Who Hijacked the World’s Greatest Economy?
Revolutions typically start with a theory and talk and transition into practice and political action. They almost always end in disaster for the societies they disrupt and the economies they destroy. That's the story of the French Revolution and Russia's October Revolution, but not the American Revolution, which had a happier ending – until now.
What we are currently witnessing looks worryingly like the end of the American Dream for most of us and, in a real sense, the last act in the America Revolution. What started back in 1776 remained a work in progress until a) the Civil War freed the slaves; and b) women and African-Americans finally won the right to vote after World Wars I and II, respectively. But, within a decade of extending the franchise, preparations to undermine its effects – and prevent the wider distribution of wealth it implied – were in full swing.
It started with two University of Rochester business-school professors, Michael Jensen and William Meckling, and a theory – the so-called "Theory of the Firm" published in the obscure, academic Journal of Financial Economics in 1976. It debunked the old corporate model as unsuited to the new realities of the emerging global economy; and it offered a new model that called for a wholesale restructuring of the corporate commanding heights of the economy. The declining competitiveness of US business and industry was proof the old model was no longer working. It found the separation of ownership and management to be at the heart of the problem and the underlying cause of poor strategic planning and operations. CEOs were too quick to make concessions to unions, not cost-conscious enough, and too reluctant to streamline operations, adopt new technologies or adapt to globalization.
When the managers and owners are one and the same, they can move fast, do whatever they please, and aren't accountable to anyone. All you need is "leverage" (lots of privately borrowed money). Out of this theory sprouted the seedlings that grew into today's corporate raiders – the private equity firms like Bain Capital and investment-bank behemoths like JP Morgan and Goldman Sachs.
And now that the bubble has burst and the middle-class has been made to pay for billion dollars worth of bailouts to banks and major corporations, now that hundreds of factories have been closed and thousands of jobs lots, now that foreclosures have disrupted the lives of families from coast-to-coast – now the old white titans of industry have the audacity – nay, the indecency – to blame a black man, Barack Obama, for everything.
Everything.
To say it's irresponsible of the financial wheeler-dealers who caused the problem is a gross understatement. These are the very individuals who got rich by jumping on the high-speed train that took the American economy from a model of profitability based on quality products and competitive prices to one based on leveraged transactions – mega-million dollar deals made behind closed doors with no accountability to any public authority.
This transformation ultimately led us to the derivative economy that crashed within a period of less than a quarter of a century. We have Wall Street, along with the Harvard Business School and guys like Willard Mitt Romney to thank for the reinventing of the US economy, financialization of business, and the so-called "Third Industrial Revolution". And, by the way, Barack Obama had nothing to do with it.
Nothing.
Romney's private equity fortune amassed during his tenure as Bain Capital's boss is only one example of how business in the US was transformed from organization-based (corporations that lived and died by the quality of the products and services they provided) to transaction-based ("consulting firms" engaged in private deal-making to avoid regulation and transparency, hostile takeovers, leveraged buy-outs, restructuring schemes, lay-offs, and ruthless pursuit of quick profits). It's a transformation that made a few people very, very rich, and put most of us very, very much at risk – our homes, jobs, savings, and pensions . If Obama is to blame for anything it's for talking about hope in 2008 at a time when millions of Americans – poor and middle class alike – were about to lost it.
In the brave new economy the only thing that defines success or failure is the bottom lines for the investors and owners (one and the same) of ephemeral companies constantly moving across an ever-changing commercial landscape and providing no measurable benefit to consumers, workers, or the society they exploit. If anything good and lasting comes out of this election let's hope it's the truth about who hijacked the US economy and how they did it. Never mind why (greed is nothing new). The key to finding a solution is understanding the problem.
