THE WAY IT IS
If you’ve been paying any attention at all, you know that 60% of our nation’s wealth is owned by one-quarter of one percent of our population.
It would be interesting to know how much of the rest of our nation’s wealth is owned by one percent or even ten percent of the powerful…but we can imagine there isn’t a heck of a lot left for the rest of us. Then again, this is America the land of plenty and we are a hopeful people.
How does it happen that so very, very few own so much?
Begin with the understanding that truly wealthy people appreciate money and always want more. The old adages that the rich just get richer and that wealth is power and power gets what it wants, both work. But we are talking about a very tiny number of people/businesses owning more than half the wealth of our country. It takes something more than habits of the wealthy to make that happen and to keep it happening.
And so we find that magical place where the power of Big Business and the power of those in government find a comfortable place to help each other…and do. We call the mutually beneficial relationship crony capitalism.
It drove America’s industrial revolution. The Robber Barons in the 1920’s cornering the market on steel, coal, auto manufacture, railroads…and all the companies since. Today there is Facebook, Apple, Amazon. Crony capitalism gets results and keeps the money and power in the hands of fewer and fewer even in a global economy in which America is far from a leading player.
Here are a few obvious examples as we enter the Trump Era. Crony capitalism starts in his very cabinet. Some of his nominees for Secretaries of major departments are actually his buddies. All come from the very highest echelons of capitalistic success, have nothing good to say about government, believe that less of it is more and look with sarcasm and worse at professional politicians…whose campaigns they support so that their phone calls are always answered.
None of those attitudes will prevent every single one of them from using the government they denigrate to make money while they are in those positions. Those who will turn their assets into blind trusts have little to fear. Their actions and activities in the years ahead guarantee the success of those blind trusts. People like Carl Icahn and Wilbur Ross exist to make money. Nothing in their backgrounds or lives indicate any interest in anything else. Like their best buddy, the game of life is about making money. They certainly don’t act like Mr. Trump – but then, very few people do.
These nominations indicate that in a very natural way the game of crony capitalism is being elevated to a new level.
But other things are happening right at this moment to indicate that the game is on.
PLAYING TO THE MAN
Carrier, a major midwest American manufacturer operating from a new plant in Mexico, finally decides that the time has come to close down American operations and move the remaining 800-1000 jobs to Mexico. Suddenly, the Trump transition team announces that Carrier has changed its mind and the jobs will stay here. Behind the scenes, United Technologies which owns Carrier and gains 10% of its major profits from government contracts, receives a call. The CEO of United is reminded that some attention must be paid, and recognizing what’s necessary rescinds those pink slips for now. The Mexican facility exists; United will be rewarded with $7 million for taking such positive action and money passes from power to power.
Sprint is owned by SoftBank, an Asian company. Its CEO has promised the Trump Administration that it would add 5,000 jobs because it likes the spirit of the new regime and sees growth coming. But it turns out that these jobs are part of previous commitment made by SoftBank to Mr. Trump in December when the two men met and the CEO talked about an investment of $50 billion and the creation of 50,000 new jobs in the US. And even that promise was part of a $100 billion technology fund that SoftBank announced in October…before the election.
The crony capitalism part? SoftBank wants the Department of Justice’s antitrust division and the Federal Communications Commission to allow a merger between Sprint and T-Mobile. In 2014 regulators appointed by President Obama told SoftBank that it would not approve such a merger because it would greatly reduce competition in that industry.
Should regulators in this new Administration adopt a change of heart, the damage to American consumers would be far greater and certainly outweigh 5,000 new jobs…jobs that would have been created anyway.
And speaking of that kind of deal…there’s the Ford Motor Company. Their CEO thought it would be a good deal for Ford not to build a half- billion dollar new plant in Mexico and to instead build some electric vehicles in an existing plant in Michigan…keeping 700 jobs… Cars will be built in Mexico in an existing Ford plant.
Mr. Trump tweeted remarks at General Motors that building Chevys in Mexico might get them a tariff coming back into the US for sale. Maybe Ford is making sure that doesn’t happen to its Mexican built Ford Focuses.
One of the ways that massive wealth is accumulated is through knowledge of what the marketplace really needs, how to make those needs a reality and how to turn those realities into profit.
Times have changed. Today in Mississippi, 647 men produce as much steel as 4,000 men produced when steel was made in Bethlehem, Pa.
40,000 coal miners have lost their jobs since 2014.
300,000 manufacturing jobs are not being filled in America today because our people don’t know how to do them. It is true that Steve Jobs told President Obama that the Chinese make IPads and IPods better than we can.
Those in the dental industry are facing the fact that dentists can make their own models of dentures with 3D printing right in their offices and can send them to China to have them completed beautifully…cutting out the dental technician industry.
Once the most powerful companies were General Motors and Exxon Mobil. Today they have been replaced by technology companies…which use fewer and fewer employees to produce all the goods and services they need to make major profits.
And all the time those in power find ways of using government to increase profits and intensify their control of the nation’s wealth.
And when government won’t cooperate willingly, political power- plays stop government from working at all as we have seen in the past eight years. And before that the administration of George W. Bush became infamous not simply because of the cronyism of key appointments to unqualified individuals with close ties to business and other top government officials but because his administration botched the occupation of Iraq in part because of profiteering by politically connected businesses like Halliburton.
Are we about to see the Trump Administration add new layers to the game?
And if so, what can we do about it?
We will discuss that next.