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"Tim, it's not that complicated. On the one hand there is 'We, The (Little) People' and on the other hand, there is Us, the Financial Community - the very heart of this Corporate State of ours, the very personification of Big Business. The way American Free Enterprise works is that we let The Little People go bust in the normal way of things while we, the Financial Community get bailed out and otherwise subsidized. Who pays? The Little People, of course. That's what Little People do. That's why they stay little. Now go to it."  And so it came to pass. 

“Corporate Profits Were The Highest On Record Last Quarter”

Catherine Rampell NYT November 23 2010

“The nation’s workers may be struggling, but American companies just had their best quarter ever.

American businesses earned profits of $1.66 trillion at an annual rate in the third quarter, according to a Commerce Department report released Tuesday. That is the highest figure recorded since the government began keeping track over 60 years ago, at least in nominal or non-inflation-adjusted terms.

Corporate profits have been going gangbusters for a while. Since their cyclical low in the fourth quarter of 2008, profits have grown for seven consecutive quarters, at some of the fastest rates in history.

This breakneck pace can be partly attributed to strong productivity growth — which means companies have been able to make more with less — as well as the fact that some of the profits of American companies come from abroad. Economic conditions in the United States may still be sluggish, but many emerging markets like India and China are expanding rapidly.”

So much for the good news. Now let’s examine its implications.

We seem to have entered a period when it’s almost as if American Big Business has declared war on the Democrats in particular and the American people in general. Do I exaggerate to make a point? Possibly, but what I am saying without hesitation is that Big Business seems to be using its clout – yet again – to turn Obama into a one term president in the hope that his Republican successor will be more business friendly. The methodology is straightforward enough.

• Squeeze the U.S. consumer in every way possible in order to optimize profits.
• Squeeze workers for exactly the same reason in the certain knowledge that in the current employment climate workers have little choice but to accede to employer demands.
• Despite having unprecedented capital available - in excess of $2 Trillion - and profits being at record levels, refuse to invest to any serious extent until Obama is out of the picture.

This is pretty sick behavior, but Big Business may well get away with it because, so far, Obama seems to be incapable of facing up to the fact that the American Business Model is deeply flawed – and communicating that truth to the American people as a whole. Quite why this is, I do not know, but his lack of moral courage on this issue is not to his credit; and if he doesn’t understand what is going on – entirely possible given his lack of a business background – then, once again, he has surrounded himself with the wrong people.

To be critical of the American Business Model does NOT make one “anti-business.” It means your eyes are open; and you care about ALL Americans.

Attempting to destroy the credibility of the messenger is a standard technique and labeling critics of specific business bad behavior as innately “anti business” is pretty much a standard reflex. In reply, I merely ask you to think about what is actually going on and to reflect on the performance of American Big Business (which includes the Financial Community) over the last four decades. If that does not make you appreciate that “something is rotten in the state of Denmark (Shakespeare meant U.S. Big Business, of course) then I’m emigrating to China.

Read on and think this through carefully. Big Business has bought our political system and we no longer have a Free Enterprise economy. There is nothing free about it. We have a country run by, and for, the Rich and Special Interests - and most Americans are getting shafted. 

Most of us don't want to believe it because it is frightening to realize that  our Democracy has been so subverted, that something akin to a coup has taken place, but the evidence is readily available, and incontrovertible: Congress isn't working - it has been bought - and our National Wealth is being siphoned off at rapid speed. Unless enough of us wake up and do something, this country is going to be no country for our children. 

Let me going into a little more detail by exposing you to a Chamber of Commerce briefing.  They didn’t really write the words but they have certainly supported the deeds; (and they should be ashamed of themselves).

HOW TO INCREASE CORPORATE PROFITABILITY IN TWENTY-FIRST CENTURY U.S.A.: A checklist for action originated by the U.S. Chamber of Commerce 

1. Buy government at Federal, State and Local level so that the legal system consistently favors business over the rights of the American citizen. 

