Category Archives: Capitalism

When Ideology Swallows Sense

 

I have been struggling to understand this amazing phenomenon that regions with a high prevalence of Christians and conservatives, such as southern Manitoba where I live, also have a high prevalence of vaccine hesitancy. Why is that the case?  What unites these two ideologies with nonsense? I think this is a very important question.

 

I have been surprised by the number of people that won’t take the Covid-19 vaccines because they don’t trust the government. To me that seems ludicrous. I have managed to dodge the prevailing political wisdom that assumes anything the government does is bad while anything the private sector does is good. I hear it all the time.  It is particularly prevalent here. That has been the prevailing political belief since at least the time of Saint Ronald Regan. Even left wingers are subject to this ideology; it is so common and so pervasive.

Some people blame the internet for this problem, and it is a partial cause.  But it does not explain enough. One of my favorite political commentators in my favorite newspaper (now a magazine), Nesrine Malik of The Guardian, pointed out something very interesting when she said,

“People with the wildest theories about the pandemic can be found in countries even where most people don’t have access to the internet, cable TV or the shock jocks of commercial radio. A common impulse is to write off those espousing conspiracies, consigning them to the casualties claimed by WhatsApp groups, disinformation or silent mental health issues. These things may be true – but vaccine hesitancy is a symptom of broader failures. What all people wary of vaccines have in common, from Khartoum to Kansas is their trust in the state has been eroded. Without understanding this, we will be fated to keep channeling our frustrations towards individuals without grasping why they have lost trust in the first place.”

 

Malik emphasizes that governments around the world, particularly in the developing world, have earned this distrust. Endemic corruption breeds justifiable distrust. I agree entirely with that. But what about countries like Canada with governments that are not as corrupt? Why is distrust of governments so common here? Not that our governments are perfect, but they have at least a modicum of integrity.

As Malik said,

“Vaccine rejection doesn’t happen in a vacuum. It’s easier to dismiss hesitancy and conspiracies as unhinged behaviour; it makes us feel less unnerved by displays of unreason from those who we think are, or should be, rational people. Sure, among vaccine-hesitant people are those who are simply stubborn, misanthropic or selfish. But, just as the pandemic exploited the weaknesses of our economic and public health systems, vaccine hesitancy has exposed the weaknesses of states’ bond with their citizens. There are no easy answers for how to deal with those who repeat conspiracy theories and falsehoods, but scrutinising the systems that lost their trust is perhaps a good place to start.”

 

I also want to point out that in the west since the 1980s during the reigns of Saint Ronny, Princess Maggie, and Prince Brian in the US. UK and Canada respectively, people have been fed a steady diet that the state is unreliable and predatory.  As Saint Ronald Reagan said, the most scary 11 words in the English language are, ‘I am from the government and I am here to help.’

 This is all part of neo-liberal dogma/propaganda that the government can’t be trusted only the private sector is worth our trust. Of course, this ideology has for decades served the interests of the wealthy who care more about minimizing their personal or corporate taxes than the plight of the less advantaged. As a result many of them  have used their wealth to convince us of its truth because it is in their interest to do so. This ideology is now so prevalent that even people whose best interests would be served by government are reluctant to accept its help. Vaccines are a case in point. Governments provide many things of enormous value that the private sector is unwilling or unsuited to provide including hospitals, roads, libraries, universities, parks, environmental regulations, health and safety standards to name only a few. For decades we have been taught and many of us believed that governments are bad and private enterprise is good.

Now we are paying a heavy price for blindly following that ideology.

