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“It’s Crucial to Break Up Facebook”

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By Asher Schechter

Source: ProMarket

Four decades ago, writes Tim Wu in the introduction to his recent book The Curse of Bigness, the United States and other countries entered into a sweeping experiment that radically transformed their economies and politics. The experiment in question consisted of abandoning most checks on anticompetitive conduct, thus allowing concentrated corporate power to grow undisturbed.

The result: an increasingly concentrated global economy marked by historic levels of inequality and extreme concentrations of economic and political power, with disaffected voters being lured by radical far-right nationalists across the West. “We have managed to recreate both the economics and politics of a century ago—the first Gilded Age,” Wu writes.

Now, he warns, liberal democracies risk making yet another grave historical error by ignoring the well-established link between the concentration of economic power and the rise of authoritarianism. That monopolization poses an existential threat to democracy has been widely known throughout history: Louis Brandeis famously referred to this threat as the “curse of bigness”; in Germany, the rise of fascism was partly facilitated by monopolists and industrial cartels.

Yet in recent decades, explained Wu in an interview with ProMarket, much of this history has been forgotten. The legacy of Brandeis, America’s leading defender against bigness, has been “neglected, almost forgotten,” along with the greater antimonopoly tradition that has been an integral part of US politics for over 200 years. Which is why he decided to write The Curse of Bigness, a slim book that is equal parts historical polemic and urgent call to action. 

Wu, the Julius Silver Professor of Law, Science and Technology at Columbia Law School and also the author of The Attention Merchants and The Master Switch, is perhaps best known for coining the term “net neutrality.” In his interview with ProMarket, he discussed the parallels between the monopolies of today and those of the first Gilded Age and explained why breaking up dominant companies is crucial, particularly when it comes to Facebook.

[This conversation has been edited and condensed for length and clarity]

Q: I want to start with Brandeis, who famously coined the phrase “curse of bigness.” In the book, you write that Brandeis “has been done a disservice.”

Yes, I think he has been. I think his economic vision has been forgotten. There are powerful ideas in it, very appealing in our times, very appealing through much of American history. So I wanted to try to do justice to and resurrect the Brandeisian strain of thought when it comes to economic policy.

Q: You point to many parallels between Brandeis’s time and ours, but one that especially haunts the book is the rise of neo-fascist movements around the world and the potential link between large business groups and aspiring authoritarians. Did you feel a certain sense of urgency in writing this book and making this link at this particular moment in time?

There is something alarming about the rise of extremist governments around the world. It has something to do with a sense of discontent as to how the economy functions for people, and that did give the writing of this a sense of a sense of urgency and a sense of a historic moment.

It’s a dangerous moment around the world and in the United States. I don’t think we have a complete understanding of what causes fascist uprisings, but I have a strong instinct, and I think many people do too, that there are economic origins to fascism that are very important and that, among other things, we really need to understand how to prevent people from turning to fascist, neo-nationalist, and extremist answers. I would suggest that has a lot more to do with economic policy than people think.

Q: That is something many of the “big is beautiful”-type arguments about private monopolies seem to ignore: the historical precedents of concentrated economic power contributing to the rise of authoritarian regimes.

I think that’s right. Also, it ignores [the fact] that there’s more to people’s lives than their lives as customers. People are also workers, and it’s one thing to face scale when you’re buying things and another thing to face scale when you’re an employee looking for a job and in a difficult bargaining position.

To take this further: I don’t like excessive pricing or price gouging, but the vision of antitrust over the last 40 years has been that the best of all possible worlds is one where you have relatively mild reductions in prices for consumer goods. Let’s just say there’s more to life than that. It’s not always clear that economics can get at it, but the focus on price in antitrust yields very narrow results.

“I don’t like excessive pricing or price gouging, but the vision of antitrust over the last 40 years has been that the best of all possible worlds is one where you have relatively mild reductions in prices for consumer goods. Let’s just say there’s more to life than that.”

Q: Unlike many people involved in the antitrust debate, even those that support vigorous enforcement, you don’t shy away from what Robert Pitofsky called the “political content of antitrust.” In fact, you seem to embrace it. What would you say is the political role of antitrust?

Ultimately, antitrust is a kind of constitutional check on private power. You can’t understand antitrust law without understanding its relationship with power. This is the centerpiece of the book and the original soul of antitrust law. It wasn’t so concerned with the details with price. It just had a sense that there needed to be some kind of outer limit on private power, much like there’s a limit on public power set by the constitution.

Q: What do you say to criticisms that you’re leading antitrust through uncharted waters, and that reinstilling political values into antitrust risks turning antitrust into a blunt political tool, much like what Trump is threatening to do with tech platforms?

I think this is confusing two meanings of the word “political.” There’s a narrow political sense in which a law can be used to punish your opponents or save your friends—consumer welfare antitrust can be used to do that already. But there’s also the broader sense of the law informed by constitutional values or concerns about power. That is also political, but in a much broader sense. That is the best sense in which the law has been enforced in the best moments of its history—the sense that a firm has become too powerful and too dominant to be tolerated in a land which calls itself free. It’s important not to confuse those two ideas of the term “political.”

Q: You compare the first Gilded Age to our own. Where do you see parallels between the monopolists of the Gilded Age, people like John D. Rockefeller and Andrew Carnegie, and present day dominant firms? Google and Facebook are not shooting workers, after all. 

There’s some traces of the same ideology. Peter Thiel is a prominent example: He calls his [ideology] libertarianism, but it’s not much different than 19th century social Darwinism, which worships the monopoly form and holds the idea that we should see our society as a winner-take-all, survival of the fittest, “The strong shall rule, the weak shall serve them” kind of undertaking. Google and Facebook have much kinder public faces, but—particularly with Facebook—I’m not sure underlying it they think that much differently.

There are other parallels as well, particularly levels of individualized personal wealth that the world has never seen before. In the concentration of wealth is a glorification of wealth, and almost a fetishization with accumulating amounts of money that no person could spend in their lifetime. A lot of projects in Silicon Valley get bent to the need for monstrous payouts and it ends up getting in the way of what would otherwise be good projects or better ways to run companies.

Obviously, as I explore in the book, the economic structure is also similar, where you have an overall economy dominated by fewer entities and greater levels of inequality.

Q: Another parallel seems to be this belief in the goodness of monopolies and the benefits they bring humanity. The ruthless robber barons, who threatened to crush rivals who didn’t submit to their will, genuinely believed they were doing the good, moral thing, for the betterment of humankind.