We call this “Gaming the Constitution” and we’ve become so good at it, the elections are now categorized as entertainment. Heck, we should set the whole thing to music. True, we’d prefer the Republicans to win because they are clueless in practical terms, but we have our hooks into the Democrats too so either way we make out like gangbusters. Remember that the bail-out of Wall Street was started by Bush and completed by Obama. Go figure. DONE

2. As above with the Legal System.

Here we pay particular attention to the Supreme Court because, in the right hands – no pun intended – it makes sure that we can go on buying politicians with as much money as is needed. Most reasonable citizens would call this bribery, but since the Supreme Court classifies corporations as people, we get away with paying off pols under the pretence that our bribes equate to free speech. Yes, we know it defies commonsense and makes a mockery of the Constitution, but it’s good for us; and that’s all that counts. Why so? Because we are the elite. It’s the natural order of things. DONE.

3. Make sure that government gives special breaks to Big Business in the form of tax breaks, subsidies, grants, contracts, privatization and anything else you can think up.

This isn’t that difficult if you remember to pay off the politicians, provide jobs for retired military and the like, and support the Right Wing even if you privately think their policies are idiotic. DONE.

4. Rail against government spending publicly, but privately suck at the public teat as much as you can.

As most large corporations have discovered, it is much easier to make money screwing the government than competing in the marketplace. Campaign contributions and lobbyists are relatively cheap compared to marketing costs. In addition we always manage to place large numbers of our people within every administration. He who pays the piper calls the tune. And the American people do not pay the piper. Big business does; and Big business is US – a small, select, elite, extraordinarily rich group (who pay tax, if we pay any, at a vastly lower rate than the average American). It’s the American Way – and always will be. DONE.

5. Talk a lot about how only private enterprise is willing to take risk and spur innovation but, privately, make sure that risk is underpinned by the government.

This is particularly important if you are a defense contractor. Here, an additional trick is to drag out contracts interminably so that no one can ever be held accountable for anything (because they have moved on) and the ignorant blame the increase in costs on inflation. Appreciate that a big weapons contract can be stretched out for 20 years or more and, with luck, you won’t have to make anything at the end. Look at the Commanche helicopter. And by the way, did you know the Defense Department books cannot be audited – even though it is a legal requirement. It’s systems won’t talk to each other. Somehow, that scarcely seems to be accidental. Money flows in and sort of disappears – into our pockets, by the way. The systems cannot account for it. Is this a great country or what! DONE.

6. Moan about corporate tax a lot but, unless you are an idiot, don’t actually pay much of it.

Think of the Google example. If one of the largest companies in the world can pay only 2 percent tax, you can shoot for the same. DONE.

7. Blame government for everything – and those socialistic Europeans for everything else.  

We have done a fantastic job dumping on the government. We probably couldn’t have done it in the immediate post war period, or during the Eisenhower years, but the Vietnam War left many people unhappy with government, and we exploited that feeling to hammer away at government ever since. 

The Nazis weren’t wrong. If you repeat a lie often enough, you can get an awful lot of people to believe you. Sure, we know that government is necessary and that some governments can be very good indeed (and some corporations very bad), but the truth has nothing to do with it. Instead, we want to be able to blame some outfit while we get on with the business of making money – and the government is a perfect patsy in that regard. As for the Europeans, they are another perfect foil – especially as most Americans haven’t a clue what Socialism is except that it’s BAD. Of course, the truth is that American corporations operate with great success – and very profitably - in virtual all European states but we are not going to tell the American voter that. We like things the way they are, and it’s really useful having a bogeyman. DONE.

8. Support Small Business publicly while undermining it privately.

Here’s the thing. Although we talk about how wonderful a free market economy is, we don’t really want anything of the sort. Genuine competition is far too risky and has a disconcerting habit of depressing profit margins and working in favor of the consumer. And it’s very hard work. 

So what we really want – and have – is a situation whereby a mere handful of corporations has a lock on each market sector and create what is, in effect, a monopoly. Now the great thing about a monopoly is that it doesn’t have to worry about competition, can keep profit margins high, has more than enough resources to make the people who run it filthy rich, and has enough clout to keep the politicians in line and to strangle any potential competitors at birth. All of that adds up to THE AMERICAN BUSINESS MODEL. Pick virtually any market sector in the U.S. and you’ll find it that despite the profusion of brands, it will be controlled by only a few corporations. De facto monopoly is here.

So where does Small Business come in? Well, we tolerate that for a number of reasons. (1) Many of these so called small businesses are really employees whom we don’t have to pay benefits too because we classify them as contractors. (2) The sector is a convenient dumping ground for people we fire. (3) We want to keep the plebs still believing in the American Dream because it distracts them from what is really going on. (4) Some of them provide services we find useful but don’t want to get involved in. (5) Backing small business is a real vote getter. 

