Wealth and Ethics in American Fiscal Policy

In a struggle between wealth and ethics, practically speaking the former tends overwhelmingly to win hands down, even if the form of government is at least nominally a representative democracy, but in fact an oligarchy or plutocracy. The influence of the moneyed interest both in the E.U. and U.S. is likely much stronger than most of the respective citizenries know. When the poorest of the poor are to be made worse off financially by cuts in certain government programs while defense contractor companies stand to get more, which tends to mean higher bonuses for executives (and campaign contributions for elected representatives), the skew toward the gilded and away from the most vulnerable economically can be viewed as an x-ray of sorts indicative of rule by wealth rather than by the People. U.S. President Trump’s fiscal budget enacted in 2025 is a case in point by which the questionable morality of the plutocracy or oligopoly form of government can be gleaned.

Plato laid out the following as alternative forms of government, from the best to the worst:

1.       The Ideal State (kallipolis): everyone is doing their respective jobs well; philosophers with knowledge of the good are in charge of making decisions pertaining to public policy.

2.       Timocracy: (e.g., Sparta): people who love honor, social status, and competition are in control. In other words, a military. 

3.       Oligarchy: producers (or suppliers) of goods and services (i.e., business executives and or companies) are in control. That is business runs the government.

4.       Democracy: the “mob” is in control. Direct democracy. Such “mob rule” is volatile, with enacted policies swinging back and forth. This does not include representative democracy, which is better, but not as good as having a philosopher king rule because reason should control the passions in a mind and a city.

5.       Tyranny: a tyrant is in control. This is the worst form of government, for obvious reasons, as an autocrat faces no worldly constraint in unleashing suffering and death on a population. In 2023 through at least 2025, the Israeli government was a tyranny in Gaza.

The three highest Hindu castes fit the three highest Platonic forms of government, with Brahmins, who are ideally priests (or philosophers), soldiers/generals, and merchants in descending order in Hindu society. The “mob” in Plato’s scheme corresponds to the laborers in the caste system. That business managers (including CEOs) running (and thus controlling) government are higher than direct democracy may sound strange to modern ears in the West, even in the E.U., in which Greece is a state unless the difference between well-paid modern elected representatives and a mob of mostly uneducated (i.e., unprofessional) laborers in ancient Athens is grasped. Even in modern representative democracies, complete with terms of office to buffer the momentary passions of the people—passions that can contradict a people’s long-term best interests (i.e., the public good)—corporate interests likely view themselves as superior and thus legitimately at the helm in what is known as a plutocracy, or rule by wealth. The moneyed interests could cite Plato’s hierarchy of government-types without bothering to point out that Plato had mob-rule rather than the U.S. Senate in mind as democracy. We need not pit the reasoning, albeit skewed by self-interest, of CEOs on public policy against what a disorganized mob might come up with as the public good (over partial interests), but we might want to consider whether corporations and individual CEOs should have so much monetary sway with elected representatives and their appointees that a representative democracy is de facto a plutocracy serving the relatively narrow interests of capital. The pecuniary interests of American defense-contractor companies in manufacturing and selling weapons, planes, and tanks to the U.S. Government for use in Israel as it pummeled 2 million residents of Gaza in 2024 and 2025 were not necessarily in the best interests of the United States, which might have been more accurately represented and instituted by the American electorates than business political-action-committees helping representatives get re-elected. Not that any member of Congress cares about that, of course.

Or take the “Big Beautiful Bill” passed by the Republican lawmakers in both chambers of Congress and signed by President Trump in 2025. The projected economic impacts on the different economic tiers of Americans supports Adam Smith’s fear that company managements and government officials would work together at the expense of workers and even competitive markets themselves. On August 11, 2025, the Congressional Budget Office made public its estimates “that the 10% poorest Americans will lose roughly $1,200 a year as they experience restrictions on government programs like Medicaid and food assistance, while the richest 10% of Americans will see their income increase by $13, 600 from tax cuts. Overall , American households will see more income from the tax cuts in the legislation, including middle income households, but the largest benefit will go to the top 10% of earners.”[1] Such a distributional impact could be expected in a plutocracy, even in the form of a hijacked representative democracy. Very poor disabled Americans living on Social Security (SSI) of less than $1,000 a month already faced reductions if they negotiate a good deal on rent, or a friend or relative helps out with utilities or rent. That the U.S. Defense Department budget was increased, with corporate defense contractors set to reap additional profits as a result, illustrates the questionable ethics in taking from the poorest of the poor, who cannot work, and giving more to wealthy corporations (with higher bonuses, everything else equal, going to executives). Additionally, just for added fun, roughly “2.4 million people won’t be eligible for the Supplemental Nutrition Assistance Program [i.e., food stamps] under new work requirements” for poor Americans who have not been declared disabled by the Social Security Administration.[2] Food has thusly been declared not to be an unconditional human right. As the work requirement applied to Medicaid, the government program that funds healthcare for the very poor, access to medical services—and thus good health—was also declared to not qualify as an unconditional human right.

In short, the American social contract between the federal government and its people was changed in ways that stood to make many of the poorest Americans poorer while defense contractors could make even more money from that government. The new social contract reflected a plutocracy or oligarchy in the guise of a representative democracy. Although arguably superior to mob rule, such a trajectory for representative democracy may trouble a good many people, financially or otherwise perhaps in conscience. A person need only read John Rawl’s Theory of Justice to realize that a plutocracy gearing public policy to the narrow interests of a part rather than the whole of a society is diametrically opposed, or antipodal, to a system of government and economy in which the poorest of the poor are looked to first such that they can survive and lead decent, albeit not wealthy, lives before other, increasingly better off tiers are taken into account. In a school yard, only a bully goes after the kids with the least to eat for lunch so to enrich himself and his buddies.

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1. Stephen Groves, “Trump’s Tax Law Will Mostly Benefit the Rich, While Leaving Poorer Americans with Less, CBO Says,” The Associated Press, August 11, 2025.
2. Ibid.

