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Introduction: About 75% of US employees work 40 hours or longer, the second longest among all OECD countries, exceeded only by Poland and tied with South Korea. In contrast, only 10% of Danish workers, 15% of Norwegian, 30% of French, 43% of UK and 50% of German workers work 40 or more hours.
With the longest work day, US workers score lower on the ‘living well’ scale than most western European workers. Moreover, despite those long workdays US employees receive the shortest paid holidays or vacation time (one to two weeks compared to the average of five weeks in Western Europe). US employees pay for the costliest health plans and their children face the highest university fees among the 34 countries in the Organization for Economic Cooperation and Development (OECD).
In class terms, US employees face the greatest jump in income inequalities over the past decade, the longest period of wage and salary decline or stagnation (1970 to 2014) and the greatest collapse of private sector union membership, from 30% in 1950 down to 8% in 2014.
On the other hand, profits, as a percentage of national income, have increased significantly. The share of income and profits going to the financial sector, especially the banks and investment houses, has increased at a faster rate than any other sector of the US economy.
There are two polar opposite trends: Employees working longer hours, with costlier services and declining living standards while finance capitalists enjoy rapidly rising profits and incomes.
Paradoxically, these trends are not directly based on greater ‘workplace exploitation’ in the US.
The historic employee-finance capitalist polarization is the direct result of the grand success of the trillion dollar financial swindles, the tax payer-funded trillion dollar Federal bailouts of the crooked bankers, and the illegal bank manipulation of interest rates. These uncorrected and unpunished crimes have driven up the costs of living and producing for employees and their employers.
Financial ‘rents’ (the bankers and brokers are ‘rentiers’ in this economy) drive up the costs of production for non-financial capital (manufacturing). Non-financial capitalists resort to reducing wages, cutting benefits and extending working hours for their employees, in order to maintain their own profits.
In other words, pervasive, enduring and systematic large-scale financial criminality is a major reason why US employees are working longer and receiving less– the ‘trickle down’ effect of mega-swindles committed by finance capital.
Mega-Swindles, Leading Banks and Complicit State Regulators
Mega-swindles, involving trillions of dollars, are routine practices involving the top fifty banks, trading houses, currency speculators, management fund firms and foreign exchange traders.
These ‘white collar’ crimes have hurt hundreds of millions of investors and credit-card holders, millions of mortgage debtors, thousands of pension funds and most industrial and service firms that depend on bank credit to meet payrolls, to finance capital expansion and technological upgrades and raw materials.
Big banks, which have been ‘convicted and fined’ for mega-swindles, include Citi Bank, Bank of America, HSBC, UBS, JP Morgan, Barclay, Goldman Sachs, Royal Bank of Scotland, Deutsch Bank and forty other ‘leading’ financial institutions.
The mega-swindlers have repeatedly engaged in a great variety of misdeeds, including accounting fraud, insider trading, fraudulent issue of mortgage based securities and the laundering of hundreds of billions of illegal dollars for Colombian, Mexican, African and Asian drug and human traffickers.
They have rigged the London Interbank Official Rate (LIBOR), which serves as the global interest benchmark to which hundreds of trillions of dollars of financial contracts are tied. By raising LIBOR, the financial swindlers have defrauded hundreds of millions of mortgage and credit-card holders, student loan recipients and pensions.
Bloomberg News (5/20/2015) reported on an ongoing swindle involving the manipulation of the multi-trillion-dollar International Swaps and Derivatives Association (ISDA) fix, a global interest rate benchmark used by banks, corporate treasurers and money managers to determine borrowing costs and to value much of the $381 trillion of outstanding interest rate swaps.
The Financial Times (5/23/15, p. 10) reported how the top seven banks engaged inmanipulating fraudulent information to their clients, practiced illegal insider trading to profit in the foreign exchange market (forex), whose daily average turnover volume for 2013 exceeded $5 trillion dollars.
