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.

Damn You, Donald Trump!

If the top experts in a field don’t give you the answers you wanted, don’t tell you exactly what you wanted to hear, then the best thing is to find people who will say precisely what you want to hear and abide by their opinions.  For example … say your tax accountant, a long-trusted Certified Public Accountant tells you that you owe a few thousand dollars in federal income taxes, and you don’t want to pay any more taxes, you can always find a shyster who will find illegitimate deductions and with a bit of creative accounting, can make your tax bill vanish into thin air.  This is what all the smart, wealthy businessmen do all the time … businessmen with last names like DeVos, Ross, Mercer, Koch, Craft and Trump.  That’s why they are so wealthy!

Now, my point today has nothing to do with income taxes, though I have spent the last three hours working on them, but with the science of climate change.  Trump doesn’t like the report that was issued last November by the National Climate Assessment (NCA).  He doesn’t like it largely because the results do not fit in with his grand scheme to roll back all environmental protections and give free rein to the fossil fuel industries, as well as others such as the auto industry.  And so, if the puzzle piece doesn’t fit where you want it, then grab a knife and whittle it until it does fit!

The NCA report is a result of the work of 13 different federal agencies, and I urge you to take a look at the section titled Summary Findings, at a minimum.  When the report was first issued, Trump summarily dismissed it, saying he is not among the “believers” who see climate change as a pressing problem.  Go figure, huh?

“One of the problems that a lot of people like myself, we have very high levels of intelligence but we’re not necessarily such believers.”

Did he really say “high levels of intelligence” as referring to himself???  What a son of a b**ch!  But on to the business at hand …

Trump has now decided to set up his own ad hoc group of select federal scientists to reassess the government’s analysis of climate science and counter conclusions that the continued burning of fossil fuels is harming the planet.  In other words, Trump is going to establish a group of climate deniers to state that the NCA report is wrong, thus giving him free rein to follow through on his policies that will bring about, in short shrift, the extinction of not only the human species, but likely all life on earth as we know it today.  Alarmist?  Nope … ask the real scientists.

Trump has tasked the National Security Council with establishing the initiative that would include scientists who question the severity of climate impacts and the extent to which humans contribute to the problem.  The group would not be subject to the same level of public disclosure as a formal advisory committee.  NSC officials said they would take steps to assemble a group of researchers within the government. The group will not be tasked with scrutinizing recent intelligence community assessments of climate change.

Understand that the NCA report was subjected to intense scrutiny by scientists worldwide before it was released and is not the only report to provide similar warnings.  Last year, a military-funded study warned sea level rise and other climate impacts could make more than a thousand low-lying islands in the Pacific Ocean “uninhabitable” by midcentury.  Just last month, the national intelligence director delivered a worldwide threat assessment that “climate hazards” including extreme weather, wildfires, droughts and acidifying oceans are worsening, “threatening infrastructure, health, and water and food security.”  In the words of Camilo Mora, a geographer and environmental professor at the University of Hawaii …

“When it comes down to climate change, we are talking about thousands of independent papers, from everywhere, finding exactly the same thing: that the climate is changing, that we are doing it and that most often than not, the impacts are pretty bad.”

A few very important things should be noted.  While I am admittedly ‘science-challenged’, I am fully convinced that humans have created environmental problems that have been ignored for far too long and are now at crisis stage.  Every other nation on the globe … every single one … have signed the Paris Climate Accord and are diligently finding ways to reduce their carbon emissions, as well as other climate initiatives.  But the United State, the second largest emitter of CO2, and the largest per capita, has reversed course and is actively increasing fossil fuel usage, refusing to take advantage of technology that allows vehicles to become more fuel efficient, and has taken every step imaginable to further increase carbon emissions!Co2 emissions by nationOur carbon emissions do not simply affect the atmosphere directly over the U.S.!  Our emissions affect people in every nation on the globe! Put yourself in the place of a citizen of the United Kingdom, a country that has reduced its carbon emissions by some 43% since 1990, a country where clean, renewable energy has reduced much of its reliance on coal, where industrial pollutants are strictly regulated.  Yes, there is a price … some industries have taken a hit and there are other ramifications, but at the end of the day, they are doing their part … the U.S. is not.  Plain and simple.  Germany is doing its part. Even China is taking climate change far more seriously than the U.S.!

And now, the head of our government has undertaken a new mission to form a group of climate deniers to tell the American people that CO2 is not actually harmful to the atmosphere and that we should all support the coal and oil industries, that we should all drive big vehicles that get 10-12 miles per gallon as opposed to more fuel efficient cars that average more than 40 miles per gallon.

Former Secretary of State John Kerry has written an OpEd in The Washington Post titled “Disband Your Climate Denial Panel, Mr. President” that is well worth the short read and is further proof that those who are thinkers, those who have education, knowledge and intellect, understand that man has abused the environment just about as long as he can, and we are on a path to destroying the very resources we need to survive.

When our cities look like this …China-pollutionThere is one person who bears the responsibility:  Donald J. Trump.  Damn you, Donald Trump!