That’s right. But I think this has less to do with Silicon Valley and more to do with Wall Street today, this very fragmented morality, the idea that somehow the right thing to do is not exactly what we would usually call the ethical thing: It’s right to destroy your rivals, it’s right to lie and cheat so long as you get away with it.

“If you’re looking for the one big signal failure of the last 20 years, it’s got to be merger review. There has been an inexplicable allowance of so many industries to merge down to four or three players, sometimes two, sometimes even a monopoly. Europe is as guilty of this as the United States.”

Q: You write that the priority for neo-Brandeisian antitrust would be reforming the process of merger review. Why is merger review the top priority, and how should it be reformed?

If you’re looking for the one big signal failure of the last 20 years, it’s got to be merger review. There has been an inexplicable allowance of so many industries to merge down to four or three players, sometimes two, sometimes even a monopoly. Europe is as guilty of this as the United States. In many cases, it seems like the question was not how are we going to stop this [merger], but what kind of conditions are [merging companies] going to agree to, which is not the way merger review was intended. Merger review is not intended to be a big set of commitments that companies make, but rather the actual blocking of mergers. There’s been some recovery from that, particularly in the United States near the end of the Obama administration, but merger review has been in a crisis point.

It’s possible Congress could act and reaffirm that it meant what it said when it passed the 1950 Merger Act. It’s possible you could add greater burdens for larger mergers, or mergers that pass some structural threshold. Another way would be to open merger review to more public scrutiny. I understand some of the arguments in favor of secrecy, but I think that in the case of really big blockbuster mergers there’s just too much at stake. Having more public awareness and more groups involved would be good actually, given the important political consequences.

Q: What’s interesting about European antitrust is that although they’ve taken on several big cases in recent years, in terms of mergers European competition authorities don’t put up a lot of a fight. 

I agree. I think that Europe, if anything, has been worse than the United States for the last ten years. The beer merger of Anheuser-Busch InBev and SABMiller was inexplicably approved, creating a monopoly. Telecom mergers across Europe have been allowed, bringing multiple markets down to three [competitors].They allowed the Monsanto-Bayer merger—I’m not sure what they were thinking with that one.

Overall, I think consent decrees appeal to academic economists, but they have a bad track record. One problem with consent decrees is that you have the most talented attorneys and economists negotiating these on the government side, but once they’re done, they’re given to an enforcement bureau which is typically not heavily staffed. And sometimes it can be forgotten, and certainly not enforced with any kind of vigor.

Structural separation is self-executing. The blocking of mergers is self-executing. You don’t have to have the government constantly trying to make sure the thing is working. I think Europe has really gone down the wrong path in that direction.

Q: Another solution you explore in the book is breaking up dominant companies. One company you point to in this regard is Facebook—you call for breaking up Facebook, separating it from Instagram and WhatsApp. Why single out Facebook? And what would breaking up Facebook accomplish, considering its business model is at this point shared by the majority of online platforms?

I think it’s crucial to break up Facebook, particularly from WhatsApp and Instagram. In some ways, I think the burden should be on Facebook to explain why they shouldn’t be broken up.

Will that make a difference? I think it will. I have faith in improved competition. I don’t think there’s strong evidence of great efficiencies that come from having all of the major social networks under one roof. It’s hard to see any real loss of so-called efficiencies, at least ones that matter to consumers.

People are looking for somewhere to switch, but they don’t have anywhere to go. WhatsApp can easily be that platform, and its leadership has different values, or at least had different values before they left.

“I think it’s crucial to break up Facebook, particularly from WhatsApp and Instagram. In some ways, I think the burden should be on Facebook to explain why they shouldn’t be broken up.”

Q: In a recent post in Medium, you laid out ten antitrust cases the government should be investigating. Which ones would you say are the most pressing?

Someone has to stop the T-Mobile/Sprint merger. Maybe it will be the states, but someone has to stop that merger. I already mentioned the Facebook breakup, which I think is big and symbolically important.

I think the Justice Department actually is already working on this, but the Live Nation-Ticketmaster matter has been sitting there for a long time. It’s not the biggest industry, but it’s still a case with a lot of anticompetitive conduct.

And I would like to take a look back at the airline mergers and ask whether we should consider breaking down the triopoly. The state of the airlines is really unacceptable.

Q: It’s been roughly a year since the repeal of net neutrality. You, of course, famously coined the term net neutrality. What would you say is the importance of net neutrality, in terms of competition and the bigness debate?

It’s really a parallel discussion but the same issue, which is: When you have monopolies that don’t seem to be going anywhere, should they be completely unconstrained? Or should there be some rules as to how they conduct themselves? It’s always been a parallel to this question of antitrust, but they’re part of the same discussion. For some reason, we’ve moved in the direction of extreme, radical, laissez faire [responses] for all of these questions. But people are starting to move in different directions now, and the backlash is inevitable.

National Bankruptcy as a Board Game

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By Dmitry Orlov

Source: Club Orlov

Most people are familiar with the game Monopoly. Its goal is to teach capitalist kiddies a valuable lesson about capitalism; namely, that in running a business it isn’t useful to shoot for some happy modicum of accommodation with your competitors or to strive for a sustainable steady state. Instead, what you need to do to survive (never mind win) is to grow as quickly as possible and eat up your competitors alive, or you’ll get eaten up yourself. That’s not just a game; that’s exactly how capitalism actually works, and if that doesn’t work for you (it doesn’t for most people) then that’s exactly how capitalism doesn’t work.

And so the Waltons couldn’t just run Walmart as a mart; they had to make it into a global empire—just in order to survive. Now, most governments in the world realize that this sort of unbridled capitalism is harmful and seek to regulate it. For instance, Russia has a Federal Antimonopoly Service. The US Justice Department has an Antitrust Division, which is aptly named if its mission is to destroy Americans’ trust in their government’s ability to regulate business. It also has a website which currently says: “Due to the lapse in appropriations, Department of Justice websites will not be regularly updated.” Perhaps that’s all right for a country that seeks to monopolize everything—international finance and law, defense procurement and, of course, the dispensation of “freedom and democracy” and “universal values.”

Most people are also familiar with the concept of national debt. The federal debt of the US government currently equals… never mind; it’s going up much faster than you can write it down. If you want to watch it go up real time, you can look it up here. The exact number is useless: if you take a snapshot of it—say, $21,921,420,945,123.00—that will no longer be the payoff amount by the time you write out the check, and if you write out the check, no matter who you are, it will bounce. But it won’t even get that far: if you mail that check to the US Treasury Department, they wouldn’t be able to deposit it because “Due to the lapse in appropriations…” (You get the picture.)