Crony Capitalism

 

Gandhi was once asked what he thought about western civilization. He replied it would be a good idea. I feel that way about capitalism. Many of my friends are big supporters. I am more sceptical. m

Scott Galloway calls what we have  crony capitalism.  He liked capitalism; he hates crony capitalism. This is what he said to Bill Maher, who also likes capitalism:

 

“Capitalism is hands down the best system of its kind. What young people are seeing today is not capitalism. We have rugged individualism on the way up and then we have ‘we’re all in this together on the way down.’ We have socialism. Capitalism on the way up where 5 CEOs of airline companies make $150,000,000 and use all their excess cash flow to buy-back stocks so that they artificially inflate their own compensation and then shit gets real when a pandemic comes they don’t have any money and all of a sudden its ‘we’re in this together.’ When you have capitalism on the way up and socialism on the way down, that’s not capitalism or socialism it is cronyism. It is the worst of all worlds. Capitalism is full-body contact violence at a corporate level so we can create prosperity and progress that rests on a bed of empathy. We have flipped the script here. We need to be more loving and empathetic with people and more harsh on companies. We should be protecting people not companies. Fucking Delta? Burn baby burn!”

Larry Wilmore made an important point. He said, “we have not had pure capitalism for 150 years. We are constantly redefining what capitalism is”

 

In the period of the new deal we expanded what government could do. It could bring social security and unemployment insurance. It could bring things that at one time were considered uncapitalistic. Now that does not matter. Perhaps in the US Obama care will be accepted as a proper government benefit. Socialized medicine, as the Americans like to call it, has been an acceptable governmental interference in the economy in all western countries except for the United States.

 

The Republicans in 2016 rode to victory on a platform of dismantling Obama Care. For the first two years the Republicans had a Republican president and a Republican Senate and a Republican House of Representatives and could not kill Obama Care. Perhaps it is also here to stay. How many Republicans campaigned to dismantle Obama Care in the 2020 elections? Not many. They were largely afraid to try that. So they ran on no platform. Their only platform was “I like Trump.” What ever that meant.

 

In Canada no political party in 40 years has campaigned to dismantled Medicare. It is a sacred trust. It does not matter that it is not capitalism. No one in Canada cares.

Capitalism? Yeah that’s something we should try some time.

Is it important that we all get across the finish line?

 

Some Canadians are leery about taking any of the Covid-19 vaccines as they are worried they might not be as safe as advertised. On the other hand, many of us are worried about not getting the Covid-19 vaccines fast enough. In fact some of us think our government has done a poor job of securing enough vaccines. We look jealously at friends in the US who already have had their vaccinations. 3 of my friends are vaccinated and getting out and about again. But jealously will get me nowhere.

I have been thinking a lot about vaccine ethics lately. There is no reason in the world why we are justified in getting vaccines ahead of anyone else.

Then I read recently that according to the WHO until recently 25 vaccine doses were administered in all of the poor countries combined, while in the wealthy countries, such as Canada, 39 million doses had been given. And we thought it was bad when people were hoarding toilet paper. The rich  countries don’t recognize it yet, but this is not good for any of us.

 

I read an interesting article in the Winnipeg Free Press  by Lindsay Glassco the president and CEO of Plan International Canada.

where she said,

“It shouldn’t be about winning the vaccination race, but rather ensuring we all cross the finish line. It’s been more than a year since the World Health Organization declared COVID-19 a pandemic. In that time, the virus has exacerbated long-standing inequities and deepened global power imbalances. It has also revealed our interdependencies and the fragility of our global systems.”

 

 

Hoarding vaccines is a lot worse than hoarding toilet paper.

One thing that has become difficult for us not to learn is that during an international pandemic borders are ephemeral and lose much of their significance. No country can keep out the coronavirus or escape its deadly and costly consequences. I remember when Donald Trump seemed to suggest that the US might be able to keep its cases of Covid-19 to less than a hundred! Now they have had more than 500,000 deaths from the virus. How quickly times changed.

All of us must understand that we are citizens of the world. We are all linked and what happens in distant countries can have a profound effect on us. As Glassco said,

“The interdependencies that make up our global fabric are more evident than ever, because we are witnessing first-hand what can happen when they are affected, at local, national and global levels. Disruptions to supply chains, closed borders and restricted freedom of movement are a few examples.”