All of that said, we don’t really want a vibrant small business sector because people might soon discover that local is better in many ways and put more than a few of us out of business. Imagine if local restaurants replaced Fast Food – the mind boggles. So our policy is to praise them, but work them to death and keep them underfinanced. Our financial friends do a great job in that regard. They don’t quite strangle them, but they keep them gasping for air.  Our whole approach works like a charm. DONE.

9. Break the Unions.

American workers don’t enjoy anything like the benefits of workers in Europe and we want it to stay that way. Good grief, what would happen to this country if workers started getting decent vacations. And remember that the unions have been behind just every social advance made by the American worker. In fact you can make a strong case that without the unions there wouldn’t be an American Middle Class. The unions are a downright menace. NEARLY DONE.

10. Buy up the Media so that it becomes an instrument of distraction and corporate manipulation – packaged as entertainment - rather than information.

Realize that it is extremely important that Americans do not realize how much better workers are treated in most of the rest of the Developed World. Trade on the fact that many Americans are either badly educated or narrowly educated; and KEEP THEM IGNORANT!  And broke. DONE (apart from the pesky Internet).

11. Oppose any and all regulations, regardless of their merit.

This attitude defies all reason except than it may keep direct operating costs down in the short term (and other costs are the taxpayers problem). Its effect is to allow business to pollute at will, Big Coal to devastate the environment and have its miners killed unnecessarily, the financial sector to pass bad paper and  gamble etc. – to name but a few examples. True, that will put you and your family at risk too – but you can avoid most of that if you pay yourself an obscene amount of money and live a separate lifestyle. You know, God invented gated communities, corporate jets and stock options for a reason. Why not? After all, he too is a CEO in a way and it is no accident that the cross is a Plus Sign. DONE.

12. Undermine any and all worker rights.

In addition, make sure that workers have as little time off work as possible because they must not have either the time or the energy to think. Thinking is bad. Process is good. Information is bad. Ignorance is good. It’s a mantra. Use it to help yourself meditate on just how rich all of this is going to make you. DONE.

13.  Eliminate any notions about such socialist concepts as ‘The Public Good,’ ‘The National Interest,’ ‘the Welfare of the Community’ etc.

Realize that U.S. interests and business interests are NOT  one and the same. Perhaps they were half a century ago, but now what’s good for corporate interests is frequently downright damaging to America. Tough. That’s just the way it is these days. DONE.

14. Focus only on short term profitabilityy.

Remember, although Wall Street loves the results of research, it doesn’t like us investing in it. So let the government pay for most of it and let us practical business people who live in the real world focus on the next quarter. And while you are at, close down your lab and lay off a few thousand U.S. researchers. If ever you need research, you can get the job done in China or India and those guys come a whole lot cheaper. And meanwhile watch your share price shoot up. Wall Street loves cost cutting. DONE.

15.  Transfer as much risk as possible to your workforce.

Make them pay more for healthcare and fund their own pensions – and oppose unemployment pay. Remember that an insecure workforce is a docile workforce. DONE.

16.  Export as many American jobs as possible.

This not only cuts costs but it keeps the rest of the workforce terrified and amenable – and renders unions impotent. Better yet, it boosts the pay of the Chinese (or whoever) and creates whole new markets for your corporation. And, by the way, you are going to need new markets with a vengeance because the American Middle Class is being destroyed by debt, the housing crisis, healthcare, education costs and low pay. But, that’s not your concern. You’ve got to think global these days – and always put yourself (and your buddies) first. DONE.

17.  Export manufacturing expertise and all kinds of other technology.

Well, we’re not really crazy about doing this because it means in effect that we are creating are own competition to the great detriment of America. On the other hand, why should we care about the American Middle Class – and, frankly we don’t. Our loyalty is solely to the bottom line. In fact it has to be because that is what U.S. law mandates. Now, it’s true that we have also exported all kinds of stuff that some might regard as a threat to American National Security but we really had very little choice. The Chinese insisted on it. DONE.

18.  Appreciate that ‘The American Job is your prime bargaining chip’ and should be exploited in every possible way.

So spread the illusion that only big business creates jobs, ensure that government at all levels pays heavily for the privilege of having you set up a plant – and keep jobs as scarce as is practical. Remember: Unemployment is good and keeps your costs down.  Full employment is bad because then you’ll have to pay decent wages. DONE.