Tariffs as a Negotiating Tactic: Undercut by Wall Street Expediency

With all the economic and political turmoil from the anticipated American tariffs, it may be tempting, especially for financially-oriented CEOs and billionaires looking at quarterly reports, to call the whole thing off even though doing so would deflate the American attempt to renegotiate trade bilaterally with other countries. The concerns of the wealthy, whether corporations or individuals, have their place, but arguably should not be allowed to "lead the proverbial dog from behind, lest the dog run in circles and get nowhere." Moreover, the notion that any goal that is difficult and takes some time to materialize can or even should be vetoed by momentary passions at the outset is problematic and short-sighted. That U.S. President Trump's announcement of bilateral tariffs quickly brought fifty countries to the negotiating table is significant as a good sign for the United States, as long as that country's powerful business plutocracy (i.e., private concentrations of wealth that seek to govern) can be kept from vetoing the emergent trade policy, which at least in part is oriented to trade negotiation and ultimately to the notion that fair trade is conducive to increased free trade. 

The full essay is at "Tariffs as a Negotiating Tactic."

The Tech Industrial Complex

Democracy, Plato and Aristotle both theorized, is a governmental system that is most susceptible to the mob—meaning mob-rule. Accordingly, the Electoral College and the appointments of U.S. Senators by state governments, the latter being the case from the establishment of the U.S. Constitution to a few decades into the twentieth century, were meant to limit any damage from momentary passions of the People to the U.S. House of Representatives. The governments in the United States, like those in the European Union, are republics in which democracy is a part rather than the whole. What neither Plato nor Aristotle could foresee in their agrarian city-states is the threat to democracy by plutocracy—the system of government in which private wealth rules. It is less understandable why the American electorates have ignored repeated warnings of the threat, especially as governmental power has concentrated at the federal level since the war between the CSA and the USA in 1861.

Much like U.S. President Dwight Eisenhower had done “in 1961 when he expressed concerns about the ‘military industrial complex’ in his farewell address,” President Biden said in his address, “’an oligarchy is taking shape in America’ as power and money become more concentrated in the hands of the few.”[1] Biden “criticized the ‘tech industrial complex’ and social media, where ‘the truth is smothered by lies for power and for profit.’”[2] It seemed likely in 2025 that Biden’s warning would not eventuate in any policies oriented to breaking up the concentrations of private wealth, which I submit are inherently incompatible with a democracy. Simply put, seeing billionaires visibly chatting with government officials during President Trump’s second swearing-in presents a picture that may suggest that the influence of private wealth on public policy (and thus government officials) had gained such a foothold that the confluence could be shown brazenly without fear that the American people might vote for candidates campaigning on enforcing anti-trust law and raising the effective tax-rates on billionaires to the point that, with anti-trust, being so rich from an oligarchic business would not be possible going forward.

Tech titans amid the incoming administration: Just the visible tip of an iceberg. (Getty)

Besides Elon Musk, perhaps the richest billionaire in the world at the time, Mark Zuckerberg of Meta (Facebook) as well as the titans of Amazon, Google, Apple, and Microsoft could be seen on television in front of, and amicably chatting with the incoming administration's Cabinet secretaries. Musk was chatting with Trump's proposed secretary of defense in spite of the conflict of interest in Musk owning SpaceX. Zuckerberg could feel comfortable being seen chatting with secretaries and President Trump’s adult sons in spite of his power to minimize political dissent on social media. With 90 days to decide whether to close down or sell Tik Tok, President Trump expressed interest in a news conference in the evening of his second inaugural in letting rich Americans buy into a 50/50 joint venture that would allow China to continue Tik-Tok operations in the United States. Were Zuckerberg or Musk to invest enough that they could exercise control on the company through the American half, the investments could put the two social-media titans closer to achieving monopoly control over social media in the United States. 

The real power evinced in the inaugural ceremony was in the seating area where the Cabinet nominees, the tech titans, and Trump's business-oriented relatives were sitting. At one point prior to the arrival of Trump himself, all of the living former U.S. Presidents, Democrats and Republicans, were looking across the aisle at the cadre of Trump’s nominated cabinet secretaries, the billionaire tech titans, and Trump’s business-family. Those former presidents undoubtedly knew where the real power was, and perhaps they were surprised to see the public-private collusion so brazenly visible. After the ceremony, hidden from the public’s view at the lunch in the Capitol, members of Congress, “Cabinet nominees and business titans within Trump’s inner circle” mingled.[3] The luncheon was an “opportunity that VIPs use to mix and mingle with members of the administration and advance their policy priorities. Apple CEO Tim Cook [was] seated between Donald Trump Jr and [U.S. Senate] Minority Leader Chuck Schumer.”[4] I submit that most such mingling takes place behind closed doors, even and especially in regard to the writing of laws. It is not uncommon for Congressional committee to use language written by the companies to be regulated.  

Lest President Eisenhower’s warning of the dangers to democracy from the military-industrial complex be replaced by Biden’s warning of a tech industrial complex as if the former had gone away on its own,  President Trump promised in his second inaugural address, “Like in 2017, we will again build the strongest military the world has ever seen.” Lest it be forgotten, President Biden has approved weapon-sales to Israel even as it ravaged the residents of Gaza on a scale that openly deified international human-rights law. Rather than assuming that Eisenhower’s problem was only existed in the second half of the twentieth-century, the American people in the twenty-first century would not be wrong in perceiving the tech industrial complex as being on top of the continuing military industrial complex. How many such complexes must there be before a existential threat to democracy itself be recognized and combatted? The sheer power of huge sums of private money, such as the influx of Elon Musk’s millions in Trump’s 2024 presidential campaign, and the magnitude of the discretion that Zuckerberg showed he had in unilaterally firing fact-checkers on his social-media company, can indeed be peeled back to reveal just how much the American voters could be manipulated on whom to vote for and even what issues to focus on. Rarely, if at all, did a candidate for federal office propose applying anti-trust law to the social-media’s big companies in the U.S.—an oligopoly. Nor was there any traction from the few voices in Congress suggesting that maybe the U.S. Government should stand up to military contractors by refusing to buy weapons for Israel and give that country’s government money to buy even more American weapons. The shop was open for business; human rights be damned.