These seven convicted banks ended up paying less than $10 billion in fines, which is less than 0.05% of their daily turnover. No banker or high executive ever went to jail, despite undermining the security of millions of retail investors, pensioners and thousands of companies.
The Direct Impact of Financial Swindles on Declining Living Standards
Each and every major financial swindle has had a perverse ripple effect throughout the entire economy. This is especially the case where the negative consequences have spreaddownward through local banks, local manufacturing and service industries to employees, students and the self-employed.
The most obvious example of the downward ripple effect was the so-called ‘sub-prime mortgage’ swindle. Big banks deliberately sold worthless, fraudulent mortgage-backed securities (MBS) and collateralized debt obligation (CDO) to smaller banks, pension funds and local investors, which eventually foreclosed on overpriced houses causing low income mortgage holders to lose their down payments (amounting to most of their savings).
While the effects of the swindle spread outward and downward, the US Treasury propped upthe mega-swindlers with a trillion-dollar bailout in working people’s tax money. They anointed their mega-give-away as the bail out for ‘banks that are just too big to fail”! They transferred funds from the public treasury for social services to the swindlers.
In effect, the banks profited from their widely exposed crimes while US employees lost their jobs, homes, savings and social services. As the US Treasury pumped trillions of dollars into the coffers of the criminal banks (especially on Wall Street), the builders, major construction companies and manufacturers faced an unprecedented credit squeeze and laid off millions of workers, and reduced wages and increased the hours of un-paid work.
Service employees in consumer industries were hit hard as wages and salaries declined or remained frozen. The costs of the FOREX, LIBOR and ISDA fix swindles’ fell heavily on big business, which passed the pain onto labor: cutting pension and health coverage, hiring millions of ‘contingent or temp’ workers at minimum wages with no benefits.
The bank bailouts forced the Treasury to shift funds from ‘job-creating’ social programs and national infrastructure investment to the FIRE (finance, insurance and real estate) sector with its highly concentrated income structure.
As a result of the increasing concentration of wealth among the financial swindlers, inequalities in income grew; wages and salaries were frozen or reduced and manufacturers outsourced production, resulting in declines in production.
Employees, suffering from the loss of income brought on by the mega-swindles, found that they were working longer hours for less pay and fewer benefits. Productivity suffered. With the total breakdown of the ‘capitalist rules of the game’, investors lost confidence and trust in the system. Mega-swindles eroded ‘confidence’ between investors and traders, and made a mockery of any link between performance at work and rewards. This severed the nexus between highly motivated workers, engaged in ‘hard work, long hours’ and rising living standards, and between investment and productivity.
As a result, profits in the finance sector grew while the domestic economy floundered and living standards stagnated.
Financial Impunity: Regulatees Controlling the Regulators
Despite the proliferation of mega-swindles and their pervasive ripple effects throughout the economy and society, none of the dozens of federal or state regulatory agencies intervened to stop the swindle before it undermined the domestic economy. No CEO or banker was ever arrested for their part in the swindle of trillions. The regulators only reacted after trillions had ‘disappeared’ and swindles were ‘a done deal’. The impunity of the swindlers in planning and executing the pillage of hundreds of millions of employees, taxpayers and mortgage holders was because the federal and state regulatory agencies are populated by ‘regulatory administrators’ who came from or aspired to join the financial sector they were tasked with ‘regulating’.
Most of the high officials appointed to lead the regulatory agencies had been selected by the ‘Lords of Wall Street, Frankfurt, the City of London or Zurich.’ Appointees are chosen on the basis of their willingness to enable financial swindles. It therefore came as no surprise on May 28 2015 when US President Obama approved the appointment of Andrew Donahue, Managing Director and Associate General Council for the repeatedly felonious, mega-swindling banking house of Goldman Sachs to be the ‘Chief of Staff’ of the Security and Exchange Commission. His career has been typical of the Washington-Wall Street ‘Revolving Door’.
Only after fraud and swindles evoked the nationwide public fury of mortgage holders, investors and finance companies did the regulators ‘investigate’ the crimes and even then not a single major banker was jailed, not a single major bank was closed down.
There were a few low-level bond traders and bank employees who were fired or jailed as scapegoats. The banks paid puny (for them) fines, which they passed on to their customers. Despite pledges to ‘mend their ways’ the bankers concocted new schemes with their windfalls of billions of Federal ‘bailout’ money while the regulators looked on or polished their CV’s for the next pass through the ‘revolving door’.
Every top official in Treasury, Commerce and Trade, and every regulator in the Security Exchange Commission (SEC) who ‘retired to the private sector’ has ended up working for the same mega-criminal banks and finance houses they had investigated, regulated and ‘slapped on the wrist’.
As one banker, who insists on anonymity, told me: ‘The most successful swindlers are those who investigated financial transgressions’.
Conclusion
Mega-swindles define the nature of contemporary capitalism. The profits and power of financial capital is not the outcome of ‘market forces’. They are the result of a system of criminal behavior that pillages the Treasury, exploits the producers and consumers, evicts homeowners and robs taxpayers.
The mega swindlers represent much less than 1% of the class structure. Yet they hold over 40% of personal wealth in this country and control over 80% of capital liquidity.
They grow inexorably rich and richer, even as the rest of the economy wallows in crisis and stagnation. Their swindles send powerful ripples across the national economy, which ultimately freeze or reduce the income of the skilled (middle class) employees and undermine the living conditions for poor working-class whites, and especially under and unemployed Afro-American and Latino American young workers.
Efforts to ‘moralize’ capital have failed repeatedly since the regulators are controlled by those they claim to ‘regulate’.
The rare arrest and prosecution of any among the current tribe of mega-swindlers would only results in their being replaced by new swindlers. The problem is systemic and requires deep structural changes.
The only answer is to build a political movement independent of the two party system, willing to nationalize the banks and to pass legislation outlawing derivatives, forex trading and other unnatural parasitic speculative activities.
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And if pigs had wings they could fly.
You can’t get there from here.
The main reason we cannot control our own gov’t is because the nation is too large and diverse to unite against the fed govt and its masters.
An article 5 constitutional convention of the state legislatures may be the only path to reform. It would take 38 state legislatures to pass constitutional amendments sending power back to the states.
the GOP currently has 31 states.
B..b..b..but, didn’t Lloyd Blankfein say that Goldman Sachs was “doing God’s work”? Tar and feathers, post haste.
America is too big and heterogeneous for a democratic solution, and is becoming more so by the day. Now you have megarich like Adelson defining who is elected. It is not democracy.
According to Hollywood, Wall Street people consume as much cocaine as people at Studio 54 did. Also add quaaludes to the mix.
The passage of the 1965 Immigration Reform Act=The importation of high fertility highly racialized nonwhite legal immigrant scab labor=importation of the highly racialized high fertility Democratic Party Voting Bloc=massive transfer of wealth away from The Historic Native Born White American Working Class to The Greedy Cheating Mega-CEO Class=massive transfer of power away from The Historic Native Born White American Working Class to the Greedy Cheating Mega-CEO Class=Greedy Cheating Mega-CEO complete control over US Economic Policy and Labor Markets.
The 1965 Immigration Reform Act=The 1965 Native Born White American Extermination Act!!!!!
Behind every Great Fortune is a very very Great Crime!!!!!!=The passage of the 1965 Immigration Reform Act!!!!!!
I would agree with this assessment, although I’m not sure that about how to build up a new political movement that is totally independent of the system.
It would have to involve building a third party and various other reforms. The US Justice System, US Congress, and the other branches would all need key changes. The problem is, how to reform, when the very people that benefited the most are currently in power?
For sure, money has to be taken out. The Kochs and a few others have simply too much influence. There needs to be major campaign finance reform and the gerrymandering too must end.
