Friday, April 5, 2013

Failure of Laissez-faire Capitalism

© MMXIII V.1.1.3
by Morley Evans

Every American Should Be Horrified!
The Failure of Laissez-faire Capitalism
by Paul Craig Roberts (PCR)

only $9.73 instant delivery
The title, "The Failure of Laissez-faire Capitalism", may set the teeth of some on edge while others may say, "I told you so." But as Paul Craig Roberts tells his critics, the "free market" means prices are free to change as conditions change. It does not mean anything goes and the strong may plunder the weak as they please.

PCR introduces the concept of economics based on an empty world and economics based on a full world. In an empty world "externalities" may be ignored because they are insignificant. In a full world, "externalities" (the costs outside an enterprise itself) must be considered in the profit and loss statement and reflected in the balance sheet of the operation. Many such costs are unknown and are unknowable but must not be ignored. The maxim "If it makes a profit, it must be good," leads to disaster, and has. The rule "Thou shalt not steal," is pretty simple and easy to understand but stolen goods are difficult to accurately represent on the balance sheet. What is the value of a species that has been destroyed, or a people? We should remember that Adam Smith was a moral philosopher first and foremost, not an "economist" juggling numbers.

PCR thinks that natural resources must be considered as finite and irreplaceable. He thinks care must be taken with resources and with people. PCR thinks people outside the board room have as much value as those who sit around the board room table — a board may be accustomed to ignoring the interests of stockholders and non stockholders alike in their pursuit of a firm's bottom line. Such board members follow Stalin who once said, "You can't make an omelet without breaking a few eggs." Or was Stalin following them? Full-cost accounting in a full world cannot ignore such things. In a full world, expansion cannot continue forever. Eight thousand million people cannot all live as well or better than the Pharaoh once did. (Some think the future resembles Pharaohnic Egypt and all the people who are not needed to serve the √©lite will have to go. That means you and everyone you know will be gone. That is not a new idea.)

PCR thinks a different idea of a better world must be realized before we eat ourselves out of house and home. Along with the seven deadly sins (pride, covetousness, lust, anger, gluttony, envy, and sloth) greed has taken us to the brink of what is possible. We are looking into the abyss:

Under the cover of laissez-faire capitalism and "free trade" rhetoric, twenty years ago, American board members and their executives began dumping their American workers for low cost workers in China, India, and other Third World countries. The difference between the cost of First World middle class workers and the cost of Third World entry level workers was pocketed by American CEOs, their boards of directors and the shareholders. The deindustrialization of America had begun.

The tipping-point has been passed. This process will only end when unemployed American workers can no longer buy foreign-made goods because they have run out of money — since they have no jobs and no credit left. Unless something changes, the United States will become a Third World country itself in 20 years, PCR has predicted. Will it change? Can it change?

Electronics provides but one example. The Failure of Laissez-faire Capitalism provides many more.

Foxconn, which is owned by a Chinese citizen of Taiwan has factories in China, the Czech Republic and a growing list of countries around the world. Low-cost Foxconn workers in high tech factories build almost everything for all the major electronics companies including Apple, Microsoft, Hewlett-Packard, Dell, Intel, Sharp and Sony (of which the last two are Japanese). If you need support for your Microsoft or Adobe software product you will be talking toll-free to a customer support technician in India or China. H-1B visas are making it possible for American companies to bring low-cost foreign workers into the United States to replace Americans. Are American taxpayers unknowingly making it possible for these workers to afford to live in the United States, a high-cost country? Are American taxpayers subsidizing low-cost workers and high-cost executives who are putting Americans out of work? PCR tells us that American workers are even training the H-1B workers who will replace them.

If Steve Jobs and Apple could not trust Bill Gates and Microsoft (Jobs couldn't trust Google either!), how can all of the major electronics companies trust Terry Gou and Foxconn not to steal their stuff? The owners of American high tech companies may find themselves out in the cold standing in soup kitchen lines with some of the American workers that have been discarded.

Neighborhoods in Detroit, which not long ago was the fourth largest city in the United States, are reverting back to the Michigan forest — like ancient Mayan and Cambodian cities reverting back to the jungle — or Chernobyl that was abandoned after the nuclear reactor meltdown in 1986. The rust-belt has crept across Indiana, Ohio, Pennsylvania and New York like cancer as American heavy industry has collapsed.

Along with this frightening trend toward unemployment and poverty — for everyone outside the board rooms and the top company executive suites — high finance has run amok, concentrating wealth and power, stripping 99% of Americans of their political and legal protections. The Department of Homeland Security has begun to look like the Gestapo to many. It joins the FBI, the CIA and the 16 other American intelligence agencies that supposedly protect Americans. Police departments are becoming military operations. Police are training for riot control and incarceration of masses. Crooks are in control of governments at every level — from the Oval Office to City Hall. The President of the United States maintains an assassination list for extrajudicial killings of people he deems to be enemies of the state at home and abroad. Do you remember "Change" that Obama promised? The law has become a weapon in the hands of the government which has become the enemy of the people.

George Carlin summed it up with, "The politicians are put there to give you the idea that you have freedom of choice. You don't. You have no choice. You have owners. They own you."

The United States is very far down the road to serfdom. A second Great Depression ominously looms. Americans are in deep trouble. Their Canadian allies will share their fate but Canadians continue to slumber smugly. Canadians may sleep through any bad times that lie ahead: zzzzz.

Will the world return to slavery and a new feudal order? What will they do with the surplus population? Washington does have "the most powerful military in history." Americans are insouciant and obedient so far. But here are some points to ponder: The United States of America is bankrupt — loss of the US dollar as the world reserve currency and hyperinflation both loom; American goodwill has been completely squandered — the number, even among Americans, who believe the American Dream is dwindling fast; countries that have been buying T-Bills which finance the United States (along with the printing press) are making arrangements to stop buying more American debt; the USA has not won a war since the Great Victory of '45 — despite astronomical military purchases bought at the expense of basic services for Americans and peace and decency for the rest of the world. The real evil empire has been revealed.

According to Paul Craig Roberts, the top earner in the "new American economy" was paid $1.7 billion in 2006. The other top 25 earners were paid an average of $575 million each. But the jig is up. A reckoning is coming. The Soviet Union evaporated when nobody believed in it anymore. That is happening to the United States of America. Nobody likes to be lied to and sold down the river.

Exactly the same thing is happening in Canada where the five chartered banks who have enjoyed a cozy oligopoly for the entire history of Canada are dumping Canadian employees for low-cost foreign workers. It stinks! Here's the CBC (Which itself is part of another protected oligopoly):

No comments: