Cannibal Capitalism

How Big Business and The Feds Are Ruining America

Michael C. Hill

• Publisher: Wiley
• Year: 2011
• Print ISBN:
  9781118175316
• eBook ISBN:
  9781118197752
• Edition: 1
• Topic: Volkswirtschaftslehre
• Subtopic: Wirtschaftstheorie

An unbiased look at how the economic practices of corporations, leaders, and government are severely damaging the American way of life

Most of us have lived our lives by the rules—going to school, investing in real estate, and building careers—but the so-called Great Recession has changed everything. Cannibal Capitalism: How Big Business and the Feds Are Ruining America answers the questions on everyone's lips; what happened and where do we go from here?

Unlike in most other recent instances of financial turbulence, when this crisis hit, the country turned on itself economically, with the powerhouses—corporations, business leaders, and government—throwing the everyman under the bus. In an effort to avoid becoming slightly less rich, the super-rich effectively cannibalized the true engines of growth in the economy, in the process putting the bottom ninety-nine percent of the population at serious risk of losing everything. Cannibal Capitalism fights back, arguing that to really recover we need to educate our children, invest in our small businesses, use our inflated money to develop real things that build real wealth, and get back to exporting in a big way.

• Takes a thoughtful look at how income and wealth disparity, industry consolidation, anticompetitive business practices, political ideological extremism, and the hoarding of existing wealth are destroying the wealth building capacity of the nation and the promise of ideal capitalism
• Examines the financial crisis and its fallout in a clear, no-nonsense way
• Explains what we can do to fix a broken system and come out on top

The economic crisis rocking the foundations of the international financial system has had a disproportionately devastating affect on the average person. Angry, afraid, and confused, regular people are looking for answers and Cannibal Capitalism is here to help, illustrating how the super-rich did everything in their power to stay safe at the expense of everyone else.

Part One:

What’s Wrong with This Picture?

Economic cycles of bubble and bust have become normal. Political intransigence is normal. And the Great Recession of 2007-9 was indicative of the declining prosperity of America. Instead of finance as a means to enable production, finance has replaced production as the engine of our economy. Cannibal capitalism has become our modus operandi.

Chapter One

The Face of Self-Destruction

He must be nuts! There is an obviously troubled man standing with a gun to his head. He profanely screams at some enemy, accusing him of ruining his life. But, curiously, no one else is there. The gun is pressed to his own temple. Then, as if shifting gears, he abruptly changes tone and speaks as if responding to his earlier rant. As he utters the most odiously vitriolic speech, you notice that he is facing a mirror. This man must suffer from some mental illness. Perhaps a multiple personality disorder? His enemy is another part of himself. Will he pull the trigger? Will he actually kill himself in order to dispatch his enemy?

This scene is illustrative of what is going on in America right now. We are that disturbed man. Political preferences have hardened into factions. The indivisible nation is the most divided it has been since the Civil War. The leaders of our cannibal country use the time-tested war tactic of “divide and conquer” against their own people to attain and maintain power. As a result, the extreme wings of the political spectrum don’t merely disagree, they distrust and seemingly despise their counterparts. Because ideological activists carry so much sway in their respective parties, they restrain their leaders from fully seeking cooperation with political opponents. For that matter, the term “opponent” has become a euphemism for far more severe sentiments; it implies that someone with a different political point of view is a villainous enemy, unworthy of existence. The language of political commentators and activists has become so overheated and hyperbolic that leaders of the opposition must be compared to Hitler, Stalin, Pol Pot, or Mao in order to show dissent.

Liberal commentator Al Franken wrote a book entitled Lies and the Lying Liars Who Tell Them: A Fair and Balanced Look at the Right, directed at George W. Bush’s administration and political allies. Franken was later elected to the U.S. Senate. Republican insiders Ken Blackwell and Ken Klukowski wrote The Blueprint: Obama’s Plan to Subvert the Constitution and Build an Imperial Presidency. In 2009, Blackwell was a candidate for chairmanship of the Republican National Committee, who withdrew after the fifth round of voting. These are not exactly fringe characters spewing vitriol.

Fringe elements take matters quite a bit further. They use vulgarity to describe their political opponents, burn effigies, and in the extreme, commit violence. The Southern Poverty Law Center (SPLC) claimed in a 2010 report that the number of antigovernment militias, which it referred to as “extremist,” grew from 149 to 512 between 2008 and 2009.4 Then, as if scripted to validate the SPLC warnings, at the end of March 2010, the nine members of the antigovernment Hutaree militia group were arrested for their plot to kill police officers. Minimizing and dismissing the extremists as harmless would be naive. Lest we forget, Timothy McVeigh, domestic terrorist and murderer of 168 victims in his attack on the Murrah building in Oklahoma City, was a militia-movement sympathizer acting on political motivations.

With sociopolitical chaos as the backdrop, economically we see scheme after scheme by the nation’s business leaders to extract more and more wealth from the middle class and from the real economy, further spreading the gap between the haves and the have-nots. The resulting economic malaise feeds people’s anger and frustration as they look for someone to blame. The blame game causes a deepening of ideological rifts, undermining efforts for political accommodation. Then, the apparent incompetence of the political structure undermines confidence in the economy, further hastening the extraction of wealth as investors flee to “safe haven” financial instruments. This in turn increases the sociopolitical chaos, as the downward spiral of cannibalization continues.

Where will this go? Will we actually kill ourselves?

We already are. Slowly but surely, this country is eating away at all of the things that built it up. This slow destruction comes not from without, but from within. It is as if we were a nation of cannibals feeding on one another, with no regard for the self-defeating nature of such conduct.

The Systemic Flaw: Catabolism

Catabolism is defined by Random House Dictionary as a “destructive metabolism; the breaking down in living organisms of more complex substances into simpler ones, with the release of energy.” If you think of the nation as an organism, we have seen a destructive breakdown of the means of production and a release of “energy” (wealth) to the rest of the world. At the core of government and economics, there are mortal defects.

The disease kwashiorkor is a form of catabolism (the human body eating itself) that occurs when a person is getting what would seem to be adequate caloric intake, but little or no protein. You’re getting calories, but they are empty calories. To get “meat,” your body eats itself. Analogously, the economic system, feeding off itself, has aped the operation of healthy markets while not actually sustaining healthy growth. The system has suffered from the worst kind of malnutrition.

There are eight principal factors that make this a sort of “cannibalism”:

1. Selfishness. This is the fundamental human flaw behind all that is evil in the world. Overcoming it is an individual struggle, a war we must each wage within our own hearts. There is nothing we can do about that, but, to the extent that selfishness is the core ethic of our institutions and economy, its effects have far-reaching consequences that are ultimately self-defeating.

2. Suicide-Enabling. With selfishness as a core ethic, short-term profits are always chosen over long-term benefits. Whether you are considering broad-based issues such as energy, arbitrage finance, and international trade, or personal matters of tobacco use, diet, or consumerism, both macro- and micro-level destructive habits are enabled, whether intentionally or not, for fiscal advantage.

3. Money Politics. There is a perverse relationship between politics and economics. Whether or not intended, politics creates opportunity for wealth. Also, our democratic process requires expensive elections, and so it only makes sense that those seeking to benefit from the opportunities afforded by public policy would seek to shape politics, thus forming a corrupt circle of dependencies.

4. Selective Morality. There is no honest debate when there is no consistent standard of truth. The practice of ignoring or obfuscating inconvenient facts is all too common in all ideological corners. Oversimplification of the contrast between capitalism and socialism, liberal and conservative, and right and left overheats rhetoric and stunts potential progress. When an ideology becomes a pejorative, those holding to it cease to exist as your fellows and become something foreign, immoral, even evil.