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29 comments on "Who Hijacked the World’s Greatest Economy? "
October 15, 2012 5:45pm
A Black man that has a background as an educator in the nation's one institution of higher learning that proudly proclaims it's top achievement, the Milton Friedman school of Austrian Economics. In the world of academia it's very difficult to take an independent stand against your institutions biggest rock star even if your working in a completely different field. A black man that proclaimed his belief and strong support for market economics in a media interview. A Black man who kept many of the past administration's appointees and filled the remaining slots with former Wall Street sharks and Democrat Leadership Council alumni. Black has nothing to do with anything, puppets that dutifully carry out the puppeteer’s commands come in all colors. Too many voters chose to only see two things in 2008, the Liberals saw the first Black president and a majority of the remaining voters saw that he wasn't George W. Bush and a Washington Insider and they ignored everything else !
October 15, 2012 1:21pm
Magstadt's arguments would make interesting discussion except I can't get past the MOST RECENT Hijacker of the America's economy. With an economy seriously crippled (by the Mortgage Crisis caused by Chris Dodd, Barney Frank, and a Democrat Congress) and , in the words of a Obama crony, "Never not use a crisis", Obama has certainly Hijacked the Nations economy and taken it down a very destructive/bankrupting path.
The very best solution for ALL voters (no matter which Party) is to PUSH for tighter Sentencing on ALL crime. Yes, send them to jail and make the $ fines fit the crime !
Stop living in the 1800's. A world economy is here and will always be here. Corporate Criminals of all Parties should be prosecuted to the full extent of the law. AND, after some of the recent mistakes by the current administration, Obama should be rewarded with a ticket to private life (sadly, at the taxpayers expense).
October 18, 2012 5:37pm
Chris Wilborn
As terrible as Obama has been, to allow a double scumbag like Romney and Ryan into the trove is suicide..... and this is what you're proposing?
I think it's about time we realize BOTH PARTIES have been completely controlled by the financial puppetiers, and the best course of action has to be performed OUTSIDE the corrupt political Washington arena.
BOYCOTT is the best weapon we can use to force corrupt Congress, Judiciary and White House to modify their behavior.
They can't do anything unless we support it by agreeing to follow THEIR CORRUPT rules.
But for this to work, we need enough citizens to wake up, realize there are MANY MORE ALTERNATIVES THAN THE TWO PARTY SYSTEM, and act on it in conjunction.
October 15, 2012 5:54am
Adequate enforcement and regulatory laws exist. Why have none of these crooks gone to prison for a very long time? The fact that they wear a shirt and tie, and make huge sums, has nothing to do with their guilt or innocence. Fines do not equal jail time! These birds have ruined the U.S. economy for 308 million citizens! Why, for Heaven's Sake! are they still on Wall Street making enormous profits? They should be doing hard time. Let's make an example of the prime suspects! Send them up the river to Sing Sing.
October 14, 2012 8:04pm
Kathleen Murphy - Your points are well taken, (about Obama closing the investigation and letting them walk with 32 trillion - actually I want to read about the second part) but I'm sure the author was referring to Obama having nothing to do with making the mess in the first place.
October 14, 2012 5:19pm
Remember folks, when it comes to crunch time, it's 99 to 1. We've got the numbers. Plain and simple we win. They simply can not kill us all with out killing themselves. It will be just a matter of exercising our authority by what ever means will be required at that time. It may get ugly for a while. But we win in the end by the shear consolidation of numbers. United, together, we the peoples are invincible.
October 14, 2012 3:43pm
The day when the stock market was the means to amass enough capital to carry out enormous projects is long gone. Today it a casino for mega corporations and the mega-rich, who buy and sell companies on a whim, mess with countries money markets and generally ruin the economy for the rest of us for some quick profits.
Capitalism is no longer a progressive force, but like a cancer destroying itself.
Local production and economies will rise under a more human order by necessity.
October 14, 2012 1:27pm
RACIST TRIPE!
"now the old white titans of industry have the audacity – nay, the indecency – to blame a black man, Barack Obama, for everything. "
They're not blaming him because he's black, but because he's a communist.
But then, of course you Liberals are racists - you always assume that ONLY White, Western people (including, of course, the Jews in Israel,) are INTELLIGENT enough to be judged guilty of being truly evil, while all your pet "People Of Colour" (including, of course, the "swarthy palestinians,") just can't help being violent animals, the poor oppressed little dears, so you'll always indulge their crimes, much as one ignores the new puppy as it pees on the rugs.
Then you further clinch your own prejudices, by blaming only the White, Western folks for “propping up” all the non-White genocidal dictators in the world (again implying that only the White Westerners have been historically INTELLIGENT enough to manipulate the poor innocent but mentally inferior savages) and as if, without Whites, there would be no non-White dictatorial madmen in the world. It's always the White man's burden to you, isn't it?
;-)
October 16, 2012 12:53am
sault: Be afraid, be very afraid! OOOHWEEOOOH The "SAVAGES" are coming to get you!!! Seriously, get psychological help, you really need it! - Rev. Pheary Watkins
PS. Then you can go back to school and learn the difference between communism and fascism.
October 15, 2012 4:50am
Nobody said that the rich white men were blaming Obama because he was black, just that rich white men were blaming the black man for everything. They call him a communist, which he clearly is nothing like, a socialist and there again he's nothing like a socialist, a Kenyan because his parents flew thru time to set up his fictional birth event, an insider and an outsider. When you scrape away the nonsense we are left with two reasons he is being blamed for things which were set in place by people like "Dick" Cheney, George Bush and Condi Rice: he isn't Cheney, and he calls himself a Democrat. He also happens to be black and that is making things much harder to deal with.
The rest of your whine is rather pathetic. Tell ya what, make a list of all the world leaders who are black, the black British King, the black Russian dictator, the Saudi king...and the American President. Hmmmm. Seems we are an advanced nation. But in my universe a millionaire lawyer from Chicago still has to be careful about walking the streets at night in certain neighborhoods, certain cities, not because of the money and power, but because the local cops will stop and search any black man on the street, possibly arrest on trumped up charges, tased or beaten to death...because America is still a racist society. It's great that you feel you have grown beyond that, so let's find truths about Obama to object to instead of BS like "he's a secret Kenyan communist time traveler out to destroy our nation!"
We've already seen the tee shirt slogans and the bumper stickers and you must have, too: "Get that black man out of our White House!" and there are a few others, less clever. There is a vast underlayer of racism in a nation which had slavery until a relatively short while ago and if we look at some worker classes we still have a fair amount of it. Maybe you're color blind and that is GREAT! Congratulations! The problem is a large number of powerful white businessmen are not as enlightened as you are and many of them have records of opposing equal rights for minorities. Thus by their actions and speech we can identify them as racist. They also hold most of the real wealth in the country and are hanging on to every penny they can, even if it collapses our economy...because they are part of a global capitalistic band of hearty billionaires and one nation is not going to break them. They can just move their money, like Romney is doing, into offshore tax shelters and real estate deals in former Soviet Union nations.
It's obvious that by acting pretty much exactly like Cheney in foreign policy and like Bush in national security Obama is nothing like any black man every seen in Democratic circles. He's also nothing like any Democrat seen. He walks like a Republican candidate, is rich like a Republican businessman, wages war on women and children like a Republican President, and yet he is still accused of being a liberal Democrat, even a socialist or Communist...but clearly he is nothing like that. So we are left with an observation that the rich white men of industry and finance have a hatred and distrust for Obama which only makes sense at a gut level, a basic, instinctive dislike for those who look different from us, as in skin color. Lizard level thinking.
October 14, 2012 8:44pm
Sault~
"Communist"?
Please clarify that you either do not believe that or that if it were true that you would find that a good thing.
On another note, although I do understand and relate to your criticism of the idea that only Whites are intelligent enough to manipulate masses -- Do you think that there are any significant world banker rectums that are not White? Or, perhaps more importantly, that without the gang of old-money Whites on board that the non-White megabucks elite would be successfully foisting the same world-wide game upon us?
Petaluma, CA
October 14, 2012 12:53pm
GET REAL!
To think that the rest of us -- the 95% -- still have any real control, is simply maya. As "they" have now taken over of our ballots, we are now simply consumer units that are rapidly being converted into wage slaves in order to eventually devolve into the lowest international denominator.
Think not? Then just tell me one major area of our nation (other than The Internet) where we (the real people) can still claim dominion!
October 15, 2012 4:56am
"dominion"? The vast population of the internet consists of bots, apps, cookies and programs. We, the People, are used to fill in certain blanks and move money around. Our ultimate purpose, it would seem, is to consume everything and anything China can make, and if something is actually made in America (!) we need to consume that as well. Our cattle-like actions are the result of many decades of re-programming by the Masters of Industry, creating a dairy farm for capitalists with you and I doing the mooing and being milked dry. The good news is that we have not yet had to deliver our children to the Leadership for softening up in special crates before being shipped out to certain restaurants in mainland China.
October 14, 2012 12:45pm
Those people were comfortable just sucking the money out of the economy. Also guilty (IMHO) are the traders whose computers trade stock in seconds, based on algorithms designed merely to net profits. I'd have to include arbitragers who also skim profits by trading currencies around the world.
These "wall Street traders" did nothing but put us and people who depend on a stable economy at risk. Their schemes killed our futures, and for many, compromised their present standards of living.
They need to be brought to task and the system fixed so this won't happen again.
October 14, 2012 2:36pm
I believe it is wrong to blame the traders for this . The traters are the ones you should be blaming . A black opp plan to wreck the economy and constitution of the USA , is not a criminal violation that we should ignore, after all the same people keep doing this year after year , because there is no penalty. If they had been prosecuted fifty years ago when they first started these criminal acts ,we would not be in this fix today.
October 14, 2012 12:21pm
What is the "cure" for greed? Generosity!
October 14, 2012 10:54am
re-elect no one Throw them all out, especially the Congress Vote 3rd party all the way Vote Fepubli-=Crat and you vote for your own destruction
October 14, 2012 10:44am
It's the old dump and run. The 1% makes a huge stinking mess of things, leaves everyone else to clean up the sewage, and proceeds to "blame it on the black guy!"
October 14, 2012 10:11am
While you're busy examining the trees, here's a look at the forest:
http://www.counterpunch.org/2012/09/20/the-waning-of-the-modern-ages/
Or you can continue to agonize over the symptoms and ignore the disease...
October 14, 2012 3:24pm
Thank you for the link Chet. I firmly believe that our current woes are a sign that total systematic change must happen if we are to avoid becoming part of the fossil record.
October 14, 2012 10:12am
Did Barack Obama "have nothing to do" with closing the investigation on the bankers who destroyed the world's economy, letting them walk off with $32 trillion in offshore accounts?
(sources- two NationofChange articles- 11 August 2012, Richard (RJ) Eskow, "Attorney General to US: Nothing to See on Wall Street, Folks, Just Move Along' & 23 July 2012, Anthony Gucciardi, 'Banks, Global Elite Confirmed to Hold $32 Trillion in Offshore Accounts')
It's bad enough that the corporate media blocks all honest communication, but when the "progressive" media does it... I have to ask, does being "progressive" mean supporting the "left" fist of the 1%?
p.s.
Jill Stein is on the ballot in 38 states (and allowed as a write-in in 5 more states! www.jillstein.org/ballot -not bad for not getting any help from the "progressive" media!)
October 15, 2012 12:14am
If you look into: www.johnperkins.org : you will see a video: "Confessioins of an Economic Hit Man" that shows how our Corporate Entities have taken over the Economies of 47 or the World's 100 poorest countries. They then use these countries to take massive loans from the World Bank and the IMF, and hire these American Corporate entities, (Haliburten) to develope the parts of the economy that benefit themselves, not the poor. In addition this policy leaves these countries in massive debt and the Corporate Entities can then obtain very low prices for oil they harvest and high prices for weapons they market. These countries can also be enslaved to support the Corporate Entities needs and the political needs of the USA.