The point is seldom made in American public discourse that had the U.S. Government enforced anti-trust law, including stopping tech giants like Facebook and Twitter from peremptorily buying up potential new-entrants in the first two decades of the twenty-first century, a billionaire class would not have been so large, and thus such an implicit threat to democracy. Just in how social-media company financial (and political) interests can be tacitly presented to manipulate internet users in feeds without the voters realizing it, the reason why Biden’s warning was not likely to be heeded at the ballot box can be understood. I submit that the televised images of tech “competitors” sitting together at Trump’s second inaugural points to an inter-related oligopoly instead of a competitive market (wherein new entrants are not bought up). But this is not all that we can take away from having watched the ceremony; we could also see the billionaires amicably chatting with likely high officials in Trump’s second administration, with Musk’s SpaceX having a financial interest in being NASA’s exclusive space-sub-contractor, and with Musk’s “X” and Zuckerberg’s social-media giant having a financial interest in what the Trump administration does about Tik-Toc. 

Extreme personal and corporate wealth literally in front of government officials at the inauguration in democracy's own Capitol Rotunda. 

My point is that, had the inherent threat that having billionaires poses to a viable republic been grasped by the American public, then governmental power would have been used such that the Musk, Zuckerberg, Bezos, and other tech managerial-visionaries would not have been able to become billionaires in the first place. As of 2025, and perhaps even back in 1961 concerning the military contractors, the proverbial horses were almost certainly already out of the barn. Thus, the electoral grass-roots energy going forward from 2025 needed to upset the proverbial apple-cart being steered by individual teckie billionaires to advance the financial interests of their respective companies in the halls of American government would be, realistically speaking, virtually unattainable. One of the most remarkable visuals from President Trump’s second swearing-in ceremony was that of the former presidents all looking over at the billionaires' very visible nicities with the incoming Trump officials and Trump's financially-inclined scions. The former presidents looked like bystanders rather than as pillars of power in themselves even though power had presumably been given to them by the People. I’m just glad that it does not fall to me to get the horses back in the barn. Ultimately, the American People since World War II are to blame for not having minded the proverbial shop as a going concern, for they should have known from the Titanic that most of an iceberg is hidden from view under water. Yes, I think people should know that, even with respect to icebergs in the ocean of political economy. Perhaps, though, I think too highly of popular sovereignty, which, unfortunately, is admittedly quite vulnerable to being manipulated. Both the manipulation itself and the sources are very difficult for the public to detect. Whether through social and/or mass media, even just a few very rich people or a large company, or a network of large corporations with  oligopolistic shared financial interests can frame what is debated, and keep out what is not. It is precisely because detection is so rare that the visuals coming out of Trump's second inaugural are so important, for they give us a rare glimpse of the nature and dynamics of real power in America.

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1. Chris Megerian and Colleen Long, “Five Things To Know about Biden’s Farewell Address that Also Served as a Warning to the Country,” APnews.com, January 15, 2025.
2. Ibid.
3. Michelle Shen, “Trump Attends Congressional Luncheon Where Key Politicians and Business Leaders Mingle,” CNN.com, January 20, 2025.
4. Ibid

Nature Credits in the E.U.

One of benefits of the market mechanism, by which, for example, economic goods are bought and sold, is that self-interest is relied on; people don’t have to be told to buy or sell a product because it can be in their self-interest to do so if the price is right. As an alternative to regulatory standards, a government can create units of pollution-allowance that businesses can purchase so to be lawfully able to pollute in so far as a purchased unit allows. In the E.U.’s emissions trading system, “operators of power plants and factories have to buy tradeable allowances to cover every tonne of carbon dioxide they emit.”[1] Business could buy and sell allowances so as to cover the amount of pollution that is anticipated. In this way, the market mechanism efficiently allocates pollution in line both with the interests of the companies and the public interest—the latter being made concrete in the decision on how much pollution per allowance and how many allowance units to create. Crucially, the company private interests are put within the purview of the public interest; the tail is not directing the dog. In political economies in which political-campaign contributions by businesses are high, especially if unlimited, the tail can indeed wag the dog, such that the public interest is determined by private interests. This is one reason why the Citizens United (2010) U.S. Supreme Court case is so significant. It allows corporations and labor unions to spend unlimited amounts of money on political campaigns and directly on advertisements—both being beneficial to elected officials in positions to curry favor through legislation and regulations favorable to business (or labor). The informal exchanges of political donations and legislation or regulation comprise a market of sorts. So, the market mechanism, which is created or at least regulated by government, can serve for good or ill, from the standpoint of the public interest.  Using the mechanism, such as the E.U. president proposed in 2024, on behalf of ecosystems, is for good rather than ill, and thus using, in effect, the self-interest of farmers could be better than relying on regulatory requirements that farmers expend some money and effort to beef up their local ecosystems.

At a conference on September 13, 2024, a Friday, E.U. President Ursula von der Leyen said, “We need new financial tools to compensate farmers for the extra costs of sustainability and compensate them for taking care of the soil, the land, the water, and the air.”[2] The assumption is that the farmers would not otherwise do so because expending the energy and paying the costs for the externalities would not add to their profits from farming in the short or medium term. The time-value of money too reflects the penchant in human nature for immediate over delayed gratification. To extend the farmers’ “event-horizon” and broaden out their concern to include their vicinity would be the purposes of “the market-based system of ‘nature credits’,” which Von der Leyen hinted “could also be applied beyond the agricultural sector.”[3] This is part of the beauty of the market mechanism: it can be applying to various things, serving various purposes, rather than only pertaining to economic products and services.

Via “nature credits,” a water company could have the incentive as per self-interest to help to take care of a spring that that company depends on, and a fruit company would be more likely to invest in the “essential work of pollinators.”[4] That the language of long-term investment applies raises the question of why farmers in general do not do what manufacturing businesses do as a regular part of business. It would seem that making sure that a principal water source is not lost or that bees stay in the area of the fruit trees would be in the self-interest of the respective companies. Why would compensation by the government be needed to run a sustainable business?  Is the managerial perspective really so delimited that the viability of the business is not included?

Unfortunately, even by 2024, climate change was perceived by many business practitioners still as a gradual and outside process not germane to business. Johan Rockstrom of the Potsdam Institute for Climate Impact Research, said at the same conference, “I can tell you, science is clear today that the ultimate determinant, what regulates the stability of the planet, its ability to stay in a desired equilibrium state is nature.”[5] According to a journalist, Rockstrom was “suggesting that action of biodiversity and climate made sense even if purely pragmatic.”[6] If farmers didn’t yet see it as such, “nature credits” would help render biodiversity pragmatic from an agribusiness standpoint—essentially interiorizing some externalities.