The debt goes up all the time, and the rate at which it goes up is accelerating. The concept of acceleration may not be intuitive for some of you, so let me explain. Debt goes up with some speed. Acceleration is the amount by which that speed increases, measured in, for example, dollars per minute per minute. Calculating it is a fun little arithmetic exercise. During Barak Obama’s reign it went up by $8.6 trillion, starting from $11.6 trillion and gong up to $20.2 trillion. Trump plans to add $4.8 trillion during his first three years. (Relevant numbers can be looked up here).

Thus, Obama’s velocity was $8.6 trillion over 8 years—roughly $1 trillion per year or $2 million per minute while Trump’s velocity is roughly $1.6 trillion per year or a little over $3 million per minute. Therefore, the acceleration is only a few cents per minute per minute—but it sure adds up! Acceleration tends to sneak up on you. For instance, if you want to gain some intuitive appreciation for acceleration due to gravity (9.81m or 32 feet per second per second) then try jumping off a chair while keeping your knees straight. You can also ponder the fact that satellites that fall out of Earth’s orbit tend to burn up on reentry as they decelerate due to friction with the atmosphere.

Any sane, numerate person can tell you that increases in debt are fine provided your revenues are increasing significantly faster, but if that’s not the case then the eventual result is bankruptcy. And that is most definitely not the case. Hence the name of this board game is National Bankruptcy. But I am not sure what the objective of the game should be. Is it to go bankrupt as quickly and efficiently as possible, or is to go bankrupt as slowly and painfully as possible?

I am quite sure that players who aren’t on a path to national bankruptcy would prefer to keep it that way, and would furthermore prefer to be rid of all sovereign debt issued by whoever is going to go bankrupt before that happens. (Russia seems to have that problem solved already while China is far behind.) In any case, I am a very serious person who doesn’t like jokes and doesn’t have time to play games, board games included, so I’ll leave it to others to ponder such questions. Still, the board game metaphor seems useful for discussing this topic.

One problem with playing this game is the problem of scale. People have a problem appreciating such huge numbers. They are familiar with what a dollar is, but what’s a trillion? Here it is, represented as double-stacked pallets of $100 bills.

That seems a bit cumbersome for our board game. Reasonable values for the chips in our National Bankruptcy game would be $100 billion, $500 billion and $1 trillion. We could use a few $5 trillion and $10 trillion chips too, though not too many because I doubt that the game would go on long enough to make them useful.

I propose that for the sake of this game we introduce a handy new unit called a “piffle” which is equal to $100 billion. A trillion is 10 piffles, 10 trillion is 100 piffles. Then our chips can be 1, 5, 10, 50 and 100 piffles. Piffles allow us to express various huge quantities without going through any arithmetic contortions. US federal debt is currently 220 piffles. US trade deficit for 2018 was 6 piffles while the US defense budget was 7 piffles. For 2019 the federal budget deficit (covered by increased borrowing) is 10 piffles and rising while tax revenues are just 3 piffles and falling. The interest payment on federal debt is 3 piffles but with rising interest rates it’s going to 5 piffles within a few years.

Speaking of rising interest rates… just today Trump wished for 0% interest rates again, like Obama had while he was running up his 80 piffles’ worth of debt. But now it’s hovering around 3% and is unlikely to go down no matter what Trump wishes. Why? Well, here’s the reason. The US imports much more than it exports because it can’t afford to or lacks the ability to make all the stuff it needs; that’s why there are 6 piffles’ worth of trade deficit. When other nations sell to the US more than they buy, they end up holding lots of piffles, and since the US needs lots of piffles (remember, the budget deficit is 10 piffles) it makes plenty of sense to borrow that money right back. A little while back it was possible to borrow it back at 0% interest because the US was powerful enough to threaten those who refused to play this game with military annihilation (cue pictures of bombed-out Libya and Iraq). But times have changed, and unless the US bribes its debt-holders with 3% interest rate or better—no deal.

How have times changed? There are two effects worth mentioning. First, the military annihilation threat isn’t working any more. Yes, the US still spends a stunning, record-shattering sum of 7 piffles on defense, but none of that is working. Call it the free money effect. When people spend their own hard-earned money, they tend to be careful with it, but if it’s somebody else’s money that they got for free never intending to pay it back, then they tend to throw caution to the wind. And so US military spending has become less and less effective over time, in one of two ways: procurement costs have gone through the roof, and the resulting products have become useless.

In terms of procurement costs, the purchasing parity between the US and (just as an example) Russia seems to be at least ten to one: to get the same result, the US has to spend at least ten times more than Russia. And so although Russia spends well less than 1 piffle on defense, its military is far more effective. In terms of product uselessness, the Pentagon now resembles a woman who has a closet jam-packed with expensive designer labels but has absolutely nothing to wear because her entire wardrobe is no longer fashionable. There is the entire set of aircraft carriers none of which can operate close enough to enemy shores to be of any use at all because they can be readily sunk using hypersonic rockets launched from very far away. There are the stockpiles of Tomahawk cruise missiles which can’t make it past Soviet-era air defense systems (with a few electronics and software upgrades). There are the Patriot air defense systems which are useless even for stopping Soviet-era SCUD missiles, never mind anything more modern.

Add to this Russia’s (and soon China’s) new hypersonic weapons with conventional payloads and new air and space defense systems such as the S-400: these provide what’s known as “escalation dominance.” Suppose the US does something unspeakably nasty and Russia and/or China decide to teach it a lesson. They now have the ability to blow up any target within the US without getting anywhere near it and without placing any of their military assets at risk.

They could, for instance, take out the US electric grid in a way that will take many months to get it back on line. They can then reliably intercept anything that the US tries to retaliate with. Of course, the US can become suicidal—that’s always a risk—and launch a full-on nuclear first strike, then sit back and wait to be completely obliterated along with much of the rest of the planet. But that’s not a military strategy, that’s pure suicide, and the officers in charge of military strategy tend to be emotionally stable family men who look forward to playing with their grandchildren upon retirement.

So, why then should the US continue to spend 7 piffles on defense? The sad answer is that it will go bankrupt whether it zeroes out the defense budget or not. If the defense budget goes to 0, then there is still 3 piffles’ worth of budget deficit left, plus those 6 piffles of trade deficit aren’t going anywhere but up. But what about MAGA?—you might ask—What about firing up US manufacturing, bringing the jobs back and exporting our way out of this? After all, if we turn those 6 piffles of trade deficit into 6 piffles of trade surplus, suddenly it all works out and bankruptcy becomes avoidable.

No, sorry, that just not realistic. You see, in order to get an industrial economy going again the US needs several things. It needs cheap energy, cheap labor, low cost of doing business and readily available markets, both domestic and export. And the US doesn’t have any of these. In terms of energy—and oil is by far the most important form of energy—in 2019 the US will import exactly as much oil as it did in 1998—around 8 million barrels a day. Yes, the shale oil industry has sprung up in the meantime, and the US is currently producing 11.5 million barrels per day. But also in the meantime US oil consumption has gone up a lot—to 20 million barrels a day, which is a stunning 20% of the world’s consumption for 4.4% of the world’s population.

And so the oil deficit is still very much there. Plus the shale oil patch has never made any money but has accumulated over 2 piffles’ worth of debt and has spent over a piffle’s worth more than it made. With interest rates going up they are unlikely to be able to borrow enough to keep up the same hectic drilling rate, and with declines from existing wells at over half a million barrels per day per month it won’t take many months to whittle down that 11.5 million barrels per day, forcing the US to either boost imports or cut consumption.

But the oil price has gone down a lot lately, so there shouldn’t be a problem in any case, right? Again, sorry, no. Peak Oil for most countries has come and gone. There is now only a handful of countries left that are able to meaningfully boost oil production: Russia, Canada (mostly tar sands), Iran, Iraq, United Arab Emirates, Kuwait and Brazil. Russia has recently announced that it isn’t planning to boost production. Saudi Arabia is a huge oil producer but does not seem to have any spare capacity left. Canada’s tar sands patch is a money-losing environmental disaster. Iran and Iraq (call them Iranq, since they are both Shia Moslem, are politically aligned and neither loves America too much) aren’t exactly going to gallop to the rescue. That leaves UAE, Kuwait and Brazil, and if you add them all up together that’s nowhere near enough. So, get ready for oil price spikes, followed by a wave of demand destruction, followed by oil price collapses, followed by supply destruction—you know, the usual.

Moving on to labor. In order to stay competitive, the US will need to lower its median wage a lot. It has to be lower than what the Chinese and the Southeast Asians earn because the US needs to outcompete them to steal their export market share. Without various other major changes this will cause US workers to either rebel or starve to death in short order. The changes involve nationalizing medicine and education to drive down their costs by a factor of 1000 or so, converting to public transportation and pretty much banning the use of private cars to make transportation affordable, putting up high-rises right next to factories for affordable worker housing and so on. That’s a lot of piffles’ worth of effort!

The cost of doing business is a tough one too. The US spends way more on courts and lawyers, insurance and regulatory compliance than most other countries, and the regulatory maze that entrepreneurs have to run in order to run even a small and simple business is very costly and absolutely confounding. How does one take a machete to that whole ridiculous, corrupt scheme? I have no idea. It’s an imponderable. The Chinese would probably just call it a “cultural revolution,” round up all the lawyers and the bureaucrats, make them wear dunce caps and sandwich boards that say “I am what is wrong with this country” and march them in procession while pelting them with rocks and beating them with sticks. Something like that…

Finally, there is the question of export markets. What exactly is the US going to export more effectively than other countries are exporting already? China out-manufactures just about anybody on the planet and isn’t about to give up its spot. Russia exports grain and other foodstuffs (all non-GMO, unlike the US), nuclear and space technology, defense technology (that actually works) and much else. Pakistan and India, and various other countries, export textiles. The world is full up with product. It’s consumers to bankrupt that are in short supply. And if the US cuts its labor rates to make itself competitive, then its consumer base will shrink rather dramatically.

So it looks like bankruptcy is it, no use fighting it. But what should the US do in the meantime? I suggest that it should put up some really huge walls—just for the sake of leaving behind some spectacular ruins for future generations to marvel at. The one along the southern border seems to be going up already, but there should be at least two more. There needs to be a wall along the Mason-Dixon line, because given the heated state of US politics there needs to be a way to prevent people from trying to reenact the Civil War (a misnomer, that!) with actual real weapons and live ammo. And there also needs to be a wall along the northern border, to keep various groups of armed troglodytes from escaping to Canada and ransacking it (it’s the least we can do for our peaceful northern neighbors). How much will these three walls cost? Glad you asked! They will cost roughly 0.005 piffles apiece, 0.015 piffles total—a truly piffling amount. That’s my 0.000000002 piffle’s worth. But, you know, it’s the thought that counts.

Oh, and if you want to actually design this National Bankruptcy board game, please resist the temptation to contact me about it. Seriously, I don’t like games, board games especially. I am a very serious person who doesn’t have time for such piffles.

Why Are so Few Americans Able to Get Ahead?

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By Charles Hugh Smith

Source: Of Two Minds

Our entire economy is characterized by cartel rentier skims, central-bank goosed asset bubbles and stagnating earned income for the bottom 90%.

Despite the rah-rah about the “ownership society” and the best economy ever, the sobering reality is very few Americans are able to get ahead, i.e. build real financial security via meaningful, secure assets which can be passed on to their children.

As I’ve often discussed here, only the top 10% of American households are getting ahead in both income and wealth, and most of the gains of these 12 million households are concentrated in the top 1% (1.2 million households). (see wealth chart below).

Why are so few Americans able to get ahead? there are three core reasons:

1. Earnings (wages and salaries) have not kept up with the rising cost of living.

2. The gains have flowed to capital, which is mostly owned by the top 10%, rather than to labor ((wages and salaries).

3. Our financialized economy incentivizes cartels and other rentier skims, i.e. structures that raise costs but don’t provide any additional value for the additional costs.

It’s instructive to compare today’s household with households a few generations ago. As recently as the early 1970s, 45 years ago, it was still possible for a single fulltime-earner to support the household and buy a home, which in 1973 cost around $30,000 (median house price, as per the St. Louis FRED database).

As recently as 20 years ago, in 1998, the median house price in the U.S. was about $150,000— still within reach of many two-earner households, even those with average jobs.

As the chart below shows, real median household income has only recently exceeded the 1998 level— and only by a meager $1,000 annually. If we use real-world inflation rather than the under-estimated official inflation, real income has plummeted by 10% or more in the past 20 years.

This reality is reflected in a new study of wages in Silicon Valley, which we might assume would keep up due to the higher value of the region’s output. The study found the wages of the bottom 90% declined when adjusted for inflation by as much as 14% over the past 20 years:

“The just-released report showed that wages for 90 percent of Silicon Valley workers (all levels of workers except for the top 10 percent)are lower now than they were 20 years ago, after adjusting for inflation. That’s in stark contrast to the 74 percent increase in overall per capita economic output in the Valley from 2001 to 2017.”

source: Why Silicon Valley Income Inequality Is Just a Preview of What’s to Come for the Rest of the U.S.