 

Fragile health systems are likely to affect us no matter where they are found. It’s like a dyke. If the hole in the dyke is in front of your neighbour’s house it won’t matter. You will be deluged too. This is difficult for many of to comprehend. We are accustomed to live in a society where we think as long as we are secure in our own welfare we have nothing to fear. Many of us have started to understand how wrong that it. It’s a terrible platitude, but we actually are all in this together. For example, if our health care system were to get overwhelmed, we would all pay a huge price.

As Glassco said,

“Political borders may separate countries, but they are highly porous. We have seen that the impacts of a fragile health system in one country will inevitably spill into others — damaging the health of many and eventually the global economy.”

 

For example, a new virus appeared in far off China, and within weeks, the entire world was deluged with deadly cases of Covid-19. We were not immune. We are not an island. We are in this with everyone else. As Glassco said,

“We all now recognize how much healthy economies depend on healthy societies. Without a strong health system to help people recover and return to work, their economic contribution halts — both locally and globally — and the effect on global trade worsens.”

This is inevitable. We must act accordingly. Even capitalism cannot avoid this.

Capitalism goes Nuts

 

I know not every one likes Bill Maher as much as I do. They are entitled to be wrong. I listened to a fascinating discussion on capitalism on his show with 2 very interesting guests–Scott Galloway and Larry Wilmore. I have been blogging about Galloway’s appearance on another show. He stole the show again.

 

Scott Galloway is a Professor at NYU and the author of Post Corona: From Crisis to Opportunity i is an internal critic of capitalism. By internal critic I I mean that he is a critic of capitalism from the inside as a believer in capitalism, but who hates what capitalism has become. Galloway is a Marketing Professor at NYU and an unabashed proponent of capitalism, but capitalism has become sclerotic, in his opinion.

He used some very interesting examples. First, Jeff Bezos lost 38 billion dollars in his divorce. And he made it all back in 1 month! That simple statistic tells you a lot. Bill Maher asked a wonderful question: what does this tell you about America?  Galloway said something shocking to that. He said, “Its worse than that. We’ve had 1person add the GDP of Hungary to his own personal net worth during the 1 year of the pandemic and that is Elon Musk.”

 

Capitalism has gone crazy. It is nuts. And then Musk moved to Texas so he doesn’t have to pay taxes. During the pandemic, “Billionaires have gone from 1.9 trillion dollars to $4 trillion. The dirty secret of this pandemic is that the top 10% not just the top 1% are living their best lives.”

Some businesses have gone out of businesses. They have suffered catastrophically during the pandemic. Others have flourished. Why is that?

Bill Maher describes this phenomenon this way:If you’re in the sit on your ass and look at a screen business–Amazon, Apple, Google, and Facebook “If you’re in the sit on your ass and look at a screen business–Amazon, Apple, Google, and Facebook–they are now worth 21% of the whole US economy!” 

Scott Galloway put it this way:

“We used to talk about the S& P 500. Now it’s the S & P 7. 7 companies now have 51% of the market capital in the US. Amazon since March 2020 has added more market capitalization than all of European retail. We effectively have 4 companies that are so dominant that we’ve been overrun. There are more full-time lobbyists in Washington working for Amazon than there are Senators. There are more people working for Facebook manicuring Mark and Cheryl’s image than there are journalists working for the Washington Post. We are so beyond any sense of balance in our economy that the ecosystem is out of control. We absolutely need to break these companies up.”

 

People in the west have forgotten how corrosive market dominance can be to democracy and freedom. As these corporations grow, democracy and freedom shrivel in lock step. Concentration of wealth in modern capitalistic society, particularly when there is a conservative dominated Supreme Court in the US is “a freedom shredder” according to Galloway.

The amazing thing is that it seems inevitable. Too many people–the vast majority–believe there is nothing that can be done about it. There is a lot that can be done about it.  But the people must assert their power to do it. As Larry Wilmore, the Executive Producer of Amend: The Fight For America, said, “No matter what happens in the economy it all flows one way.”  That is what happens when power is concentrated.