I think that it has become clear that “corporate capitalism” has become totally incompatible with democracy – it’s a plutocracy, really a klpetocracy if you think about it, with money flowing from productive sectors to the non-productive financial sector.
Perhaps something like a Social Democracy may be the only way forward. Perhaps like Soviet-style Communism, neoliberal capitalism was doomed from the start.
This great article should have also mentioned the bloody R2P wars inspired by the financial sector.
It has no sense to accuse greed: greed is an instinctive drive that can be harnessed for good purposes. The problem – the real PROBLEM – is unaccountability of the deciders. This country does not have a government by the people and for the people. The incessant drive of war profiteers towards the Middle East, and Eastern Europe and China goes in cahoots with the City’ and Wall Street’ biggest crooks. The Western financial system became a cancerous growth inside the body of humanity. It metastasizes and creates necrosis. Because the Vox Populi has been effectively smothered, the most vital major decisions do not take into consideration the wellbeing of people (and of the planet). We are doomed. The psychopaths are not able to experience empathy; their consciousness is clinically inadequate.
As rich as the Koch brothers are, they are not responsible for the financial criminality that Prof. Petras is describing.
The Koch brothers employ over 60,000 people, mostly in manufacturing. They produce things that people want to buy. They are not rent-seekers. The Koch brothers are quasi-libertarians who opposed the needless and costly US war(s) on Iraq. That’s commendable.
The Koch brothers–unlike billionaires such as Michael Bloomberg, Mort Zuckerman, Sumner Redstone, Haim Sabin or Rupert Murdoch–don’t own one newspaper or one TV station. Thus, they are less powerful than their detractors claim. The Kansas-based Koch brothers are out of the global political loop compared with the media-savvy internationalists identified above. But they make an easy target.
well said.
Noldor Elf please look deeper and reassess. The problem is not having great wealth and influence but how it is deployed — for whose benefit.
In addition to ownership of media, what is another major difference between the Koch Brothers and “billionaires such as Michael Bloomberg, Mort Zuckerman, Sumner Redstone, Haim Sabin or Rupert Murdoch” ?
While Petras identifies the crime and the criminals, he throws the baby out with bath water with:
“The bank bailouts forced the Treasury to shift funds from ‘job-creating’ social programs …”
“They transferred funds from the public treasury for social services ….”
“… undermine the living conditions for poor working-class whites, and especially under and unemployed Afro-American and Latino American young workers.”
I smell a rat.
America has big problems but the follies and frauds of Wall Street, while particularly damaging to almost everyone for a number of years when very few people – and not including the trusted great and good like Greenspan – understood the dangerous developments in the world of finance, were just a minor exaggerating blip amongst the significant changes that started over 20 years ago. Those had to do with globalisation/free trade and the mismatch between the cost of doing basic manufacturing business in Asia and Mexico and what America’s multinationals can get out of an expensive American workforce which is not even smarter or better educated than those of other countries – not least China and the countries which can provide English language call centres. Add in expensive health care, legal services and wars and you don’t have much chance if you’re an average American. With interest rates at historic lows it is not the banks or hedge funds who are holding back growth in the economy.
The Koch brothers do benefit from corporate welfare, and also provide funds for many, many organizations. They might help raise up to $1 billion for the next elections. They’re plenty powerful.
But yes, they are indeed industrialists, not bankers.
David Gerlernter in a Commentary essay in the nineties, How the Intellectuals took Over said, “Today’s elite loathes the nation it rules.”
http://web.archive.org/web/19980423180121/commentarymagazine.com/9703/gelernter.html
The New Elite, brought to you courtesy of the SATs starting in the sixties, has done a piss poor job of running the country…well THEY might think are doing a good job of running the country…into the ground. The middle class this Elite rules over has seen better days, however it is also the fault of the lemming like numbness of this very middle class which would rather drink beer and watch football than DARE to get involved and risk being politically incorrect. It is this very middle class whose non observance of what is going around it, that is serving up its own grandchildren as food for the World.