To be sure, even if a private interest broadens out to include some hitherto externalities, that interest is still not the same as the interest of the whole: the public interest. It would still be important to protect the public interest from being captured by a private interest; a large company or an industry that would implicitly presume to be in charge of its own regulation by dictating legislation and regulation to sycophantic government officials should be withstood by them. Even so, expanding the practical purview of private interests is in the interest of the whole, and the market mechanism can be used to make this so.

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1. Robert Hodgson, “Von der Leyen Moots ‘Nature Credits’ Market to Avert Ecosystem Collapse,” Euronews.com, September 13, 2024.
2. Ibid.
3. Ibid.
4. Ibid.
5. Ibid.
6. Ibid.

On the Role of Agribusiness in Global Warming

Agriculture is a major source of carbon and methane emissions, which in turn are responsible for the general trend of the warming of the planet’s atmosphere and oceans. In fact, agriculture emits more than all of the cars on the roads. 10 percent of the emissions carbon dioxide and methane in the U.S. come from the agricultural sector. Livestock is the biggest source of methane. Cows, for example, emit methane. Methane from a number or sources, including the thawing permafrost, accounted for 30 percent of global warming in 2023. As global population has grown exponentially since the early 1900s, herds of livestock at farms have expanded, at least in the U.S., due to the increasing demand.[1] We are biological animals, and we too must eat. More people means that more food is needed, and the agricultural lobby in the U.S. is not about to let the governments require every resident to become a vegetarian. Indeed, the economic and political power of the large agribusinesses in the U.S. have effectively staved off federal and state regulations regarding emissions. It comes down to population, capitalism, and plutocracy warping democracy.

The full essay is at "On the Role of Agribusiness in Global Warming."

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1. Georgina Gustin, “Climate Change and Agriculture,” Yale University, February 22, 2024.

U.S. Anti-Trust Law: Applicable to Amazon?

In September, 2023, the Federal Trade Commission and seventeen states sued Amazon on ant-trust grounds for restraining trade and excessively raising prices on third-party sellers and consumers. Three months later, a leaked internal memo revealed Amazon’s anti-labor strategies of buying off local politicians and gaining reputational capital through well-publicized charitable work. Such work, as an anti-union strategy, demonstrates that the very expression, corporate social responsibility, is an oxymoron, or at the very least a misnomer (i.e., misnamed); a more accurate, and thus revealing, label would be corporate marketing. One effect of the “responsibility” connotation is that companies such as Amazon with mammoth market power could effectively hide strategic efforts in restraint of trade, and thus curtailing competition. Combined with feckless anti-trust prosecution, the result is an American economy that has not lived up to Adam Smith’s theory wherein competition via the price mechanism is necessary for individual self-interests to have beneficial unintended consequences systemically and thus in terms of the public good.

The civil case accused Amazon “of engaging in anti-competitive practices through measures that deter sellers from offering lower prices for products on non-Amazon sites.”[1] Amazon was being accused of deprioritizing listings of products sold at lower prices on non-Amazon sites, forcing merchants to raise their prices on Amazon’s platform and other sites “in order to keep their products competitive on Amazon.”[2] The customers suffer as relevant results of searches are replaced by paid advertisements that favor Amazon’s own brands. Also, the company was charging third-party sellers nearly half of their total revenue as fees for using Amazon’s platform, the result being higher prices for the consumers. The company was also compelling the sellers to use the company’s logistics service in order to qualify for Amazon Prime. With nearly 40 percent of the e-commerce market, Amazon was allegedly flexing its muscle at the expense of competition.

Yet the chairperson of the Federal Trade Commission, Lina Khan, was not asking the court to break up the mammoth company, preferring instead to limit herself to “liability.”[3] I contend that such an avenue falls short as a vehicle for instituting a competitive market. Firstly, a company with market power of nearly half of the e-commerce market can be expected to use its muscle in restraint of trade even while paying out liability claims because the oligopolistic excess-profits (akin to “monopoly rents”) more than compensate for the (tax deductible) expenses. Secondly, I submit that it is utterly unrealistic to suppose that a company with such overwhelming market power will not use it merely because of external disincentives such as civil fines. The use of “sticks” and even “carrots” to get such a company to not act as a profit-maximizer comes up short because such “motivating” tools are tertiary; they do not shake the fundamentals, whereby a non-competitive market is restructured to be competitive and thus composed of price-takers rather than a price-setter.

It is worth expanding on the tactics that an oligopolistic company can use to protect itself from extraneous attempts to fundamentally change the market. We get a glimpse of Amazon’s “play book” from an eight-page memo that reveals how one of America’s largest companies “executes on its public relations objectives and attempts to curtail reputational harm stemming from criticisms of its business. It also illustrates how Amazon [sought] to methodically court local politicians and community groups in order to push its interest in a region where [the company] could be hampered by local moratoriums on warehouse development, and [where the company was] facing resistance from environmental and labor activists.”[4] Knowing the company’s tactics in Southern California can give us an insight into how the company’s management blunts federal legislative action that could break up Amazon itself in order to create a competitive playing field in e-commerce.

In a nutshell, Amazon’s strategy was to create the illusion of on-going charity work and to pay off elected government officials to, among other goals, resist unionization of the company’s workforce and restrictions on where the company can build. Specifically, the management “’cultivated’ Michael Vargas, the mayor of the town of Perris, through pandemic-related donations” ostensibly to “support the region,” but actually to buy off his support for new warehouse construction.[5] This is proof that companies use money even aside from political campaign “donations” to get elected representatives to affect public policy favorably to the companies themselves. If this is so locally, we can be assured that companies as large as Amazon wouldn’t withhold the tactic from being used to buy federal lawmakers, whose power could include breaking up the company.