 

As Galloway asked,

“Do we want that one company to say when we type in “overthrow government” should we be sent to ‘how to build a dirty bomb’ or to “voter registration.” Should one company control those decisions 93% of the time? Should one person control the algorithms that decide the content of what of the southern hemisphere plus India see? Should one company effectively control 97% of all increase in value of all retail?”

Is that what freedom is all about? And we should never think they are satisfied with what they have. That is because they are never satisfied with what they’ve got. They want it all. They want totalitarian control of the entire economy. Is that an exaggeration? Who is being the Pollyanna here?

Amazon started out as a company that sold books. A commodity. Easy. Right Wrong? Some like Galloway think they will try to control health care next. As Bill Maher said, “Of course why wouldn’t they want that? They own everything else. Where is all the money going? Sick people. Because that’s what America does best–make sick people.”

As Galloway pointed out,

“The largest business in the world is US health care. It’s 17% of GDP. Its prices keep going up. MPS is going down. That spells ‘here comes Amazon’. But not only is it bad or morally corrupt for these companies to have so much power, it’s dangerous. The equivalent to Nasdaq in Israel is down, not up, they are vaccinating at 7 times the rate. When the most powerful and wealthiest people in the world are living their best lives, if we don’t show this virus the full-throated capitalist response we are capable of [we’re done]. If Amazon stock had declined 70% instead of risen 70% in the last 10 months, when a van with a Smile shows up on my driveway tomorrow someone in a lab coat would have jumped out and vaccinated us. ‘We are living our best lives.’ This virus has not seen what the US is capable of because ‘Stop. Stop. It hurts so good, if you’re the shareholder class.

 This virus has been allowed to flourish because the S&P 7 likes it that way! It they were losing money during the pandemic they would have stopped it by using the full power of market capitalism. They chose not to do so.”

 

The shareholder class and the big 7 have enjoyed this pandemic ride because it is the best thing that could have happened as far as they are concerned. Why stop what puts money in my pocket? If I have the power to stop it why would I do it while my bank account keeps growing exponentially? That is why concentration of wealth and power is so dangerous.

Of course, as we all know, the S & P are delivering things we want. During a pandemic they deliver food to our doorstep so I can avoid those dangerous grocery stores. What is wrong with that? Capitalism is very efficient at fulfilling our needs. Of course, it can do that because it has manufactured many of those needs in the first place! Did you think you decided you needed Twinkies delivered to your door in one day? They have positioned themselves to bring to you what you want.

But in the process, as Wilmore said, “It’s amazing how they have Pac-manned every company that is out there.”

 

Restaurants or Kids

 

Scott Galloway said,

“We seem to be obsessed with keeping restaurants open. You know what’s probably the biggest long-term scarring here, outside of the health issues is we’re losing a generation of kids. Pre-pandemic lower income kids largely tracked with higher and middle-income kids with school on math. Since the pandemic hit, they have fallen off the map. Regardless of the moral corruption there, we’re going to lose half our scientists, half our military leaders, half our civic leaders, and half our social leaders when 50% of kids don’t have the skills to enter college. So, we’re losing an entire generation of leaders and scientists because we have decided it’s more important to keep businesses open than keep our schools open. So, if it comes down one theme it’s to protect people not jobs and also capitalism doesn’t work, it’s not an organic state, unless it rests on a groundswell, a tide pool of empathy.”

I want restaurants open as much as anyone. But, I think Galloway is absolutely right. Capitalism needs to be rescued from the capitalists. Again. Just as it was in the 1930s when Roosevelt realized that and saved it.

I would just add that we that we are facing another crisis that has been shoved aside during the Covid-19 pandemic, and that is the environmental crisis. As we ignore it, we keeping digging ourselves deeper into a hole from which it will get increasingly difficult to dig our way out. We have been passing the buck for decades now. We keeping making it more and more expensive to solve that problem. But that problem is not going away. I know things have been made much more difficult and much more expensive by the people of wealth who have been spending fortunes to keep the rest of us in the dark and submissive. They have done that with remarkable success. They have bought political leaders and scared the rest. So, nothing has been done.

We need a new green deal together (or some smarter version of it) with a smart response to the Covid-19 pandemic and we have to do that at the same time. This is going to cost a lot of money, but ignoring it some more will once more just make it more costly later. Like it or not, we have to do it.  I don’t know if the Green New Deal is the right one. But at least those who proposed it did not ignore the problem like everyone else. If a better plan is possible, by all means, let’s go for that. Sadly, we now have at least 2 crises to deal with at the same time. It sucks to be us. But it could suck even more if we choose to do nothing.

Should we tackle  2 problems at once. Or ignore 2 problems at once?

 

*

Inequities in capitalism that must be eliminated

The pandemic has exacerbated some tendencies in capitalism that have had a negative effect. For example, working from home in some sense is a good thing. It’s mostly a good thing. People don’t waste so much time commuting. They can spend more time with their loved ones. But there are problems. As Professor Scott Galloway said,

If they can move your job to Denver they can move it to Bangalore. So be careful for what you ask. I think you are gong to see continued pressure on the working class as we get better and better at outsourcing jobs.

 

I am a subscriber to Photoshop and Lightroom two photographic programs.  A few years ago, I had to subscribe to them. I could no longer just buy them; I had to rent them. I hated paying $12 a month. Now it’s more of course. Then I realized there was a benefit. They had a help line. I am not an expert in the program. I often need help. So now I can phone them 24 hours a day during the week and get my questions answered by very knowledgeable people without extra charges. I love that.

And, of course, these helpers are always in India. At first, I had a little trouble understanding what they said because of their accent, but in time I got to know them and like them. They were very helpful. They taught me a lot. But they are Indians and they answer questions for all the people in North America. These are skilled jobs. They know their stuff and the programs in my opinion are complicated. Far too hard for me to do without expert help. It’s too bad they can’t hire North Americans to do it, but the company I suppose figures they can’t hire North Americans to do it at the money they offer. But this is outsourcing technical expertise. These are not laborers.

Being near the headquarters is a valuable thing for workers in a corporation. It allows people to network and rub shoulders with executives. That proximity is very valuable for a worker trying to build a career. Because women still spend more time typically than men building relationships with their family, they will tend to gravitate toward working at home. And this of course is a good thing, but it will be a drag on their careers because they will lose the benefits of proximity if they work from home instead. As a result, this will be a drag on their march toward greater equality. And that is not a good thing. Currently,  about 7% or less of CEOs for the S & P 500 are women. If women lose this proximity to power this unfortunate situation will get worse not better. As a result, Galloway asked,

“Are we building an infrastructure at HQ that is just filled with white guys? There is just no getting around it. Proximity to headquarters puts you on a different path in terms of advancement within the organization. So, I think there’ll be some positives and some negatives that we will have to adjust for and recognize that people who serve and have the money or don’t have the kids or have the ability to live close to work. As a tribal species that loves affinity and proximity, we will have to adjust for people who aren’t capable of being at headquarters every day.”

 

For these reasons stimulus from the government should be focused on protecting people and the environment. If we took 2 or 3 trillion dollars of stimulus and divided it among the most vulnerable households, the effect on society would be remarkable. Stimulating big corporations just doesn’t do as much. People who are in the top 10% are living a great life in this pandemic.  I admit I am. Life for me is great. I spend a lot of time with my wife. We read a lot. We watch some excellent TV shows together. We miss our family and friends terribly, but we are certainly not suffering. The key is how can we protect the bottom 90%? Stimulus should be shaped to do that. If you took the bottom third of American households and divided $3 trillion among them each household would get $100,000. That could be deeply transformative. Society would be very different. And those people would spend that money inside our economies. They would not stash it away in Swiss accounts.

Or let’s say it’s even less money. It would allow those people to make better decisions. Studies have shown how poverty makes it very difficult for poor people to make good decisions. People would not have to choose between paying for their insulin or their rent. They would not have to choose between paying for food or education for their children. Imagine that.  They could actually do what’s best for their families. Life in our society could be transformed. As it is now, many people have to get part time jobs with Uber to pay for food or rent or clothing for their families. So instead of staying now with their kids and helping them learn remotely they are out working at 2 or 3 jobs. This is not good for society. There is a better way.