I would also add regarding the Koch brothers…. that they are the strawmen presented by a hostile media. On one page(163) of The Israel Lobby, Mearsheimer and Walt discuss campaign financing in terms you never ever see in the media.
The conclusion is Trump might be an overbearing big mouth but he is not captured by campaign money and can do what he damn well pleases. Vote for Trump on the longshot that he can overcome our media masters. He is the only candidate who is free.
Petras is a leftie, and thereby still loves the darkies. However his economic arguments are solid.
What still needs to be addressed is the fundamental of stagnation as a function of low anemic consumer spending.
Theoretically and technically (not ethically) one could excuse the financial sector for its shenanigans, if the end result was a booming economy with high wages and modest inflation…say, under 4 %.
Nobody worth billions can spend that money for fun or show. It has to be invested, and the investments ‘should ‘ benefit the economy, particularly the economy (country) that provided the muscle and brains from which capitalists made money.
Does Prof. Petras know how much Surplus Capital there is idling on the sidelines for lack of investment opportunity? My banker friend thinks the number is about 5 trillion dollars.
The capitalist machine, or economy (once called a free-market economy) cannot prosper without consumers with fat wallets and spending, spending, spending. When they have no money, they cannot spend. This is a simple but abstract formulation.
Maybe these characters cannot perceive that it is all a Golden Egg kind of deal, and that they are starving the golden egg bearer.
——
So, the Left used to say, class or race…and decided it was class, not race. Or Petras decides it is the top one per cent, leaving the old class paradigm behind. OK.
It is both “class” and race.
The hysteria of the last few days presages a new repression of free speech (no free speech for racists!) and even Obongo calls for no guns for racists.
Then, the economy is in a hog-tied state. Too much capital and too little wages. Capital flys around the world looking for investment, and labor at home has little to spend. Stagnation, or maybe crisis.
the perfect storm: race war and economic crisis. let the bad times roll, and let the financial sector heads roll.
Joe Webb
By the way, the official ratio between black on white killing, and white on black killing, is 13 to one.
Guess which races gets the 13? and which gets the one?
And now ‘disparate impact’ per the court, with the black Justice dissenting…says that your apartment or condo neighbors can be moved in on a race based basis…and paid for by you if you be white.
Color-blind used to be…now it is Blacks first , etc.
Joe Webb
wear a stars and bars tee-shirt and get murdered by darkies arguing that disparite impacts affect whites vs. blacks. So whites will get murdered, etc. payback for a million years of slavery.
It is virtually impossible in present-day America to own any moderately sized organization without having to curry some kind of favor with the state. Whatever one may think of their particular political positions, the Koch brothers are not particularly noteworthy as crony capitalists. Warren Buffet is far worse as he is a necessary illusion of the parasitic financial system, and hence part of the crime.
There is a reason the Kochs are the liberal left’s favorite whipping boys, and anonymous has indicated why: attention on them keeps eyes off more guilty culprits.
It won’t be tar and feathers when the worm finally turns.
“The only answer is to build a political movement independent of the two party system, willing to nationalize the banks and to pass legislation outlawing derivatives, forex trading and other unnatural parasitic speculative activities.”
The only fair and just way is to have panarchism. That way those who want a failed system will be rewarded with failure and those who embrace a system that works, won’t be. After all, your political beliefs are just … beliefs.
“Panarchism is a political philosophy emphasizing each individual’s right to freely join and leave the jurisdiction of any governments they choose, without being forced to move from their current locale. The word “panarchy” was invented and the concept proposed by a Belgian political economist, Paul Émile de Puydt, in an article called “Panarchy” published in 1860. The word “panarchy” has since taken on additional, separate meanings, with the word “panarchism” referring to the original definition by de Puydt.
