Concentration of Power is The Real Crime

Originally published by The Huffington Post
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We are missing the lesson of the current British outrage over Murdoch just as we missed the lesson of the financial crisis in America.

Was the real crime in England that employees of the News of the World illegally hacked the cell phone of a missing girl? Was the real financial crime in America illegal acts such as Ponzi schemes or insider trading? The answer is no in both cases.

The real crime in England was legal, not illegal; it was that one man had the power to influence large parts of the British parliament and was credited with a major influence in electing whichever government he favored. No one in government dared to cross him until an emotion-provoking illegal act unleashed a public outcry. That outcry has, at least temporarily, liberated the members of Parliament from their fear of being smeared by Murdoch's newspapers if they dared to be hostile to his interests or beliefs.

Was the real crime in America illegal acts? No. Despite the press devoted to Madoff, the real crime, here as in England, was legal. Selling subprime mortgages to people who could never pay them back was legal. Rating agencies certifying to the high quality of the resulting worthless securities was legal. The whole web of interacting CDO's was legal. It was the legal, though strongly unethical, actions of a powerful Wall Street dedicated to self-enrichment at any price that brought down the U.S. economy. And, though we are still far from recovering from that disaster, the power of money has prevented any fundamental reform of the financial sector.

In both countries, the real crime is the concentration of power that allows these things to happen.

How Power is Used

Power can be exerted through both the stick and the carrot. In England, members of Parliament feared being smeared in the powerful Murdoch newspapers, and they also knew that if they accommodated his views or interests, they could profit from his support.

In the United States, members of Congress understand that Wall Street money and corporate money can either be used to defeat them or to support their campaigns. They also know that if they are sufficiently influential in the right direction, lobbying jobs that are far more financially rewarding than their present occupation await them when they retire from Congress

Money can extend its power to other parts of government, too. In England, part of the police force became a Murdoch ally in ferreting out more news about important stories. In America, regulatory bodies, established to protect the public interest, become blind to risky behavior and kind to the industry. And these examples are some entries in a long list of possibilities.

The Tyranny of Government

It has been common throughout history for the concentration of power to be in governments, often but not always monarchies or dictatorships, and for the leaders of such governments to act to enrich themselves and their friends. In the years preceding the American Revolution, the British government's restrictions on colonial manufacturing, the Navigation Acts, the tax on stamps, and the tax on tea, brought revenue to the British Crown and profits to British merchants and manufacturers at the expense of the colonies, but also produced a revolution. This tyranny by governments is the type of oppression which the Tea Party is constantly reminding us of, but today's tyranny is of a different type.

The Tyranny of Wealth

The problem today is not the tyranny of government, but rather the concentration of money, and hence power, in Wall Street and in the largest corporations. And it is clear that enough money can buy political power.

Both Wall Street and the major corporations have added to their strong direct effect on the economy a decisive effect on the actions of governmental bodies. It is their influence on the federal government that caused the regulatory bodies to stand back from regulation and encouraged the excesses of the financial sector in the years leading up to the crash. It was the federal government, led by Wall Street alumni, that rescued the financial institutions so that they are now posting record profits despite having impoverished the nation. It was the overwhelming lobbying power of the financial sector that prevented the passage of meaningful financial reform. The banks that were too big to fail are, with the concurrence of both political parties, now bigger than ever. And the actions of the U.S. Supreme Court, permitting the unrestricted use of corporate and Wall Street money for campaigns, are adding to this effect.

The declared goal of most major U.S. corporations today is to make their stock as valuable as possible. As more than two-thirds of all stock is held by the wealthiest five percent in the country, this corporate goal amounts in practice to simply making the wealthy wealthier and increasing the extreme concentration of wealth and power that already exists in America today. And if making the stock as valuable as possible means sending jobs and technology abroad, while holding down wages at home, so be it.

Yet it is to this same corporate leadership that the government turns for policy advice on how to create jobs and revive the economy.

Today

Today we have a concentration of wealth unmatched since the days immediately preceding the Great Depression in 1929. This wealth and power, concentrated in Wall Street and in the major corporations, is being used for the enrichment of the already wealthy. Unfortunately, that enrichment is one that does not raise all boats. As statistics clearly show, the big boats are rising rapidly and the small boats are not doing well.