We do need  to reset. Only the extremely comfortable think things are perfect right now. People like my member of Parliament.

Cronyism: Degenerate Capitalism

 

I have been blogging about things I learned from listening to Scott Galloway on a couple of television shows.  I have not read his book. As a cheap Mennonite I must wait for the paperback.

I always want to remind people, that Galloway was talking as a big fan of capitalism. He wants to improve capitalism. But he does not like the current version of capitalism which he considers a degenerate form of capital. Many of modern capitalists rely on monopolies. They love nothing better than to squeeze out competition. That is not capitalism. Galloway called it cronyism.  This is what he said:

“I am a full-throated capitalist. I don’t like this weird form of socialism we are in now which I describe as cronyism. Part of capitalism is that you want to oxygenate the marketplace. When we look back at breakups, not only typically has everybody done better but the companies themselves are worth a whole lot more than the original company. So I think this is an exercise in capitalism. We have to have a robust ecosystem. We have to have opportunities for other companies to get a seat at the table. And we also find that innovation is buried inside these companies. When we broke up AT&T we found out that cell, data, wireless, optics were all lying dormant. This is the capitalist handbook. Break companies up when they become so powerful that they are performing infanticide on small companies and prematurely euthanizing big companies which tend to be great employers and great taxpayers. We don’t break them up because they’re bad people. We don’t break them up because we’re angry. We break them up because we’re capitalists. It’s absolutely a capitalist thing to do.”

 

When companies get too big to fail, we must break them up before their breakdown creates problems for the economy. That is classic liberalism.

Monopolies are the worst thing for capitalism. The problem with corporate giants is that they don’t have to compete anymore. They get fat and lazy. They do that because they have it too easy.

So the first rule is that market concentration of power has to be kept in check. To do that we need regulations. Smart regulations.  We are not doing that now.

Stock Markets like Monopolies; People don’t

 

Some people have been surprised that I have been critical of capitalism. I deny that I have been critical of capitalism.   First, let me say, I have been critical of what has happened to capitalism, not capitalism itself. It is appalling what has happened to it. Monopolies are not capitalism. They are predators of capitalism. They destroy capitalism. Subsidies for capitalists are not capitalism either. What we need is capitalism!

 Hari Sreenivasan pointed out to Scott Galloway, “One of the interesting things about the pandemic is that it has been exceptional for the big 4–Google, Apple, Facebook, and Amazon.”

Scott Galloway, a defender of capitalism, and Professor of Marketing, not socialism, agreed, and added this,

If you owned shares in those 4 companies they have risen 47% so far in the pandemic. And it might be just the middle of the pandemic…Markets have spoken. They have said monopolies are good.”

Galloway also said,

“If you think of the market as an organism that absorbs millions of data points and then spits back a verdict, the market is saying those unregulated monopolies and these are fantastic companies, but let’s be honest, they’re monopolies, they are able to extract rents like other companies can’t, and also companies that are too big to fail like airlines that have reinvested 93% of their free cash back into stock buy-backs which juices the equity based compensation of their CEOs and then on the way down they wrap themselves in the American flag and say ‘we’re all in this together’ and look for bailouts.”

 

As Galloway said,

“One the way the up in the markets, capitalists love to be rugged individualists. On the way down they want to be coddled and entitled socialists.”

That is modern capitalism. It is sickly capitalism, good for only a few corporations. According to Galloway,

“The Big 4 have come out of the pandemic stronger. So far at least. The Pandemic has treated monopolists kindly like the child of a rich man. Which of course is what they are.