5. Superpower Coasting. America has been a significant international power for a century, a superpower since World War II, and the only superpower for a generation. It has been resting on those laurels for quite a while. There has been a lack of internal investments to maintain healthy growth. Some of the apparent growth has come by exploiting this attrition.

6. Easy Money. Instead of healthy growth, economic advancement has often been related to the “empty calories” of arbitrage wealth creation, thus creating bubbles and subsequent busts. The lure of easy money has redirected talent and capital away from the real economy to the world of finance.

7. Monopoly Madness. The solution to difficult market situations is far too often business consolidation, which creates monster companies that can become “too big to fail” enterprises that can threaten the national or even global economy. Also, as such companies grow larger, barriers to competition become so high that new business is undermined.

8. School (out to) Lunch. Society undervalues education, as evidenced by the deterioration of public education. American students are scoring below the youth of many other nations in core educational metrics. Whether it is because these other nations are advancing or this one is falling behind, for all intents and purposes the public school system has become little more than national day care. Anti-intellectualism is viewed as a virtue in far too many circles, and erroneously linked to the attractive personal quality of humility. What was once anti-elitism has become a visceral aversion to well-reasoned, logical dialogue in nearly any form. It is considered better to follow your gut than to think a subject through. Snap judgments are viewed as a sign of strength, while careful deliberation is seen as a sign of weakness. Even children are indoctrinated against intellectual development, dreading the label of “nerd.” This growing anti-intellectual culture breeds an utter disinterest in the matters that matter most. Many would rather follow the minutia in the lives of celebrities than engage in the things that shape their world. Few take the time to examine history, economics, sociology, and anthropology, and yet still vote, charting the path of future history, only doing so in ignorance.

This is certainly not an exhaustive list, but it gets to the catabolic systemic flaws of our republic. Not mentioned here are the destructive divisions and waste of resources within the nation caused by racial and cultural animosities; a criminal justice system that turns petty delinquents into hardened career criminals; the military-industrial complex; or other societal ills that are far too many to enumerate.

A House Divided

The focus here has to be the catabolic, systemic flaws of the republic that affect the broadest swath of human civilization—economics and the sociopolitical mechanisms that catalyze the hastening of self-destruction. We can neither wish these away nor ignore them. Ignoring them, as we do now, perpetuates catabolism. The selfish nature of human beings may be immutable, but some of these flaws are possible to correct. Most of these problems are artificially created by public policy, and could be redesigned if confronted boldly.

Take, for example, the issue of money politics. Financial interests bankroll the campaigns of politicians, thus ostensibly obligating these public officials to vote for their “benefactors’” preferences. Critics view the government as bought and paid for by the corporations. However cynical it may seem, this is a reasonable conclusion. True or not, it seems rare for a politician to ever violate the interests of his or her benefactors, even when those interests are not aligned with those of the broader public. Politicians need contributors’ cash to keep their jobs. It is in their self-interest to play this game, irrespective of the public good. Do wealthy elites thus really control a nation supposedly ruled by the people?

Throughout all human history, mankind has experimented with every conceivable form of government and economics. None has ever worked completely. There are really only three fundamental types of government: rule by one, rule by some, or rule by all. The variances in specific instances are tied up in the who’s, how’s, and why’s. Whether autocratic, oligarchic, or democratic, the attempts to correct one system’s flaws have consistently created systemic flaws in the next.

The root problem of all forms of government is human selfishness. The thought of entrusting a selfish individual with ultimate power is what makes the prospect of an autocracy horrifying to all others. Oligarchies may dilute and distribute power, but the result of a group pursuing its self-interests has consistently been the creation of disparate classes, inequity, and even oppression. Pure democracy is chaos—anarchy incapable of producing efficient governance. So for all practical purposes, countries that don’t want totalitarian rule have to live with some variation of democratic republicanism, which wobbles between classism and ineffectiveness. As bad as this may be, history has proved the alternatives to democracy have been far worse.