De Puydt, a proponent of laissez-faire economics, wrote that “governmental competition” would allow “as many regularly competing governments as have ever been conceived and will ever be invented” to exist simultaneously and detailed how such a system would be implemented. As David M. Hart writes: “Governments would become political churches, only having jurisdiction over their congregations who had elected to become members.”
https://en.wikipedia.org/wiki/Panarchism
When the US was founded, there was a different proportion of mindsets with the abilities to establish a free and successful society relative to mindsets lacking such abilities. For 200+ years that ratio has been being eroded by immigration of people possessing mindsets with very little of the freedom culture, but a great deal of the social control present in forager and pharaonic cultures. The microcosm of a free America has reverted to the norm of a tyrannical world run by command and control structures.
It didn’t occur because of the 1965 Immigration Reform Act. It’s been an ongoing process.
Democracy never works. Eventually idiots take over.
Free market capitalism has been dead for decades.
I think the solution is to innovate and provide people the tools and an example to survive comfortably while starving the beast by making it less relevant. People will naturally gravitate to what is easiest and ignore the powers that be. That’s what people did on the internet with intellectual property. I think pursuing sustainable cities might be a way to do this. Re-invent society in order to remove Wall Street’s boot from our collective throats.
No eventually the puppetmasters of the idiots take over, like today.
Globalization freed American companies from caring about America first. Prior to WWII the interests of America’s corporations and the American people were aligned. Now they are not and the government was supposed to arbitrate in the best interests of everybody. Unfortunately, the government has been bought off.
“The only answer is to build a political movement independent of the two party system, willing to nationalize the banks and to pass legislation outlawing derivatives, forex trading and other unnatural parasitic speculative activities.:
Forget about it. Reforms at this stage are no longer possible. Wall Street and the banking interests own the Senate and Congress (did you pay attention to the TPP/TPA vote or the GOP rubber stamping illegal immigration?).
35 years agon when LBO artists were raping American corporations for profit. Reforms would have been possible because the demographics were in favor(most people weren’t on the dole) and the MSM was much more honest that it is today. None of that exists today.
Demographics work against the people, we no longer speak with anything resembling a single voice. Everyone has their hands out for free government stuff – it makes it easy for the powerful to throw a couple bones to the masses to keep them docile.
So things won’t change, until one day it will simply stop working in a very ugly way. As to what exactly, well if you know anyone who lived through the Great Depression it would help prepare you.
I agree with that.
Greed rules, and it is amazing how much greed there is.
It’s pretty clear. The Koch brothers are white Christian Americans who use their clout, or I should say some of it, to support causes that they see as being traditional, conservative, and in the interest of the US. This will NOT be tolerated by the Stalinist left, who are at war with white, Christian, conservative America. The other billionaires are mostly Jewish, mostly support Israel right or wrong, and want the Israeli tail to continue to wag the US dog. An exception is Murdoch who, while not being Jewish, is a rabid Zionist of the worst sort, that is, one who uses his media empire to wash/rinse/repeat the goyisher kopfs!
What will it be? Tar and feathers followed by heads on pikes? Ok by me. The Iceland solution, with bankers thrown in jail? Ok, if you promise to confiscate their ill-gotten assets. My choice would be in the tradition of Vlad Tepes, better known as Vlad the Impailer, even better known as Dracula, the Dragon.
Murdoch is not only a militant Zionist (he’s received at least one award from the ADL) but he had one Jewish parent.
Rupert Murdoch is a treated like a hero in Israel and he allows no anti-Zionist to appear on his network.
35 years agon when LBO artists were raping American corporations for profit.
You could not have LBOs without publicly traded stock corporations. It was the bear market starting in 1966 that caused companies to be worth more broken up than their market value that caused the LBOs. Chicken and egg.
There will be massive class warfare and the fortunate 500 folks will be hacked up in the streets and not a soul will miss them.
Here’s just one aspect of why whatever party it voted into office, it makes no difference:
http://www.veteranstoday.com/2015/06/28/hillary-libya/