Meanwhile, the median house price has more than doubled to $325,000 while median household income has stagnated. Please note this price is not adjusted for inflation, like the median income chart. But if we take nominal household income in 1998 (around $40,000 annually) and compare it to nominal household income now in 2018 (around $60,000), that’s a 50% increase–far below the more than doubling of house prices.

To raise stagnant incomes, the Federal Reserve and other central banks have attempted to generate a wealth effect by boosting the valuations of risk-on assets such as stocks, bonds and commercial real estate. But the Fed et al. overlooked the fact that the vast majority of these assets are owned by the top 10%–and as noted above, the ownership of the top 10% is concentrated in the top 1% and .1%.

As a result, the vast majority of the wealth effect capital gains have flowed to the top 1%:

Lastly, the cartel structure of the U.S. economy has raised costs while providing no additional value. One example is higher education, a cartel that issues diplomas with diminishing economic value that now cost a fortune, a reality reflected in this chart of student loan debt, which simply didn’t exist a generation ago:

Our entire economy is characterized by cartel rentier skims, central-bank goosed asset bubbles and stagnating earned income for the bottom 90%. Given these realities, the bottom 90% are left with few pathways to get ahead in terms of financial security and building secure family wealth.

 

The USA Is Now a 3rd World Nation

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By Charles Hugh Smith

Source: Of Two Minds

I know it hurts, but the reality is painfully obvious: the USA is now a 3rd World nation.

Dividing the Earth’s nations into 1st, 2nd and 3rd world has fallen out of favor; apparently it offended sensibilities. It has been replaced by the politically correctdeveloped and developing nations, a terminology which suggests all developing nations are on the pathway to developed-nation status.

What’s been lost in jettisoning the 1st, 2nd and 3rd world categories is the distinction between developing (2nd world) and dysfunctional states (3rd world), states we now label “failed states.”

But 3rd World implied something quite different from “failed state”: failed state refers to a failed government of a nation-state, i.e. a government which no longer fulfills the minimum duties of a functional state: basic security, rule of law, etc.

3rd World referred to a nation-state which was dysfunctional and parasitic for the vast majority of its residents but that worked extremely well for entrenched elites who controlled most of the wealth and political power. Unlike failed states, which by definition are unstable, 3rd World nations are stable, for the reason that they work just fine for the elites who dominate the wealth, power and machinery of governance.

Here are the core characteristics of dysfunctional but stable states that benefit the entrenched few at the expense of the many, i.e. 3rd Worldnations:

1. Ownership of stocks and other assets is highly concentrated in entrenched elites. The average household is disconnected from the stock market and other measures of wealth; only a thin sliver of households own enough financial/speculative wealth to make an actual difference in their lives.

2. The infrastructure of the nation used by the many is poorly maintained and costly to operate as entrenched elites plunder the funding to pad their payrolls, pensions and sweetheart/insider contracts.

3. The financial/political elites have exclusive access to parallel systems of transport, healthcare, education, etc. The elites avoid trains, subways, lenders, coach-class air transport, standard healthcare and the rest of the decaying, dysfunctional systems they own that extract wealth from the debt-serfs.

They fly on private aircraft, have their own healthcare and legal services, use their privileges to get their offspring into elite universities and institutions and have access to elite banking and lending services that are unavailable to their technocrat lackeys and enforcers.

4. The elites fund lavish monuments to their own glory disguised as “civic or national pride.” These monuments take the form of stadiums, palatial art museums, immense government buildings, etc. Meanwhile the rest of the day-to-day infrastructure decays in various states of dysfunction.

5. There are two classes that only interact in strictly controlled ways: the wealthy, who live in gated, guarded communities and who rule all the institutions, public and private, and the debt-serfs, who are divided into well-paid factotums, technocrat lackeys and enforcers who serve the interests of the entrenched elites and rest of the populace who own virtually nothing and have zero power.

The elites make a PR show of being a commoner only to burnish the absurd illusion that debt-serf votes actually matter. (They don’t.)

6. Cartels and quasi-monopolies are parasitically extracting the wealth of the nation for their elite owners and managers. Google: quasi-monopoly. Facebook: quasi-monopoly. Healthcare: cartel. Banking: cartel. National defense: cartel. National Security: cartel. Corporate mainstream media: cartel. Higher education: cartel. Student loans: cartel. I think you get the point: every key institution or function is controlled by cartels or quasi-monopolies that serve the interests of the few via parasitic exploitation of the powerless.

7. The elites use the extreme violence and repressive powers of the government to suppress, marginalize and/or destroy any dissent. There are two systems of “law”: one for the elites ($10 million penalties for ripping off the public for $10 billion, no personal liability for outright fraud) and one for the unprotected-unprivileged: “tenners” (10-year prison sentences) for minor drug infractions, renditions or assassinations (all “legal,” of course) and institutional forces of violence (bust down your door on the rumor you’ve got drugs, confiscate your car because we caught you with cash, so you must be a drug dealer, and so on, in sickening profusion).

8. Dysfunctional institutions with unlimited power to extract money via junk fees, licensing fees, parking tickets, penalties, late fees, etc., all without recourse. Mess with the extractive, parasitic bureaucracy and you’ll regret it: there’s no recourse other than another layer of well-paid self-serving functionaries that would make Kafka weep.

9. The well-paid factotums, bureaucrats, technocrat lackeys and enforcers who fatten their own skims and pensions at the expense of the public and slavishly serve the interests of the entrenched elites embrace the delusion that they’re “wealthy” and “the system is working great.” These deluded servants of the elites will defend the dysfunctional system because it serves their interests to do so.

The more dysfunctional the institution, the greater their power, so they actively increase the dysfunction at every opportunity.

The USA is definitively a 3rd World nation. Read the list above and then try to argue the USA is not a 3rd World nation. Try arguing against the facts displayed in this chart:

I know it hurts, but the reality is painfully obvious: the USA is now a 3rd World nation.

 

THE MONOPOLIZATION OF AMERICA: The biggest economic problem you’re hearing almost nothing about

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By Robert Reich

Source: Nation of Change

Not long ago I visited some farmers in Missouri whose profits are disappearing. Why? Monsanto alone owns the key genetic traits to more than 90 percent of the soybeans planted by farmers in the United States, and 80 percent of the corn. Which means Monsanto can charge farmers much higher prices.

Farmers are getting squeezed from the other side, too, because the food processors they sell their produce to are also consolidating into mega companies that have so much market power they can cut the prices they pay to farmers.

This doesn’t mean lower food prices to you. It means more profits to the monopolists.

Monopolies all around

America used to have antitrust laws that stopped corporations from monopolizing markets, and often broke up the biggest culprits. No longer. It’s a hidden upward redistribution of money and power from the majority of Americans to corporate executives and wealthy shareholders.

You may think you have lots of choices, but take a closer look:

1. The four largest food companies control 82 percent of beef packing, 85 percent of soybean processing, 63 percent of pork packing, and 53 percent of chicken processing.

2. There are many brands of toothpaste, but 70 percent of all of it comes from just two companies.

3. You may think you have your choice of sunglasses, but they’re almost all from one company: Luxottica – which also owns nearly all the eyeglass retail outlets.

4. Practically every plastic hanger in America is now made by one company, Mainetti.

5. What brand of cat food should you buy? Looks like lots of brands but behind them are basically just two companies.

6. What about your pharmaceuticals? Yes, you can get low-cost generic versions. But drug companies are in effect paying the makers of generic drugs to delay cheaper versions. Such “pay for delay” agreements are illegal in other advanced economies, but antitrust enforcement hasn’t laid a finger on them in America. They cost you and me an estimated $3.5 billion a year.

7. You think your health insurance will cover the costs? Health insurers are consolidating, too. Which is one reason your health insurance premiums, copayments, and deductibles are soaring.

8. You think you have a lot of options for booking discount airline tickets and hotels online? Think again. You have only two. Expedia merged with Orbitz, so that’s one company. And then there’s Priceline.

9. How about your cable and Internet service? Basically just four companies (and two of them just announced they’re going to merge).

Why the monopolization of America is a huge problem

The problem with all this consolidation into a handful of giant firms is they don’t have to compete. Which means they can – and do – jack up your prices.

Such consolidation keeps down wages. Workers with less choice of whom to work for have a harder time getting a raise. When local labor markets are dominated by one major big box retailer, or one grocery chain, for example, those firms essentially set wage rates for the area.

These massive corporations also have a lot of political clout. That’s one reason they’re consolidating: Power.

Antitrust laws were supposed to stop what’s been going on. But today, they’re almost a dead letter. This hurts you.

We’ve forgotten history

The first antitrust law came in 1890 when Senator John Sherman responded to public anger about the economic and political power of the huge railroad, steel, telegraph, and oil cartels – then called “trusts” – that were essentially running America.

A handful of corporate chieftains known as “robber barons” presided over all this – collecting great riches at the expense of workers who toiled long hours often in dangerous conditions for little pay. Corporations gouged consumers and corrupted politics.

Then in 1901, progressive reformer Teddy Roosevelt became president. By this time, the American public was demanding action.

In his first message to Congress in December 1901, only two months after assuming the presidency, Roosevelt warned, “There is a widespread conviction in the minds of the American people that the great corporations known as the trusts are in certain of their features and tendencies hurtful to the general welfare.”

Roosevelt used the Sherman Antitrust Act to go after the Northern Securities Company, a giant railroad trust run by J. P. Morgan, the nation’s most powerful businessman. The U.S. Supreme Court backed Roosevelt and ordered the company dismantled.

In 1911, John D. Rockefeller’s Standard Oil Trust was broken up, too. But in its decision, the Supreme Court effectively altered the Sherman Act, saying that monopolistic restraints of trade were objectionable if they were “unreasonable” – and that determination was to be made by the courts. What was an unreasonable restraint of trade?

In the presidential election of 1912, Roosevelt, running again for president but this time as a third party candidate, said he would allow some concentration of industries where there were economic efficiencies due to large scale. He’d then he’d have experts regulate these large corporations for the public benefit.

Woodrow Wilson, who ended up winning the election, and his adviser Louis Brandeis, took a different view. They didn’t think regulation would work, and thought all monopolies should be broken up.

For the next 65 years, both views dominated. We had strong antitrust enforcement along with regulations that held big corporations in check.

Most big mergers were prohibited. Even large size was thought to be a problem. In 1945, in the case of United States v. Alcoa (1945), the Supreme Court ruled that even though Alcoa hadn’t pursued a monopoly, it had become one by becoming so large that it was guilty of violating the Sherman Act.

What happened to antitrust?

All this changed in the 1980s, after Robert Bork – who, incidentally, I studied antitrust law with at Yale Law School, and then worked for when he became Solicitor General under President Ford – wrote an influential book called The Antitrust Paradox, which argued that the sole purpose of the Sherman Act is consumer welfare.

Bork argued that mergers and large size almost always create efficiencies that bring down prices, and therefore should be legal. Bork’s ideas were consistent with the conservative Chicago School of Economics, and found a ready audience in the Reagan White House.

Bork was wrong. But since then, even under Democratic administrations, antitrust has all but disappeared.

The monopolization of high tech

We’re seeing declining competition even in cutting-edge, high-tech industries.

In the new economy, information and ideas are the most valuable forms of property. This is where the money is.

We haven’t seen concentration on this scale ever before.

Google and Facebook are now the first stops for many Americans seeking news. Meanwhile, Amazon is now the first stop for more than a half of American consumers seeking to buy anything. Talk about power.

Contrary to the conventional view of an American economy bubbling with innovative small companies, the reality is quite different. The rate at which new businesses have formed in the United States has slowed markedly since the late 1970s.

Big Tech’s sweeping patents, standard platforms, fleets of lawyers to litigate against potential rivals, and armies of lobbyists have created formidable barriers to new entrants. Google’s search engine is so dominant, “Google” has become a verb.

The European Union filed formal antitrust charges against Google, accusing it of forcing search engine users into its own shopping platforms. And last June, it fined Google a record $2.7 billion.

But not in America.

It’s time to revive antitrust

Economic and political power cannot be separated because dominant corporations gain political influence over how markets are organized, maintained, and enforced – which enlarges their economic power further.

One of the original goals of the antitrust laws was to prevent this.

Big Tech – along with the drug, insurance, agriculture, and financial giants – is coming to dominate both our economy and our politics.

There’s only one answer: It is time to revive antitrust.

Are Profit and Healthcare Incompatible?

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By Charles Hugh Smith

Source: Of Two Minds

The only way to systemically lower costs is to make prevention and transparency the top priorities.

As I have been noting for a decade, the broken U.S. healthcare system will bankrupt the nation all by itself. We all know the basic facts: the system delivers uneven results in terms of improving health and life expectancy while costing two or three times more per person compared to our advanced-economy global competitors.

U.S. Lifestyle + “Healthcare” = Bankruptcy (June 19, 2008)

Sickcare Will Bankrupt the Nation–And Soon (March 21, 2011)

How Healthcare Is Dooming the U.S. Economy (Three Charts) (May 2015)

You Want to Fix the Economy? Then First Fix Healthcare (September 29, 2016)

This chart says it all: the global outlier in low life expectancy and exorbitant cost is the U.S.

