other way. It’s not all that hard to do when both  political parties are standing in line to do your bidding, Sachs concludes.

Fortunately, things aren’t nearly so bad in Australia. But it will require  vigilance to stop them sliding further in that direction.

Source :


About kchew

an occasional culturalist
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