The Catskill Chronicle

By Mort Malkin

That’s “versus,” not “equals,” as corporate America would have you believe. Too many occupants of the White House have also tried to convince us that capitalism installed around the world would lead to democracy.

Viceroy Paul Bremer, the colonial governor of occupied Iraq tried to privatize everything: roads, water, telephone, schools, health care, the oil industry in the north around Kirkuk, the oil industry in the south around Basra … as if capitalism would bring democracy. The Iraqis accepted democracy of sorts but would have nothing to do with unfettered capitalism.

China adopted the economic model of capitalism but kept the political structure of communism. Even the White House financial brain trust – Timothy Geithner and Lawrence Summers – was unable to convince the Chinese of any capitalism-democracy connection.

The philosophers and poets of the Gadfly Revelry & Research gang (GRR) accepted the challenge of why China and Iraq did not see the self-evident truth that capitalism = democracy. The GRR team looked at the history of capitalism from the time of the robber barons until the current era of ringalevio capitalism. The only conclusion that logic allowed was that pure capitalism was antithetical to democracy.

First of all, each corporation is run, not by the stockholders, but the CEO and the Board of Directors, most of whom are appointed by said CEO. The corporation is not a divine monarchy – except for Lloyd Blankfein, CEO of Goldman Sachs, who is doing God’s work – but at least an oligarchy. Even if the officers of a corporation were democratically elected by the stockholders, it would still not be a democracy of all the workers and consumers, let alone the general public.

But, you may say, the Supreme Court declared that corporations have rights just like people. They are deemed to enjoy First Amendment rights of free speech the same as We the People. No, corporations are not born of love (except love of money). They don’t breathe (except fire & brimstone to scare real people). Their hearts don’t beat (most are heartless). Unlike humans they thrive on toxic chemicals.

Second, GRR says that these inherently undemocratic corporations have as their only mission, according to their charters, the making of profit, as much as possible and as fast. No responsibility to society is included in their mission statements. To that end, they hire innovative tax attorneys and accountants to find ways to avoid paying taxes. The really creative tax advisors working for Exxon et al are able to convince the government to pay them subsidies for oil or gas. Poor corporations that can’t claim depletion allowances must find other methods such as assigning profits to off-shore clamshell subsidiaries in the Bahamas or Cayman Islands, where the senior executives and their guests can spend the money lounging on white sand beaches, sipping rum-lime swizzles.

Mission statements of corporations say nothing about supporting the very government whose social and economic structure aids and abets their “earning” all that money in the land of opportunity.

Third, corporations feel no obligation to contribute to the Commons – the natural resources that belong to the people in common. We all own: the air, the water (rivers, lakes, nearby oceans, aquifers), public beaches, public parks, public transportation, public libraries, the Postal Service, public schools, public radio and television, Social Security and Medicare, public squares, public Courthouses … Indeed, many corporations have commandeered our common air and waters as places to dispose of emissions and toxic chemicals that are the by-products of their industries.

In a democracy, all citizens have the right to vote (only once per), can assemble in a public place, speak and write freely, and petition the government to redress grievances – just like it says in the Constitution. No one is more equal than anyone else – not the police, not the FBI, not the CEO of Exxon or Goldman Sachs. Of course, rich folks also should have the above Constitutional rights. But, the Constitution doesn’t say they can vote twice (or 400 times) in an election. Nor does it say they can monopolize the media and drown out the voices of workers (even minimum wage workers) or poor people (even the unemployed or homeless) or people who have contentious ideas (even those who advocate cooperation among people – communitarianism). Money and property don’t count as people.

Democracy is explicit: people are equal before the law. Democracy implies that people are of more or less equal value. A CEO of a corporation might be valued a little more than the worker who produces the actual goods or services. OK, we can be generous – CEOs may be worth two or three times the salary of an untitled worker, but not 10 or 20 million dollars a year worth or, in the case of hedge fund managers, $1 billion per annum.

In today’s corporatocracy, the CEOs of the large banks meet behind closed doors with the US Treasury Department. By what perverse logic would getting $700 billion in a bailout entitle the banks to a meeting? Why don’t We the People ask for a meeting for having gotten sold out? Actually, it was not just a mere $700 billion. The Federal Reserve also printed up a large batch of money and offered loans to the too-big banks of $16.1 trillion (with a t) at near 0% interest rates. The purpose was so the banks could write new mortgages with lower principal and lower interest for homeowners who could not afford the payments on the previously inflated loans, but the banks being good capitalists felt only an obligation to maximize profits. So, they played the still unregulated derivatives market, trading not in antique puts & calls, but exotics such as quanto options, variance swaps, butterfly spreads, iron condors, and strangle options. And, they saved a trillion or two for future more lucrative opportunities.

The people sense something is wrong. The original Occupation site had it right in name and place – Occupy Wall Street. The corporate media – the networks – were accustomed to single-focus demonstrations. They got confused when the Occupiers came from all walks of life and protested all the social and economic ills of the nation – all at once. Here’s a partial list: the patent unfairness of extending tax cuts for the 1% of the people who make more than half a million dollars a year, and the continued spending of blood and treasure on the war in Afghanistan after Osama bin Laden has been assassinated and the thirty-five members of Al Qaeda still in that country are now orphans, and the scarcity of jobs in the US at anything better than sub-prime minimum wage salaries, and the foreclosure of homes carrying vulture mortgages, and the student loans that will take decades to repay, and the menace to the environment from running the tar sands pipeline immediately above the Ogallala aquifer in the Mid-West and drilling for gas in the valley of the Delaware River where the watershed supplies drinking water to 15 million people from New York to Delaware, and the attempts to privatize Social Security and Medicare, and … All together now: the culprit is capitalism.

But, you may say, capitalism is the best of all economic systems. Anyway, with the collapse of the Soviet Union, it’s the only system we have. Gadfly replies: why not begin with a few regulations so it will not be capitalism run wild? If investing is the life blood of the system, let Wall Street handle investments. But, trading and speculation are nothing more than gambling and should be relegated to Las Vegas. No money is to change hands in the hall of mirrors called derivative trading. Investment houses may buy stocks and bonds, period. Banks may open saving and checking accounts and offer mortgages, but no playing the market. Credit card companies cannot charge more than 1% above the interest rate set by the Fed, and late fees are to be assessed at library late book fees. It would be a start.

Alternatively, we could try a different system. Why not mutualism or communitarianism. Nowhere in the Constitution did the Founding Fathers even mention capitalism.