In regard to Amazon’s corporate “social responsibility” programs, the leaked document includes plans to have employees drop off food to the Los Angeles Food Bank “in big media moments that are broadcasted/posted.” The illusion of ongoing charitable work would of course work to the company’s advantage in public relations. As the “memo suggested curating similar moments during a back-to-school donation event and a [Christmas] toy drive, where drop offs occur and Amazon executives, as well as groups who receive grants from the company, ‘speak about Amazon’s impact” to the media present, even as the company planned on cutting off groups that “did not result in measurable positive impact,” charity was clearly viewed by Amazon’s managers as a promotional tactic.[6] The false societal image of a benevolent oligopolistic company could be expected to shield governmental efforts to break up the company and perpetuate the erroneous assumption that civil liabilities (i.e., verdicts against the company) are enough to safeguard consumers because the company’s management is benevolent.

In conclusion, the Federal Trade Commission shirked its governmental mandate to enforce the Sherman Antitrust law from the onset of the litigation, thus hampering the ability of the judiciary to order an effective remedy. In a large industry in which one company has 40 percent market share, and that company actively buys government officials and strategically uses public relations, the danger is not just to competitive markets, but also to American representative democracy and the rule of law itself. It is, I submit, no accident that the chairwoman of the FTC did not include breaking up Amazon as a remedy. We need only look at the company's strategially placed political contributions to surmise which elected officials might have put political pressure on the FTC. The company’s memo reveals that Amazon uses its extraordinary wealth to bend public policy away from the public good, like a black hole in space bends even space itself, to protect the company's viability by donating directly or indirectly to elected officials. I submit that plutocracy, rather than mob rule, is the greatest threat to American democracy.  At the very least, private wealth knows how to protect itself politically, and even how to cover its tracks under the patina of corporate social responsibility.

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1. Haleluya Hadero, “Amazon Sued by FTC and 17 States over Allegations It Inflates Online Prices and Overcharges Sellers,” APNews.com, September 26, 2023 (accessed December 7, 2023).
2. Ibid.
3. Ibid.
4. Haleluya Hadero, “Amazon’s Internal Plans to Advance Its Interests in California Are Laid Bare in Leaked Memo,” APNews.com, December 7, 2023.
5. Ibid.
6. Ibid, for the quoted material, which is both from the article and the memo itself.

On the American Military-Industrial Complex

A democratic republic affords many avenues for organized private interests to influence public policy. The fact that such interests are organized is enough to outweigh the influenced of an organized constituency. Add in the money available to organized interests and the imbalance is exaggerated. The military industrial complex—the “informal” alliance between a military and private defense-contractors is a case in point in the United States.

At the end of his second term in 1961, President Eisenhower warned the American people of the abuses of power that can come from the military’s alliance with its defense-contractors. The influence of the alliance, in other words, could come to trump the influence of the electorate and what is in the best interests of the United States in the world. After World War II, a permanent armaments industry emerged; the president was concerned that its influence would grow too much. He said, “We must guard against the acquisition of unwarranted influence. . . . The potential for the disastrous rise of misplaced power exists and will persist.”[1] Once such power exists, it can protect itself even from threats from the electorate. Such protection can be explicit, as in efforts to keep the U.S. in a war, such as those in Afghanistan and Iraq, which were quite long ones.

Roughly sixty years after Eisenhower’s farewell speech, President Trump publicly claimed that the U.S. military seeks to do the bidding of the defense contractors.[2] Such an open admission was itself startling, for the president was telling the electorate that private companies effectively control defense policy. The interests of such companies are private, and thus partial, rather than being identical to the public good, which a republic’s government is supposed to enact and protect. Where a few strong interests, whether that of the financial sector or defense contractors, can control elected representatives, a democracy can actually be a mere gloss for the books. A republic is thus vulnerable.

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1. “President Eisenhower Warns of Military-Industrial Complex,” History.com, November 16, 2009.
2. Maeve Reston, “Trump Presses On after Rough Week with His Presidential Image in Shambles,” CNN.com, September 12, 2020.

Do Police Departments Unwittingly Attract an Aggressive Mentality?

Might the personality type most excited by inflicting pain on others be drawn to “serve” on a police force?  Might force itself be an allurement to such a personality? Moreover, might organizations populated by the personality be inclined to set up defenses against being held accountable either internally or by other organizations? At the very least, deference ought to go to the victims rather than the “officers.”

The New York City police department and the district attorney’s office set investigations in motion after video surfaced of Anthony Bologna of the police department using pepper spray against protesters of Wall Street greed and the lack of accountability there. Even as the department’s own investigation was yet to commence, the chief publically questioned whether the video offered enough context to evaluate the inspector’s actions. To the chief, merely protesting in a way that blocked traffic justifies the use of pepper spray without warning. The inspector’s union boss claimed the motive had been to restore order—though the video shows that the victims were not disorderly or resisting arrest. Indeed, the police did not attempt to arrest those sprayed. It is not difficult to see where the police investigation of its own will go.

Beyond the hypocrisy involved in those sworn to protect actually attacking and the anti-Americanism involved in trying to curtail a protest, it might reasonably be asked whether Bologna was acting on his own, or whether Wall Street money was ultimately behind the aggression. In the protest’s first four days, the mega media companies scarcely covered the protest; Bologna’s unprovoked aggression came after the news networks could no longer viably ignore the movement. So was the case simply that of American banks using the police state to keep a movement from spreading to their detriment? Were there actual accountability on Bologna, might the bird sing, affording us some transparency concerning any such hidden relationships?

Even if no such conspiracy existed, there is obviously a need for stronger instruments of accountability that could be imposed externally on police departments and their employees. In the wake of Bologna’s attacks, the media reported that such incidents are not uncommon. Indeed, I have witnessed them. While in Pittsburgh, for example, I witnessed how the police treated black teenagers who were simply walking along the sidewalks in the university area of town (Oakland). It was evident to me at the time (as a bystander leaving a restaurant) that the police employees believed they did not face any meaningful accountability. So I was not surprised to see video surface of Anthony Bologna’s sadism on full display in New York.