The profit motive is supposed to lower costs, not increase them. In the idealized model of a completely free market, the profit motive is supposed to lower costs as customers are free to choose the best product/service for the lowest price.

In U.S. healthcare, the profits are stupendous, yet the costs are even more stupendous. Rather than lower costs, the U.S. system of for-profit healthcare has sent costs spiraling into the stratosphere, to the point that the system’s costs are threatening to bankrupt the government and the nation.

Why is this so? Karl Marx provided the answer in the 19th century. In the idealized model of free-market capitalism, those who provide superior services for the lowest price reap more profit than their less agile/productive competitors.

But as Marx observed, in real-world capitalism, open competition drives profits to zero. Every attempt to gain a competitive advantage in price increases supply and further commoditizes the product/service. This dynamic pushes prices down to the point that nobody can make a profit until competitors are driven out of business and a cartel or monopoly secures the market and controls supply, price and profit.

The most profitable structures in real-world capitalism are monopolies or cartels– which is precisely what characterizes U.S. healthcare. The only way to maximize profits is to ruthlessly eliminate competition in the marketplace–which is exactly how the U.S. healthcare system operates: the pharmaceutical industry is a cartel, hospital chains are a cartel, insurance companies are a cartel, and so on.

In the real world of state-cartel-capitalism, competition is eliminated so cartels can maximize profits.

Do-gooders are always claiming that the system could be fixed by re-introducing competition– this was the core idea behind Obamacare’s insurance exchanges–but the do-gooders are blind to the core dynamic of state-cartel-capitalism, which is cartels own the machinery of governance via lobbying and campaign contributions. The state creates and protects the cartels, period.

In state-cartel-capitalism, there is no way to maintain real competition, as the cartels instruct the state to protect their monopolies/cartels. State reformers can try all sorts of complex reform schemes (ObamaCare) but they fail to lower costs because they all leave the cartel structure and cartel ownership of governance intact.

In the good old days of the 1950s and 1960s, U.S. healthcare was more localized, and the central state (federal government) wasn’t the Sugar Daddy for the cartels. Hospitals were community hospitals (what a quaint idea in today’s hyper-cartelized system) managed by physicians and administrators who saw their role as serving the community rather than arranging for $20 million annual salaries and millions of dollars in stock options.

This is why the cartels love Medicare For All proposals: the federal government–protector and funder of the cartels–will give the cartels a blank check not just for the 120 million people currently drawing benefits from Medicare/Medicaid but for all 325 million Americans.

Fast facts on Medicare and Medicaid (Center for Medicare and Medicaid Services)

Medicare Beneficiaries: 57.7 million
Medicaid Beneficiaries: 72.3 million
estimated dual Beneficiaries (drawing benefits from both programs): 10 million

Total Beneficiaries: 120 million

Medicare/Medicaid budget, 2015: $1.2 trillion

Total U.S. healthcare costs: $3.2 trillion, 18% of GDP

Department of Defense budget, 2015: $575 billion
source

Are profit and healthcare incompatible? In the real world of state-cartel-capitalism, the answer is yes: a profit-maximizing system fails to deliver prevention while pushing costs higher, eventually bankrupting the Sugar Daddy government and the nation.

Prevention, like a bag of carrots, is intrinsically low-profit. Illness, especially chronic illness, is highly profitable because the profits flow continuously from treatments, medications, procedures, tests, visits, hospitalization, home care, a constant churn of billing, etc.

The only way to systemically lower costs is to make prevention and transparency the top priorities. Prevention, community ownership of healthcare services, transparency and unfettered competition kill profits, period. Yet these are the only way to lower costs to be in line with our competitors.

You can reconfigure the system any way you want, but you have to eliminate cartels, cartel ownership of governance, opaque pricing, government blank checks and incentives for profiteering from chronic illness. If you don’t eliminate all these, you’ve fixed nothing.

 

The futility and corruption of the drug war

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By Jacob Hornberger

Source: Intrepid Report

I just finished watching the much-acclaimed series “Narcos” on Netflix. What a fantastic program. And what an excellent depiction of the futility and corruption of the war on drugs.

The series is a true-life account of Pablo Escobar, a Colombian drug lord who headed up the Medellin drug cartel, a black-market drug group that smuggled hundreds of tons of cocaine into the United States in the 1970s and 1980s. Smuggling an estimated 80 percent of the cocaine into the United States, Escobar became known as called the “King of Cocaine,” attaining in the process a net worth of $30 billion by the early 1990s. According to Wikipedia, Escobar was the wealthiest criminal in history.

Amidst much acclaim and publicity, the U.S. government and the Colombian government, working together, targeted Escobar with arrest or killing. Escobar retaliated by effectively declaring war on the government, a war that consisted of assassinations and bombings. Every time the DEA (which was operating in Colombia, along with the U.S. military and the CIA) and Colombian officials tightened the noose on Escobar’s operation, Escobar responded with bullets and bombs, killing a multitude of government officials and private citizens.

The logic of the drug-war crackdown was clear: By eradicating Escobar, officials thought they would be eradicating 80 percent of the cocaine being shipped into the United States. So, all the death and destruction resulting from the crackdown on Escobar was considered worth it in the long run.

But that’s not what happened. The more they tightened the noose around Escobar, the more his cocaine competitors—that is, the ones who were supplying the 20 percent, expanded their operations, gaining them a larger market share. Among the principal beneficiaries of the crackdown on Escobar was the Cali Cartel, which, not surprisingly, became the next big target of the U.S. and Colombian drug warriors, with similar results—the more they cracked down on the Cali Cartel, the more their competitors stepped into the breach and gained a larger market share.

In 1993, they finally caught up to Escobar and killed him in a shootout. You can imagine how U.S. and Colombian officials trumpeted that drug-war victory. Another “milestone” in the war on drugs, the term they have used for decades whenever they kill or capture some big drug lord.

But of course it was all to no avail. Even though they killed Escobar and ultimately smashed the Medellin and Cali cartels, amidst great fanfare and publicity, other suppliers quickly took their places and continued providing cocaine users in the United States with their drug.

In other words, all those people who lost their lives in the drug war on Escobar died for nothing. Absolutely nothing.

There is something else to consider: what the drug war against Escobar did to law-enforcement agents, both American and Colombian. It corrupted them to the core. Frustrated over all the death and destruction that Escobar was wreaking across the country and over their inability to apprehend him, officials began employing brutal and illegal tactics in return, such as torturing prisoners for information and then murdering them so that they couldn’t talk about what the officials had done to them.