60 cents of the digital marketing dollar pre-pandemic went to Facebook and Google. Coming out of the pandemic it will be 80 cents, because there’s a culling of the herd right now in business. And the biggest elephants will come out of this with more foliage to feed fewer elephants. ”

 

And monopoly power is never a good thing. It is not good for capitalism. It is bad for capitalism, but some monopolists benefit enormously. And all of this is very bad for the economy. As Galloway said,

“We’ve had a very scary trend towards more and more consolidation of power across fewer and fewer companies. It’s bad for the economy because typically the companies that generate jobs are small and medium-sized companies. There are half as many companies being formed today as there were during the Carter administration! The consolidation of power, the tyrannical march of big tech taking shares from everybody else continues unabated.”

 

Massive stimulus is good for the economy. We’ve had that. Galloway said, what capitalism needs to oxygenate the economy would be to drastically increase the funding of regulators like the Department of Justice. They have to restore their historic role of reigning in big companies that are destroying the economy. As Galloway said, a company like Amazon can become so big that it can make an announcement that scares the crap out  of the entire “free” market. For example, he mentioned how Amazon announced that it would start delivering prescriptions to home and immediately retail pharmacies and pharmaceutical companies shed billions of dollars of market capitalization.  As he said,

“we need to go to these companies, and not only big tech, but also big Pharma and big Ag. and break them up and restore and oxygenate the marketplace. If you go back to the AT&T breakup all 7 companies were more valuable than the original one. So, you have more jobs, more acquisitions, more funding, broader tax base. Typically, everybody wins in such a breakup except for one stakeholder the CEO.”

 

Capitalism needs regulation. Monopolies don’t want it. Real capitalists know that they need it.

 

Economics writer, Will Hutton, agrees with this. He  believes what American capitalism needs is more, not less regulation. Regulation can often be good for business. Business needs good government. A government like that led by Trump is not the answer. He tried his best to eliminate all regulations. There are many on the right who think that is the right approach. It isn’t. It would have been disastrous. According to Hutton, that is why European companies are in many cases doing better than American companies. They are regulated better. So they can’t get fat and lazy.

When these giants are broken up you have more robust and vigorous corporations and it is better for everyone, in particular the public but also the organizations. They all benefit. So, the United States needs a strong President, unlike Trump, who can do this. Is Biden the one? I doubt it, but I hope I am wrong. He certainly will be better than Trump, no matter what he does or does not do.

Capitalism needs smart regulation. Without it, capitalism starves.

Flattening the Curve for Rich People: Wall Street, Main Street, or Willow Place?

 

Once again Wall Street is doing much better than Main Street. Th at should not surprise anyone.  And Wall Street is doing even much better than Willow Place. This is always an interesting phenomenon. In my view this will always happen in a system that permits plutocracy, and even worse in a system that encourages plutocracy. If we left the rich rule they would do what is in their best interests. It really is that simple.

As Scott Galloway said,

“As a nation we suffer from an idolatry of innovators. And we personify companies and believe that it all starts with the shareholders. The shareholder class is the premier class and as long as the economy is strong everything will fall into place. And we measure the economy’s health by these dangerous indices called the Nasdaq where 90% of the stock are owned by the top 10%. The Nasdaq and the Dow are not indicators of the health of our economy; they are proxies for how well the wealthy are doing. And–spoiler alert–they’re killing it.”

Again no one should be surprised by this. We have a system that is designed by the wealthy for the wealthy and inevitably such a system will deliver the goods to the wealthy. Our system does that well.

Another problem Galloway draws to our attention is that private power has been unleashed as a result deregulation. As he said, as a result of regulators doing nothing,