Thomas Hobbes writes that in the state of nature, and even in society, each person has the right to protect his or her person, as per the right of self-preservation. A sovereign cannot take this inalienable right away. When Bologna acted outside of the law, and thus outside of the social contract, his victims had the right to defend themselves, even in using pepper spray against the attacker. In other words, Bologna could and should have been treated as a criminal attacker by his victims and bystanders. Perhaps in the future protestors ought to carry pepper spray in case any criminals show up and attempt any aggressive attacks. It could be that the offending attackers are imprisoned while the self-preserving protestors are exonerated. Then maybe police departments will recognize that accountability applied to their own employees is in the departments’ interest. Legitimate force goes only so far before it lapses into criminality, and we all have an obligation as citizens to thwart crime as it is happening by whomever. If police employees do not want other citizens to be put in the position of making this judgment, then perhaps those employees might want to reassess their attitude and habits. In the meantime, citizens need to be on guard against criminals even and especially where they are least expected and perhaps most commonly found.

Source:

Al Baker and Joseph Goldstein, “Officer’s Pepper-Spraying of Protesters Is Under Investigation,” New York Times, September 29, 2011. 

Bank Bonuses and Dividends After the Financial Crisis: On the Power of Banks in European and American Government and Society

Dividends are typically based on how much a bank (or company, moreover) has profited, less whatever capital is needed from the profit. Similarly, bonuses are based, at least theoretically, on how the managers and the nonsupervisory employees alike perform as well as how the bank performs. In their respective ways of shoring up banks amid the financial crisis of 2008, the E.U. and U.S. differed on how easy it would be for banks to pay dividends and bonuses, as well as to have access to governmental funding. These differences reflect both the relative power of the financial sector in the governmental sector and the cultural attitudes toward business. 

“Under proposals outlined by the European Commission president, José Manuel Barroso, banks would be required to temporarily bolster their protection against losses. . . . Extra capital for European banks should be raised first from the private sector, then from [the state] governments, according to the proposal. Only when those avenues have been exhausted should a euro zone bailout fund be tapped, it said. Banks should not be allowed to pay dividends or bonuses until they have raised the additional capital, according to the proposal.”[1] The bankers much raise additional capital before government coffers could be tapped and dividends and bonuses could be paid.

 
As an aside, the nature of the E.U.'s federal system is also relevant, as state funds would be tapped; only when they are exhausted would a federal fund be used. In the case of the U.S., the states were to be shut out of the solution. This reflects the more general shift from federalism to consolidated power at the federal level. The European federal system was at the time more balanced, and thus more viable.

After Lehman Brothers went under in September 2008, the U.S. Government took “swift action to ensure its banks had a strong cushion of capital.”[2] The banks first (rather than last) resort of capital would come from the Federal Reserve Bank (as created money) and TARP funds enacted by Congress. The bankers did not have to raise additional funds, and they could pay dividends and bonuses even though the government bailout was supposed to be used to expand lending, which largely didn't happen. The banks could take the governmental funds with few if any strings attached. Also, the U.S. Treasury allowed banks to pay back the funds earlier than perhaps advisable because the bankers wanted to be free to pay whatever bonuses they saw fit for themselves.

The difference on whether dividends and bonuses should be allowed at troubled banks reflects a rather basic ideological difference between the E.U. and U.S. concerning whether economic liberty ought to be limited even in cases in which the economic entities are culpable. In short, is a bank (or business) whose management has performed very badly, as in recklessly taking on too much debt, justified in paying out dividends and especially bonuses nonetheless? If traders knowingly sell crap to even their best customers, as traders at Goldman Sachs did in the case of the subprime-mortgage-based financial-derivative bonds, should those traders expect to get bonuses anyway? Competence and ethics are thus both relevant. 

Admittedly, the bonus system on Wall Street had made its way into calculations of standard or basic compensation, such that the bankers had come to expect at least some bonus each year, regardless of performance. However, this expecation (and practice) contorts the very meaning of a bonus; it is not to be expected because it is granted for good or excellent performance, or even ethical conduct. U.S. officials tacitly bought into Wall Street's convenient notion of a bonus, whereas E.U. officials held onto the basic fact that a bonus is an extra, not a given, and, moreover, that raising additional capital as a hedge against systemic risk is more important than bonuses (and dividends). 

I suspect that because the E.U., at the time at least, had major parties on a broader political spectrum than that of the U.S., the financial sector did not have as much power over governmental institutions as in the case of the United States. Put another way, the U.S. political landscape was more tilted in favor of the financial system. Goldman Sachs, for instance, gave $1 million to Barak Obama's 2008 presidential campaign. Furthermore, the U.S. Supreme Court ruled in Citizens United (2010) that corporations could give unlimited amounts of money to political campaigns. Meanwhile, the "hard left" was represented only by "liberal Democrats," whose power has been typically diluted in the Democratic Party. Even the liberal wing of the Democratic Party does not reach the Left parties in Europe in terms of Socialism, for example. 

Therefore, I submit that the interests of corporations, including their stockholders and managements, are distended in American politics. Perhaps not by coincidence, the culture itself is amenable to business. For example, business values have gained a greater footing in how education is conceptualized at many universities in the American States. Since 1980, for example, both universities and students have reduced education to vocation in assessing a major's worth in terms of its potential for resulting in a good-paying job. The criteria for higher education are not so limited, or warped. In terms of teaching, corporate power-point presentations, which were ubiquious in business settings, became more common not only in "teaching by bullet-points," but also in what students would study for exams. 

The cultural value of business in American society, combined with the monied/political power of corporations (including banks) in the halls of government can explain why the American response to the incompetent bankers differed so much from the European response. This is a good case study particularly because it is ludicrous that a no-strings governmental response would follow the bankers' pathetic abuse of the subprime derivative bonds. The sector had even lobbied to keep financial derivatives from being regulated! That bonus were granted attests not only to warped judgment, but to the cultural and political situs of the financial sector in America. I suspect that many Europeans, even E.U. officials, were shaking their heads in disbelief. 

1. Stephen Castle, “Europe Tells Its Banks to Raise New Capital,” The New York Times, October 13, 2011.
2. Ibid.

Oligarchs in Ukraine Decide the E.U./Russia Question: Big Business on Top of Democracy?

