Re-Thinking Capitalism

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As one of the nation’s premier non-economists, I have some thoughts I’d like to share about how to fix the economy to the betterment of the many over the enrichment of the few. We’ve all heard the expression, “The rich get richer and the poor get poorer.” Most of us believe it to be true (because it is), but the naysayers are almost always from the elite class of people who have quite a lot of money. More than they need, if you want to be perfectly honest. And to me, therein lies the heart of the debate: Should Capitalism be about getting what you need, or getting what you want?

The people who study this stuff refer to it as Wealth Condensation, but I’m a non-economist, so I’m simply going to refer to it as a “flaw” in the system. In a nutshell, the way things are set up right now, wealth flows through the system into the hands of an elite few – the Super Rich. I’m talking about the people with, like, a hundred million dollars or more. They’re out there, and they have a lot of the money. Continue reading

The Right-Wing Label

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Cross-posted from Pick Wayne’s Brain:

The Right-Wing in this country uses fear and hate to win public support for their ideas. This cannot be disputed, and was even studied by Associate Professor Jonathan Haidt (“What Makes People Vote Republican?). In a nutshell, when our fears and emotions are tapped, we tend to react first and rationalize what we did later, even if our “rationale” is in conflict with the facts. Rather than appeal to our intellect and ability to reason our way to a solution, the Right-Wing stokes fear and hate and then tells you who to fear and who to hate. The reason why you should fear and hate becomes completely irrelevant once they have tapped into your emotions, for any kind of “reasoning” will make sense if it makes you feel justified in doing what you did, even if you normally would have thought that what you were doing was wrong. Without this tactic, they could not win support for their arguments on the facts alone. (And when I talk about “facts”, I’m talking about things that are actually true, not what many people might believe to be the truth.)

Whether they want to admit it or not, this attribute in humans to have our sense of fear and hate be easily tapped comes from our evolutionary survival skills.  Continue reading

How to Ground The Street

How to Ground The Street
By Eliot L. Spitzer (published in the Washington Post)

[..] First, we must confront head-on the pervasive misunderstanding of what constitutes a “free market.” For long stretches of the past 30 years, too many Americans fell prey to the ideology that a free market requires nearly complete deregulation of banks and other financial institutions and a government with a hands-off approach to enforcement. “We can regulate ourselves,” the mantra went.

Those of us who raised red flags about this were scoffed at for failing to understand or even believe in “the market.” During my tenure as New York state attorney general, my colleagues and I sought to require investment banking analysts to provide their clients with unbiased recommendations, devoid of undisclosed and structural conflicts. But powerful voices with heavily vested interests accused us of meddling in the market.

When my office, along with the Department of Justice, warned that some of American International Group’s reinsurance transactions were little more than efforts to create the false impression of extra capital on the company’s balance sheet, we were jeered at for attacking one of the nation’s great insurance companies, which surely knew how to balance risk and reward.

And when the attorneys general of all 50 states sought to investigate subprime lending, believing that some lending practices might be toxic, we were blocked by a coalition of the major banks and the Bush administration, which invoked a rarely used statute to preempt the states’ ability to probe. The administration claimed that it had the situation under control and that our inquiry was unnecessary.

Time and again, whether at the state level, in Congress or at the Securities and Exchange Commission under Bill Donaldson, those who tried to enforce the basic principles that would allow the market to survive were told that the “invisible hand” of the market and self-regulation could handle the task alone.

The reality is that unregulated competition drives corporate behavior and risk-taking to unacceptable levels. This is simply one of the ways in which some market participants try to gain a competitive advantage. As one lawyer for a company charged with malfeasance stated in a meeting in my office (amazingly, this was intended as a winning defense): “You’re right about our behavior, but we’re not as bad as our competitors.” [..]

Go read it ALL!

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