Of course, there was also widespread bribery that was taking place within the Colombian police. In fact, that was one of the reasons they had such a hard time catching up to Escobar—his informants within the police and Colombian military would alert him to whatever was going on.

The pathetic thing about all this death, destruction, mayhem, and corruption is that there was a much simpler way to have put Escobar, the Cali Cartel, and all the other black-market drug suppliers out of business, a way that would not have involved assassinations, bombings, torture, and corruption. All that the U.S. and Colombian governments had to do was legalize drugs.

If they had done that, Escobar and the rest of the black-market suppliers would have been put out of business instantaneously. That’s because of the difference between legal markets and black markets.

In legal markets, suppliers compete against each other by providing better goods and services to their customers. Think CVS, Walgreen, and other pharmacies. Notice that they are not out bombing and assassinating each other and other people.

It’s totally different in black or illegal markets. Competitors in these markets deal with each other through violent turf wars that involve murder, kidnapping, bombing, and mayhem. While people like Escobar are able to thrive in a black market, they inevitably go out of business in a legal market because they lack the skills that are necessary in legal markets.

A good example of this phenomenon is alcohol. We don’t see alcohol dealers killing each other to get a larger share of the market. That’s because booze is legal.

But it wasn’t that way when booze was illegal. During Prohibition, there were people like Al Capone involved in the sale and distribution of alcohol, along with killing, mayhem, and corruption.

This same principle, of course, applies today. Notwithstanding all the hoopla to which all of us are subjected when the feds or state drug warriors make a drug bust, the result is no different than it was 20–30 years ago with Escobar. The minute they make the bust, the supplier is replaced by someone else.

There is only one way to eradicate drug lords and illicit drug dealers, along with all the death, destruction, and corruption that comes with them: End the war on drugs by legalizing drugs.

 

Jacob G. Hornberger is founder and president of The Future of Freedom Foundation.

Our Hopelessly Dysfunctional Democracy

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By Charles Hugh Smith

Source: Of Two Minds

When the system is rigged, “democracy” is just another public-relations screen to mask the unsavory reality of Oligarchy.

Democracy in America has become a hollow shell. The conventional markers of democracy–elections and elected representatives–exist, but they are mere facades; the mechanisms of setting the course of the nation are corrupt, and the power lies outside the public’s reach.

History has shown that democratic elections don’t guarantee an uncorrupt, functional government. Rather, democracy has become the public-relations stamp of approval for corrupt governance that runs roughshod over individual liberty while centralizing the power to enforce consent, silence critics and maintain the status quo.

Consider Smith’s Neofeudalism Principle #1: If the citizenry cannot replace a dysfunctional government and/or limit the power of the financial Aristocracy at the ballot box, the nation is a democracy in name only.

In other words, if the citizenry changes the elected representation but the financial Aristocracy and the Deep State remain in charge, then the democracy is nothing but a PR facade for an oppressive oligarchy.

If the erosion of civil liberties and rising inequality characterize the state of the nation, democracy is both dysfunctional and illiberal. A state that strips away the civil liberties of its citizens via civil forfeiture, a war-on-drugs Gulag and unlimited surveillance may be a democracy in name, but it is at heart an oppressive oligarchy.

If the super-wealthy continue to become ever wealthier while the bottom 95% of the citizenry struggle in various stages of debt-serfdom, the state may be a democracy in name, but it is at heart an oppressive oligarchy.

Author/commentator Fareed Zakaria recently addressed the illiberal aspects of America’s faded democracy in an article America’s democracy has become illiberal.

Zakar’s prettified critique avoided the real worm at the heart of our democracy:the state exists to enforce cartels. Some might be private, some might be state-run, and others might be hybrids, such as our failed Sickcare system and our military industrial complex.

The ultimate role of democracy isn’t to “give the people a voice;” the only meaningful role of democracy is to protect the liberties of individuals from state encroachment, break up cartels and monopolies and limit the corruption of private/public money.

America’s democracy has failed on all counts. Civil liberties in a nation of ubiquitous central-state surveillance, a quasi-political Gulag (that nickel bag will earn you a tenner in America’s drug-war Gulag) and civil forfeiture (we suspect you’re up to no good, so we have the right to steal your car and cash) are eroding fast.

In America, the central government’s primary job is enforcing and funding cartels. As many of us have pointed out for years, a mere $10 million in lobbying, revolving-door graft (getting paid $250,000 for a speech or for a couple of board meetings) and bribes (cough-cough, I mean campaign contributions) can secure $100 million in profits–either by erecting regulatory/legal barriers or by direct federal funding of the cartel’s racket (healthcare, defense, “National Security,” etc.).

I explain why this is so in my books Resistance, Revolution, Liberation, Inequality and the Collapse of Privilege and Why Our Status Quo Failed and Is Beyond Reform.

The fact that the corruption is veiled does not mean it isn’t corruption. In the sort of nations Americans mock as fake democracies, the wealthy protect their wealth and incomes with bags of cash delivered at night to politicians.

Nothing so crass or obvious here, of course. Here, the government of Algiers gives $25 million to the Clinton Foundation for “favors,” the Russian government gives hundreds of thousands to John Podesta’s firm for “advice” (heh), the Koch Brothers fund an array of front-organizations that work on behalf of their agenda, K Street lobbying firms rake in tens of millions of dollars every year, and the first thing tech companies do when they realize some interest group might crimp their profits courtesy of lobbying the central state’s politicos is set up their own lavish lobbying and “contribution” schemes.

In theory, democracy enables advocacy by a variety of groups in order to reach a consensual solution to problems shared by everyone. In practice, the advocacy is limited to a select group of insiders, donors and the various fronts of the wealthy: foundations, think-tanks, lobbyists, etc.

Does anyone think America’s democracy is still capable of solving the truly major long-term problems threatening the nation? Based on what evidence? What we see is a corrupt machine of governance that kicks every can down the road rather than suffer the blowback of honestly facing problems that will require deep sacrifices and changes in the status quo.

We see a dysfunctional machine of governance that changes the name of legislation and proposes policy tweaks, while leaving the rapacious cartels untouched. (See the current sickcare “debate” for examples.)

We see an Imperial Project setting the state’s agenda to suit its own desires, and a corporate media that is quivering with rage now that the public no longer believes its tainted swill of “news” and “reporting.”

The divide between the haves and the have-nots is not limited to money–it’s also widening between the few with political power and the teeming serfs with effectively zero political power. When the system is rigged, “democracy” is just another public-relations screen to mask the unsavory reality of oligarchy.