One of the many lessons shimmering in the sunlight from stars such as Gandhi and Mandela is the possibility that popular political protest really can matter after all. Alternatively, managing (or manipulating) the crowd could be a mere front dwarfed in influence by that of a rich and power elite. Although the Ukraine will serve as our case study, democracy itself is under the microscope here.
As 2013 was losing steam and heading into the history books, the people of the independent state of the Ukraine were poised to turn back east or aim toward statehood in the European Union. The matter of who in the republic would decide was at the time obscured by the appearance of power in the pro-Europe protests in the capital city. Peeling off this veneer, the New York Times provides us with a more revealing look.
"Protesters may be occupying government buildings and staging loud rallies calling for the government to step down, but behind the scenes an equally fierce — and perhaps more decisive — tug of war is being waged among a very small and very rich group of oligarchical clans here, some of whom see their future with Europe and others with Russia. That conflict was ignited, along with the street protests, by Mr. Yanukovich’s decision to halt free trade talks with the European Union” in November, 2013.[1] In other words, very wealthy businessmen were very active politically in setting the course of the ship of state.

Petro Poroshenko is a Ukrainian oligarch who sees more money for his conglomerate and himself in greater ties with the E.U. Does it matter what the majority of the Ukrainian people want? NYT

Although blocking government buildings makes excellent news copy, all that visible strife may have been diverting attention from the dark corridors of power in search of a deal that would set a much larger course. To be an independent state between two contending empires is not the safest place to be. If finally moving one way or the other hinges on a certain constellation of wealthy and business interests coalescing enough to pull the strings of state, what the people think really does not matter. As put by the New York Times, “In this battle of the titans, the street becomes a weapon, but only one of many.”[2] Put another way, what the titans do with their arsenals of wealth and power is the decisive point, not what the people in the streets happen to think.
The implications for representative democracy are stunning, if not dire, and for the illusion, utterly deflating. Does not adulthood involve the recognition that something taken hitherto as real is in actuality an illusion? Perhaps it is high time that Toto pull the curtain open to reveal the Wizard as the person pulling the levers for billowing smoke and bursts of flames to divert our attention from his existence, not to mention his manipulation and power.

1.Andrew Kramer, “Behind Scenes, Ukraine’s Rick and Powerful Battle Over the Future,” The New York Times, December 6, 2013

2. Ibid., emphasis added.

Obama and Goldman Sachs: A Quid Pro Quo?

U.S. President Obama nominated Timothy Geithner to be Secretary of the Treasury. While president of the New York Federal Reserve Bank, he had played a key role in forcing AIG to pay Goldman Sachs’ claims dollar for dollar. Put another way, Geithner, as well as Henry Paulson, Goldman’s ex-CEO serving as Secretary of the Treasury as the financial crisis unfolded, stopped AIG from using the leverage in its bankrupt condition to pay claimants much less than full value. At Treasury, Mark Patterson was Geithner’s chief of staff. Patterson had been a lobbyist for Goldman Sachs.
To head the Commodity Futures Trading Commission—the regulatory agency that Born had headed during the previous administration—Obama picked Gary Gensler, a former Goldman Sachs executive who had helped ban the regulation of derivatives in 1999. Born had pushed for the securities to be regulated, only to be bullied by Alan Greenspan (Chairman of the Federal Revere) and Larry Summers, whom Obama would have as his chief economic advisor. To head the SEC, Obama nominated Mary Shapiro, the former CEO of FINRA, the financial industry’s self-regulatory body.
In short, Obama stacked his financial appointees during his first term with people who had played a role in or at least benefitted financially from financial bubble that came crashing down in September 2008.[1] Put another way, Obama selected people who had taken down the barriers to spreading systemic risk to fix the problem. Why would he have done so? Could it have been part of the quid pro quo the president had agreed to when he accepted the $1 million campaign contribution from Goldman Sachs (the largest contribution to Obama in 2007)? Might Goldman’s executives have wanted to hedge their bets in case the Democrat wins. Getting Goldman alums in high positions of government would essentially make the U.S. Government a Wall Street Government—that is, a plutocracy with the outward look of a democracy. It is no accident, we can conclude, that the spiraling economic inequality increased during the Democrat’s first term of office.

1. Inside Job (2010).

Goldman Sachs' Revolving Door: Regulatory Capture

In July 2012, Andrew Williams, a former spokesman for U.S. Treasury Secretary Timothy Geithner, announced plans to head over to Goldman Sachs at the end of that month.[1] Williams was the second of the Secretary’s spokesmen to head to theWall Street bank. Such moves may reflect a standing policy at the bank to have a revolving door. The previous U.S. Treasury Secretary, Henry Paulson, had been the CEO at Goldman. This suggests that the revolving door was to include populating high offices in government, presumably not out of a sense of civic duty, but, rather, to see that Goldman's interests would be protected and even promoted through public policy. Hence President Obama was said to have had a Wall Street government with respect to positions bearing on Wall Street. I submit that deconstructing such a revolving door would be very difficult. 

From the standpoint of a government official being hired by Goldman, the prospect of becoming wealthy is a large incentive to make the jump. Such an official would typically have scruples about using his contacts in government to pull strings for the bank. Mired in scandal following the financial crisis of 2008, Goldman’s leadership no doubt understood the value in hiring good PR men. Such hires could even put a good face on the cozy relationship between the bank and people still in government.

The “revolving door” dynamic is also difficult to break up because it contributes toward the capture of regulators by the regulated. This is known as regulatory capture. The regulated companies supply information that regulators need in order to devise regulations; the companies can use this reliance to their advantage even just in providing tainted, self-serving data. Moreover, the revolving door can make it easier for the managements of the regulated companies to get even high government officials to put political pressure on the regulatory agencies to go soft on regulating. In the case of Goldman Sachs, it is reasonable to expect that Henry Paulson would have bent to the bank's request for lax regulatory oversight from the SEC, which of course had no idea how many subprime-mortgage-derivative bonds Wall Street had been producing and selling up to the financial crisis of 2008. 

 

The SEC can be soft on Wall Street and point to insufficient staffing as the reason, while the reality is far more sordid in terms of the relationship between the regulators and the powerful regulated. 

Legislated restrictions on former government financial officials going to Wall Street banks could of course be circumvented, given the incentives described above, though prohibiting employment (or financial enrichment, such as by consulting) in the industries related to an official's area for many years seems possible. Even if Goldman Sachs could not hire away Treasury or SEC offiicals, the bank could still count on ex-Goldman folks who occupy key offices in the U.S. Government. 