Nonetheless, democracies like ours can be “rule by mob.” More often, power is conferred based on quips exchanged in juvenile popularity contests. Whoever can better shape opinion wins. Logic is rarely given a hearing among the puerile syndicates of party power that behave as sophomorically as high school cliques. The media follow suit as if they were kids chanting “Fight!” in the schoolyard. While the adults in the general public are disgusted by such useless adolescent behavior, most are too busy to really engage. Life is stressful enough without reacting to this schoolyard behavior; paying attention to it would only result in insufferable anxiety.

“High school” politics can efficiently confer wealth and opportunity upon cronies but is utterly impotent to confront the great crises of the day or match the strategic positioning of international competitors with more unified governments. Even leaders with great rhetorical skill can be immobilized by the fickle whims of a pessimistic public inclined to consider optimism as the most naive credulity. To compound matters even further, there are financial interests backing every possible position on every conceivable issue, many of which hold no fidelity to the truth. The result is indecipherable noise with no meaningful progress coming of it. The public is left only with vague, general impressions that are more cliché than reality—party of this or party of that.

There are also endemic flaws in the concept of career politicians. The very fact that political office is a “job” creates a dependency on those who get politicians elected. For the sake of job security, politicians need financial backers to fund their campaigns year after year, leaving them beholden to their backers—and vulnerable to corruption. This is mainly because they cannot rely on regular citizens to get elected every time. There may be times of heightened interest every now and then when issues awaken the general masses, but in the end it is the perennial special interests that are the consistent base of support for most politicians.

Who do we mean by “special interests”? We mean influencers—people, groups, or organizations—that levy financial power in attempts to influence leaders in favor of one particular interest or issue. They have money, are always there, and don’t forget. Regular people may or may not have enough money, are only there when passions are aroused, and quickly forget. So, why would a sane politician who wishes to keep his or her job ever really challenge the special interests? They may rail against special interests in the abstract or specifically attack groups that have no influence among their constituencies, but that is about as far as it ever goes.

On the other side, you can’t really blame the corporations and other groups for using their money to protect their interests. It is a systemic flaw that makes their money the indispensable support of the electoral process. As unpalatable as the concept of “career politician” may be, what choice is there, really? The alternative of only electing the independently wealthy who need no financial support could create a neo-aristocracy.

Ideology makes matters even worse, because ideology insists on purity in politics, as oxymoronic as that is. Add together C-SPAN, talk radio, Internet blogs, and cable news, and politicians have no room or reason to negotiate. Whenever a politician negotiates, he looks like a “politician,” and people hate “politicians.” Politicians would rather be known as “public servants” and will only threaten that elevated status with good reason. As ugly as this truth may be, in Congress, compromise has more often than not been based on “pork”—a Washington term for an appropriation of government spending for localized projects secured solely or primarily to bring money to a representative’s district or state. To negotiate a compromise, both parties to the negotiation must want something, and “pork” creates a reason to negotiate and, ultimately, the political will to pass legislation. Those elected may claim to act in the best interest of the country, and a few may even mean it, but the congressional record belies most claims of eschewing “pork” projects. Take away the pork, and all you may be left with is ideology. Why would any politician accept a compromise to his ideals and those of his constituents in exchange for nothing? The problem is that compromise requires compromise, which is dangerous territory in ideological terms. If all one side wants is for the other side to not get what it wants, you can only succeed at reaching an agreement by giving that side something it wants more. But, in an environment where such deal making is abhorrent and pork is poison, even that “functional” dysfunction fails.

This circle of dysfunction is completed not at the top, but at the grassroo...

Table of contents

• Cover
• Contents
• Title
• Copyright
• Introduction
• Part One: What’s Wrong with This Picture?
• Part Two: How Did We Get Here?
• Part Three: Where Are We Going?