After the Great Depression, the U.S. government acted to lessen the power of concentrated wealth. It separated commercial from investment banking, insured bank deposits, enacted social security, and facilitated unions as a counter-force to corporations. It even became to some extent the employer of last resort.

But the power of wealth today over both political parties is now such that new government actions are mainly words that cover real inaction, and even that limited action is often described as the actions of a too large and too powerful government.

Today, the threat of tyranny comes not from the government, but from the concentration of wealth and power outside government, and from the influence on government of that great concentration of wealth and power.

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Comments

Media concentration, power concentration

This site is trying to put focus on facts, policy, statistics that actually matter while the MSM takes some issue, that often is a non-issue, often wrongly characterizes it, or it's literally a distraction and rarely talks about policy, cause-effect, that can be verified.

Take trade as one example, it's rare that makes it onto the MSM at all, or if at all, is given either misinformation and not enough coverage.

NAFTA still makes it as an election issue, yet in terms of enacting any policy at all, from an infrastructure projects bill to a manufacturing policy to tying tax incentives to actual hires of Americans....nothing at all happens.

We, all of us concerned about the national interest, are drowned out with the rancor and rhetoric.

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Share this post everybody!

Welcome to The Economic Populist Dr. Gomory. Thank you for testifying before Congress on trade policy and labor issues. We need more people like you. If only Gomory was on Obama's jobs panel instead of G.E.

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Great post

The concentation of power is the main point of the Murdoch episode. He moves in, tells whomever he wants in power that he will support them and, in return, he gets a blank check, the keys to the country. Challenging Murdoch is considered lèse majesté.

Well, guess what, Murdoch has been challenged by the most awesome enemy imaginable, a truly outraged and focused public. There message is like the message of Tahrir Square, Murdoch must leave the country. But that's not the only departure they want. The popinjay PM Cameron is falling like a rock in public approval, from 55% to 39% in just a few days and the hole is only getting deeper.

Those in power need to read this essay and repent;) But they won't. The departure will be smooth or rocky, but the "wealth concentrators" must be stopped.

After Murdoch, the UK is ripe for a truth and reconciliation commission. Like here, absent some truth from the perpetrators on the Iraq invasion, there should be trials. Invading a mail box for cheap headlines is not acceptable. Invading a country for whatever deluded reasons is a crime against humanity.

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Evidence of the Crime

Look who picks up the entertainment expenses for No. 10. What does this evidence indicate? What are they putting in the food and drink;)

Almost a quarter of entertainment enjoyed by Downing Street advisers was hosted by News International

The full extent of the close relationship between David Cameron's inner circle of Downing Street advisers and News International has been revealed.

An investigation has shown that almost a quarter of all lunches, dinners and other hospitality enjoyed by special advisers came from Rupert Murdoch's company.

In the first seven months of the current Government, News International treated Downing Street advisers to hospitality on 26 occasions out of 111 events listed on an official hospitality register.

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How to tell Friedman from Obama

Milton Friedman and Barack Obama are both Nobel lauteates, winning large money prizes along with their awards.

Q. What is the difference between Milton Friedman and Barack Obama?

A. Friedman kept his Nobel money for himself.

In this video, Milton Friedman presents a straw-man argument for the virtues of greed.

Smugly ensconced in his Nobel laureatehood, Friedman grants humanity this choice: unregulated global finance capitalism versus Stalinism-Naziism. Thank you, Mr. Great Nobelist, but NO THANKS. No intelligent person could ever take this straw-man argument seriously, no matter how smug and self-satisfied Friedman is with his pedantic sophistry.

It's a false argument: Friedman notes that greed has been involved in every society. Well, yes, and violence has been involved in every society, but even the most wild-eyed anti-government libertarian would never proclaim that violence should not be subject to regulation!  Friedman is guilty of gross fallacies of logic, including non sequitur and strawman argument.

Concentrations of power and wealth certainly occur in every society and it would be silly to suggest that power and wealth must be shared equally among all citizens. But does it follow that concentrations of wealth and power should not be subject to regulatory downsizing? That's the conclusion that would logically be drawn from Friedman's stated philosophy!

Pompous ass

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