“… we end up with a lot of private power that has now overrun government. There are now more full-time lobbyists from Amazon that are living in Washington D.C. than there are sitting US Senators. There are more people manicuring Sheryl Sandburg and Mark Zuckerberg’s image in the communications department of Facebook than there are journalists at the Washington Post. So, we now have a situation where if you look across the market at the S&P 500, the 50 biggest companies are up for the year, the companies in the middle are down in the high single digits and the smallest 15 companies are down in double digits. We have decided that companies are either big tech monopolies, or too big to fail. That is our priority. And the wealthiest cohort in America small business owners have received one of the largest bail-outs. There will be very well publicized examples of the owners of a cupcake bakery that made it through the other end, but mostly what PPT has done is two things. Not giving  bridges to small business but giving  them piers where they are still going to go out of business, but we have just kicked the can down the road. This economy is reshaping. It’s coming down differently. And two, we have flattened the curve for rich people. Small business owners are millionaires typically, and there was no reason they needed a bailout. The big mistake here, looking back, will be we should have protected people not companies. We should have put money in the hands of people and then let them decide  what businesses survive and what perish. Capitalism and rugged individualism on the way up and cronyism and bailouts on the way down is just cronyism. It doesn’t help the economy. And money is nothing but the transfer of time and work and all we’ve decided is that we want our kids and grand kids to spend less time with their loved ones such that wealthy people now can stay wealthy.”

 

Keep the wealthy being wealthy. That is what is happening with cronyism. Is this what modern capitalism is all about?

Lessons from e-commerce

 

 

In e-commerce it took years for the kind of growth we have seen lately. It is astonishing. I hate what Amazon is doing to small businesses around the world. I hate the thought of giving any more money to the richest man in the world (or second richest) whose employees have to wear diapers to work because they are not given enough time to go to the washroom.

Before the pandemic Jeff Bezos was earning $1 million every 50 minutes now he is doing much better than that and I have helped him out, as have millions of others. We have done that because we came to realize how convenient it was to shop from Amazon. For many things we don’t really have to go to a store to look them over. Ordering them from our homes for some of us is just easier, simpler, and cheaper.  Other businesses will have to learn that we have learned something during this pandemic and if they don’t change, we will change where and how we shop. Not for everything but for many things. Capitalists had better innovate or they will be left on the dust heap. Capitalist always say that is what they are good at. Let’s see if that’s true.

That does not mean all has been rosy. As Hari Sreenivasan pointed out to,

“It has been a boon for those who could afford it. There has been a blue collar pandemic and a white collar pandemic. For the white collar people it was great.  I can get everything from Instacard and Amazon. But if you’re an essential worker that doesn’t really apply to you.’

For others not so much. And some of us still care a little bit about fairness. Fairness and competition.

Scott Galloway is a professor Marketing who was interviewed by Sreenivasan on Amanpour & Company and he agreed completely:

“If you’re in the top 10% of income earners there is no change in employment. It means you’re no more vulnerable than you were before the pandemic. There’s a 60% likelihood you can work from home. You can spend more time with your family. You maybe got 10 hours back a week. If you make less than $40,000 a year, 40% of those people have lost their jobs and less than 10% can work from home. You don’t like to say this out loud, but if you’re in the top 10% and you’re blessed with good health you’re most likely spending more time with Netflix, your kids, and less time commuting, and by the way your stocks are probably up and I would argue that a lot of the stimulus unfortunately hasn’t been about arresting the pandemic, and helping our neediest, it’s been about flattening the curve for rich people. The savings rate in American has never been higher. The Nasdaq has never been higher. If you do a google search for covid and markets you’ll find more articles than if you do covid and mortality. It’s as if as a nation our priorities are reflected in our spending. The velocity of death is unprecedented. More people are dying every day from this than any crisis in history! And that’s meaningful. But what would be profoundly tragic would be if the Nasdaq declines! At least that’s what our spending seems to indicate. We want to save restaurants but not keep schools open. We seem to want to ensure that the markets are washed in liquidity and people are wanting stimulus, but we aren’t protecting people. We see infection rates rise. And we see our health professionals wanting for PPE equipment. It does definitely seem that we have decided that corporations are people and they are the ones that we have to save.”

 

And remember all of this is not coming from some crazy leftwing extremist. This is coming from a self-described enthusiast for capitalism. He is an insider. He likes the system. Perhaps not as much as Zwaagstra does, but he is no bleeding socialist. He just thinks the current system sucks. It sucks because the rich people are swimming in cash while those who are not are taking their chances serving the rich people. They are called essential workers, but they are not paid like it.