Generally speaking, the financial and related political power of such huge aggregations of wealth such as a Wall Street bank has (and is) naturally overpower weak governments, by which I mean governments that depend on or do not have the will to resist the allure of money (or threats) from entities subject to the government. A government whose elected officials must rely on large sums of donated money just to get reelected is ripe for succumbing to corporate offers with strings attached. A strong government is insulated, whether by law, will, or power generally from such strings. A government that has many points of access (of influence) is likely to be weak in not only rebuffing pressure to reduce taxes and spend more, but also standing up to large corporations. A government in a pro-business society is likely to be weak with respect to the power of business, other things equal. Even more significant than these variables, however, is the tenuous basis of representative democracy amid Wall Street bewindowed towers. 

1. Bonnie Kavoussi, “Andrew Williams, Ex-Treasury Spokesman,Headed to Goldman Sachs,” The Huffington Post, July 12, 2012. 

Is the U.S. Congress Too Beholden to the Financial Industry?

That financial deregulation had any traction at all following the financial crisis of 2008 in the U.S. is stunning, for the implication is that Wall Street money has tremendous influence in the U.S. Governent even after Wall Street banks have screwed up (even in triggering a financial crisis!). 

According to Gary Gensler, head of the Commodity Futures Trading Commission in 2012, Congress stood with the big banks in the struggle to shield Americans from the risks and excesses of Wall Street even after the financial crisis of 2008. He pointed in particular to a proposal from the U.S. House’s Appropriations Committee to cut his agency’s funding by 12 percent.[1] The CFTC had been given expanded powers by the Dodd-Frank Act in 2010. Doubtless the proposed budget-cut had something to do with that. It is astonishing that such a proposal would come in the wake of a financial crisis caused in large part by Wall Street bankers taking too many risks. That the agency was then tasked with regulating the problematic $700 trillion market on derivatives—a task that dwarfed the agency’s regulatory power over futures—suggests that the decision to cut the agency's budget after the financial crisis was especially agrevious, being based, I submit, in Wall Street's denial over its harmful role in triggering the financial crisis in which subprime-mortgage-based bond derivatives collapsed in value even as banks including Goldman Sachs were trying to unload the "crap" as good values. 

CFTC Chairman Gary Gensler staring down the big banks

That an industry with a vested interest in rolling back financial regulations could have any influence at all over elected representatives reflects the general ignorance or naivity concerning conflicts of interest. In a COI, a private interest predominates even if the good of the whole is being estolled. A bank-rolled member of Congress can used the espoused public-interest rationale advanced by the banking industry as cover to hide the cosy relationship. For example, a bank's public affairs department could put out the word that increased financial regulation, even after a financial crisis, is really socialism. The bank-rolled members of Congress could then use the socialism scare-tactic on their respective constituents while quietly accepting the large campaign-contributions from the banks. Meanwhile, the American people feel secure that such representatives are protecting them from a threat rather than enabling one.

1. Alexader Eichler, “CFTC Head Gary Gensler: Congress ‘Sides With Wall Street’,” The Huffington Post, June 8, 2012. 

For more on the conflicts of interest in the financial sector (and others), see: Skip Worden, Institutional Conflicts of Interest, available at Amazon.

Limits to Overused Fiscal and Monetary Policy Can Result in Self-Induced Governmental Impotence

“The [U.S.] federal budget deficit is growing faster than expected as President Trump’s spending and tax cut policies force the United States to borrow increasing sums of money.”[1] This observation was made just after the Federal Reserve Bank relented under pressure from the White House to lower interest rates because bond investors had been investing with a possible future recession in mind. With the U.S. Government’s accumulated debt standing at $22.4 trillion and interest rates already low, the limits to both fiscal and monetary policy were apparent even if most Americans in the political and business elite were focused on avoiding a possible recession in 2020.

According to the Congressional Budget Office in August, 2019, the federal deficit for fiscal 2019 would reach $960 billion; the deficit for the next year would reach $1 trillion.[2] Back during the Reagan administration in the 1980’s, deficits were in the hundreds of billions and the debt was in the trillions. It would seem that the fiscal imbalance had gotten worse since then, in spite of the fact that recessionary periods were greatly outweighed by stretches of growth. In fact, the U.S. in 2019 was in its longest period of economic expansion. Yet the deficits and thus debt rose rather than dropped. President’s tax cuts in that period of expansion played a significant role. Tax revenues for 2018 and 2019 fell more than $430 billion short of what the Congressional Budget Office had predicted.[3] In August of 2019, the president made public his consideration of payroll tax cuts just to guard against a possible recession (especially if one should hit before the next election day).

Using recessionary fiscal tools during an economic expansion means the deficits in good times won’t counter those in bad times. The result in the case of the U.S. has been a steadily increasing accumulated debt, rather than a debt from bad times being paid off in good times. That’s the fiscal theory, but it ignores the insatiable desire for instant gratification in human nature that can easily find power in a representative democracy. Accordingly, the use of leverage, or debt, by a democratic government should be extremely limited; tax cuts during periods of expansion can be seen as a red flag that a government has already gone too far.

Fortunately, lower than expected interest rates even before the Fed’s announced rate cut in August, 2019, reduced the amount of money the U.S. Treasury had to pay to its borrowers. So the public as well as policy makers could conveniently overlook the fact that the projected deficit for fiscal year 2019 was 25% higher than the prior year’s deficit. One weakness of a democracy is that if things look ok on the surface, needed work on the fundamentals—the substratum—will likely be put off. It’s more understandable that the electorate would have this weakness—less so for the elected representatives who know or should know the fundamentals and look out for the fiscal balance of the government. Speaking of balance, it is interesting that the federal system too was so much out of balance with the federal level holding most of the governmental power even though the States technically still had residual sovereignty. In other words, the tremendous fiscal imbalance can be viewed as an indication or manifestation of a more fundamental imbalance in the U.S. system of governments. In contrast, the E.U. suffered from an imbalance in the other direction, as the state governments anxiously guarded most of their powers.

See: Skip Worden, Essays on Two Federal Empires. Available at Amazon.

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1. Jim Tankersley and Emily Cochrane, “Budget Deficit Is Set to Surge Past $1 Trillion,” The New York Times, August 22, 2019.

2. Ibid.

3. Ibid.