19.  Bitterly oppose unemployment pay and similar benefits

This includes food stamps and anything else that makes up the social safety net. You want the loss of a job to be a terrible thing because that will keep your workforce cowed and in line. And you certainly don’t want the unemployed able to pick and chose. So far you are doing pretty well in that less than half those out of work actually manage to collect anything thanks to technicalities (thank god for lobbyists) but you can do better. PARTIALLY DONE.

20. Understand that you can make much more money in the financial sector than by actually making anything.

Of course we had to get rid of all kinds of regulations first, and we regularly need to be bailed out by the American taxpayer (don’t worry – the American public forgets quickly) but since we own the politicians and have a lock on the economy, that is not a problem. We call this Financialization and the great thing about it is that no one really understands it. 

However, it allows us to sell worthless paper for trillions, slap fees onto just about every commercial transaction, gamble with other people’s money, pay ourselves obscene amounts of money, operate in near complete secrecy – and hold the entire economy to ransom. 

Mind you, a byproduct is that the real U.S. economy is being destroyed at a rapid rate and tens of millions of lives are being ruined – but, hey, it should last long enough to see you and I ok; and then we can give the whole place back to the Indians. And, by the way, all of this is RISK FREE because the public always pays if things go wrong.  Look at the so called Great Recession. We caused it – and if financial businesses were normal corporations, we’d have all have gone bust. Instead, between the TARP and the Fed, we’ve been drowned in nearly free money and we’re back in action raking it in all over again. DONE.

21.  If you still do manufacture in the U.S., avail of monopoly pricing – and cut costs.

Big Pharma is the best example around of monopoly pricing so if you study how they operate, you won’t go far wrong. But you can also get a lot of mileage out of debasing the product. It’s not that hard to do and the Food Industry excels at it. What you do is take some processed product and replace one ingredient with a similar but cheaper one. Use High Fructose Corn syrup instead of sugar for example. Or add fillers such as soy powder or whatever. Now there might be health disadvantages and so on but the chances are the average consumer won’t notice and the savings can be enormous. And health issues are scarcely your problem. If people chose to eat such stuff, it’s a free country after all. DONE.

22.  Create and impose a matrix of social control that effectively distracts, entertains and constrains the U.S. population

As you will already know, this merely an updated version of the Ancient Roman way of keeping their population in line. Whereas the Roman elite provided bread and circuses to distract and entertain the masses – backed up by foreign wars and the ever present threat of physical force, we operate a more sophisticated system; albeit, for exactly the same purpose.

Our modern system is made up of: (1) Inadequate primary and secondary education. (2) Costly tertiary education that forces most into debt. (3) A bureaucratic employment system that is credential oriented to excess, and unforgiving of any deviation from the accepted norm (4) A system of government and corporate databases that virtually eliminates the concept of privacy for the individual (5) A car dependent society that forces most to buy a vehicle. (6) Unremitting pressure to consume. (7) A controlled media oriented towards entertainment, and sorely lacking in the kind of information citizens need. (8) An economic system that is carefully designed to ensure that one is indebted for life. (9) Minimal worker rights. (10) Major penalties if one loses one’s job. (11) The elimination of company pensions. (12 ) A healthcare system that is both inadequate in quality, and which costs roughly twice that of other developed countries. And by the way, ridiculously costly healthcare has TWO benefits. It's vastly profitable for people like us, and it takes money out of the economy which might be spent on social benefits which we certainly don't want. It does make us less competitive internationally, and help destroy the U.S. manufacturing base, but that's a problem for the Little People, not for us.

I could add in other elements, such as a legal system that imprisons more citizens per capita than any other nation in the world – and which thus removes large numbers of people who might be tempted to vote against our interests – but I think this will give you the general idea. And, needless to say, we have wars too, and they are super-good for business. Good grief, the Iraq and Afghani wars alone are well on their way to costing $3 trillion – and all of that is borrowed money. Think of the profit from that little lot.

The important thing to focus on is how all of this works to our advantage. In its totality, it virtually eliminates opposition because the penalties of stepping out of line are so severe. And as a byproduct, it makes a small number of us extremely rich. Why not? Not only do we own this country, but we run it too.

  

Socialism for the Rich, and Social Control at a profit, is truly the American Way. DONE.