AT PRESENT, we have reched that POINT when the Corporate Entities are moving to take over the American Government. The Oil and Weapons Corporate Entities can then force America to attack Iran in order to DOUBLE THE PRICE OF OIL AND GAS, and to SELL ALL THE WEAPONS LEFT WITH THE WEAPONS INDUSTRY.
The massive INCREASE IN OIL PRICE (SAY 100%) will ruin the world economies because TRANSPORT COSTS WILL DESTROY ALL THE PROFITS THE PRODUCERS USED TO RECEIVE. This condition will then create a MASSIVE WORLD DEPRESSION, LEADING TO THE THIRD WORLD WAR. We have lived through two of these kind of WORLD WARS and don't want our children killed in the THIRD ONE.
VOTE FOR OBOMA to prevent this CORPORATE TAKEOVER OF AMERICA!!!
October 14, 2012 2:43pm
You are correct , he had no support from blue dogs ( republicans ) and republicans who kept his hands tied his whole term. So if you want to see the real one to blame , then look in the mirror .
Obama would need money to investigate , do you think the red tide was going to give him money to put them in jail ? I do not think so .
So go ahead folks and vote republican , become a refugee . Mexico will welcome you , bring your own tent , you will be there for a long time.
Vote democrat and support OWS if you know what is good for you .
October 14, 2012 9:48am
The article is 100% right.The corporations and their raiders are the ones who have destroyed the economy.Like the good republicans they are who never accept responsibility for their actions they are trying to blame it on everybody but themselves.Yet the brainwashed and stupid,the republican flock tell us what we need is more corporte control not less.
October 14, 2012 10:20am
It's the 1%!! The 1% controls both repubs and dems!!!
It is pure suicide, at this point in time, to cling to the illusion that the "left" fist of the 1% is our only option in protecting ourselves from the 1%'s "right" fist . (This means that Obama supporters are no different than Romney supporters because the 1% wins out either way! They are both puppets controlled by the 1%! Wake up!)
October 14, 2012 3:02pm
No.
Playing the old false equivalency argument, huh, Kathleen? Well, it simply isn't true.
While the Democrats have enabled the changes to the nation the Republicans have been at the wheel driving all the way. Democrats didn't fake the reasons for two wars.
All Obama has done is take the blame for the destructive path created by Dubya, senior Bush and Saint Ronald.
October 14, 2012 2:48pm
Now you have the problem figured out , now tell us what the remedy is . i hope you do not say vote third party and throw your vote away. OWS has been trying to teach you numbskulls and cowards the answer for more than a year , but no one hears or helps . In a case like that ,people deserve what they get , A kick in the a@@@SS.
October 14, 2012 3:35pm
You do not throw you vote away by voting FOR a candidate (non-Dem or GOP) that you feel is the most qualified. You will throw your vote away by voting for Republicans or Democrats this time around. People need to realise that the DNC and GOP are just different divisions of the same corporation and ultimately serve the same master.
October 14, 2012 8:34pm
problem is, jeltez42, not enough people recognize it. And barely ANY currently Republican voters do. So Dem voters instead voting third party would mean Repub win and that means the rape we are in for no matter by Repubs or Dems would be done without any anesthetic.
The only way that the ballot box has any chance of being used to change the "same master" equation is if the disenfranchised were to all vote for a third candidate, for that group now constitutes a super majority of the potential electorate. That candidate would then win even if all registered Dems and Repubs each voted party line. But getting the disenfranchised to vote, let alone together, is a monumental challenge.
Therefore, Dems must continue to vote Dem to try to get anesthetic with the screwings until the disenfranchised might rise to the occasion. Then, in the next election progressive Dem voters can join them, resulting in a ballot count that confirms that there is a REAL "mandate" for systemic change, and that anyone who protects the old status -quo will be run out of office on a rail and that the special access, sweetheart deals, ludicrously-profitable legislative loopholes and subsidies of power-brokers is not only over but that financial skulduggery is cause for asset seizure and prison terms.
Good luck on that, of course. How are we going to get the disenfranchised to enfranchise?