Capitalism Run Amok

When I first heard of cryptocurrency, I scoffed.  It has nothing supporting it, nothing backing it up … it is an even bigger fluff of air than the U.S. dollar. Try going to the grocery store and ‘paying’ for your purchases with crypto!  Ha ha … you will walk out empty-handed, and perhaps escorted by the store’s security guard!  I’m the first to admit that I don’t fully understand crypto, as it is now called, but that is largely because I don’t care enough to learn.  I know only that a lot of foolish people have lost a lot of money by investing in something that is actually nothing.  The recent escapades of one Sam Bankman-Fried have caught the attention of the world, though, and it’s hard to ignore since he is on the front pages every day!  But he’s not the only big-money grifter in the headlines these days.

Robert Reich tackles some of the abuses and excesses of capitalism today, including Bankman-Fried but also Trump and Musk, in a head-shaking piece about how modern capitalism is corrupted by those with far too much money and too little conscience …

The monsters of American capitalism

Trump, Bankman-Fried’s, and Musk

Robert Reich

23 December 2022

If this past week presents any single lesson, it’s the social costs of greed. Capitalism is premised on greed but also on guardrails – laws and norms — that prevent greed from becoming so excessive that it threatens the system as a whole.

Yet the guardrails can’t hold when avarice becomes the defining trait of an era, as it is now. Laws and norms are no match for the possibility of raking in billions if you’re sufficiently ruthless and unprincipled.

Donald Trump’s tax returns, just made public, reveal that he took bogus deductions to reduce his tax liability all the way to zero in 2020. All told, he reported $60 million in losses during his presidency while continuing to pull in big money.

Every other president since Nixon has released his tax returns. Trump told America he couldn’t because he was in the middle of an IRS audit. But we now learn that the IRS never got around to auditing Trump during his first two years in office, despite being required to do so by a law dating back to Watergate, stating that “individual tax returns for the president and the vice president are subject to mandatory review.”

Of course, Trump is already synonymous with greed and the aggressive violation of laws and norms in pursuit of money and power. Worse yet, when a president of the United States exemplifies — even celebrates — these traits, they leach out into society like underground poison.

Meanwhile, this past week the S.E.C. accused Sam Bankman-Fried of illicitly using customer money from FTX from the beginning to fund his crypto empire.

From the start, contrary to what FTX investors and trading customers were told, Bankman-Fried, actively supported by Defendants, continually diverted FTX customer funds … and then used those funds to continue to grow his empire, using billions of dollars to make undisclosed private venture investments, political contributions, and real estate purchases.

If the charge sticks, it represents one of the largest frauds in American history. Until recently, Bankman-Fried was considered a capitalist hero whose philanthropy was a model for aspiring billionaires (he and his business partner also donated generously to politicians).

But like the IRS and Trump, the S.E.C. can’t possibly remedy the social costs that Bankman-Fried has unleashed — not just losses to customers and investors but a deepening distrust and cynicism about the system as a whole, the implicit assumption that this is just what billionaires do, that the way to make a fortune is to blatantly disregard norms and laws, and that only chumps are mindful of the common good.

Which brings us to Elon Musk, whose slash-and-burn maneuvers at Twitter might cause even the most rabid capitalist to wince. They also raise questions about Musk’s other endeavor, Tesla. Shares in the electric vehicle maker dropped by almost 9 percent on Thursday as analysts grew increasingly concerned about its fate. Not only is Musk neglecting the carmaker but he’s appropriating executive talent from Tesla to help him at Twitter. (Tesla stock is down over 64% year-to-date.)

Musk has never been overly concerned about laws and norms (you’ll recall that he kept Tesla’s factory in Freemont, California, going during the pandemic even when public health authorities refused him permission to do so, resulting in a surge of COVID infections among workers). For him, it’s all about imposing his gargantuan will on others.

Trump, Bankman-Fried, and Musk are the monsters of American capitalism — as much products of this public-be-damned era as they are contributors to it. For them, and for everyone who still regards them as heroes, there is no morality in business or economics. The winnings go to the most ruthless. Principles are for sissies.

But absent any moral code, greed is a public danger. Its poison cannot be contained by laws or accepted norms. Everyone is forced to guard against the next con (or else pull an even bigger con). Laws are broken whenever the gains from breaking them exceed the penalties (multiplied by the odds of getting caught). Social trust erodes.

Adam Smith, the so-called father of modern capitalism, never called himself an economist. He called himself a “moral philosopher,” engaged in discovering the characteristics of a good society. He thought his best book was not The Wealth of Nations, the bible of modern capitalist apologists, but the Theory of Moral Sentiments, where he argued that the ethical basis of society lies in compassion for other human beings.

Presumably Adam Smith would have bemoaned the growing inequalities, corruption, and cynicism spawned by modern capitalism and three of its prime exemplars — Trump, Bankman-Fried, and Musk.

27 thoughts on “Capitalism Run Amok

  1. This is the comment I left on Reich’s blog:
    Trump, Bankman-Fried, and Musk may be the most visible monsters today, but they are not the only ones, or necessarily even the worst ones. While the media concentrates our attention on these three, WHAT ARE THE REST UP TO? Misdirection was a prominent tool of the Trump administration (Draw our attention to one thing while he did 5 other even-worse things behind the scenes of public view!) and you can bet this is happening right now too. Bankman-Fried is a sacrificial lamb, a decoy to hide what else is going on. Musk is a crazed attention-grabber, but who is hiding behind him? Trump, meanwhile, for all the bad press he received for the past 7 years, is still going strong, as are his children and his billionaire friends.
    And we are paying them to rape us. How gullible can we be?

    Liked by 3 people

      • I’m not asking about his gang, I’m asking about all the other owners of wealth. I am not saying they are collaborating all together, but they are all doing something that they are hiding, something that is not good for the Earth. That is what I want to know.

        Liked by 1 person

  2. Pingback: Capitalism Run Amok | Ned Hamson's Second Line View of the News

  3. Jill, there are lessons to be learned herein through these examples. Focusing too much on short term profits is harmful to long term gain, always has been. Sadly, some take advantage of this and make their money and get out leaving the problems for someone else. Unscrupulous real estate developers do this often. And, guess what business Donald Trump is in and he is not known for having scruples.

    As for Musk, it is an age old tendency for someone or some company to buy an entity and then destroy its value by making invasive change. You have to ask why did you buy it in the first place. Musk is very inventive, but being a good manager is not his forte.


    Liked by 2 people

  4. We are being run by the mob and they have installed their puppets in all walks of life including much in our government. It’s a cartel trying to takeover the world, by people’s ignorance, gullibility, religious prejudices and knowing how to feed their fears of “the other.” It’s going to be a wild and scary 2 years for the normal and ethical among us.

    Liked by 1 person

    • True, but it was We the People who elected those puppets. We MUST do a better job of learning who our candidates are, who funds them, and what their past is, rather than simply falling for the never-ending promises they make, promises they have no intention of fulfilling. We must use our heads, else we get what we deserve, elected officials who are owned by the fossil fuel industry, the logging industry, and the gun industry. The next two years will be naught but a lot of noise and screeching, with no meaningful legislation coming out of Congress, but it is the 2024 election that we MUST spend our time preparing for, vetting candidates, and educating the ignorant.

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