James Clay Fuller

Things We're Not Supposed to Say

Tuesday, February 05, 2008

Economy: Start with some very basic truths

(Note: The observations below are based on roughly 45 years of paying close attention to the economy, economists, business and industry, all of which I covered for various local and national publications throughout most of my career in journalism. I have no degree in economics, but I've read the books, and I've interviewed many of this country's big-name economists, as well as some very good ones who remain largely unknown to the wider public. I've spent countless hours with top-level corporate executives over the decades. Some I got to know well. I have had frequent long conversations with many executives and economists whose names readers would recognize. As the years passed, I became less and less impressed. These days I'd trade three famous economists and two CEOs for one good plumber; it would be a much better deal than the Minnesota Twins got for Johan Santana.)

We're going to be hearing and talking a great deal about economic matters in coming months, and we should.

I intend to write about two or three economic issues soon, and I'm the tiniest of voices in a very large army of writers and yakkers who will be nattering about things economic in the near future, whether or not they know anything.

Although the powers that be and the press still are pretending otherwise, the U.S. economy is teetering on the edge of a very high cliff. The super rich who run things have lovely big parachutes, but if the national economy goes over the precipice, as seems likely, you and I and the vast majority of Americans are going to break our bones on the rocks below.

If you're still alive after the fall, those powers want you to blame someone else for what has happened -- for what they did.

Most Americans avoid any discussion of economics, as such. Even intelligent and reasonably well educated people have bought all the crap about how economics is “the dismal science” and too deep for the average human being to get a handle on.

Actually, it is neither dismal nor anything close to being a science. Neither is it anywhere near as hard to understand as the money elite have led us to believe. Figuring out what's going on – and who's doing what to whom – isn't all that difficult.

However, one needs to start with a few simple facts that you will never – absolutely not ever – see in your newspaper or big-circulation magazines, nor hear discussed on television or radio.

Here are some of those facts – and, yes, though you probably will laugh (maybe bitterly) at some of the statements, I'm serious:

* We have been taught since kindergarten that the princes of commerce are the best, brightest, bravest people in the land. We have been told over and over that if we want good government, it should be “run like a business.”

Well, government is not “business,” should not be run at a profit, or for the profit of major corporations, as it is now in this country.

In truth, dear readers, the average CEO, the typical high level corporate executive, is rather a dim bulb.

He's pretty much incapable of seeing any point of view that doesn't match the beliefs he has been fed from birth, incapable of straying beyond the borders of thought laid out for him long ago.

A surprisingly high percentage of them are just like George W. Bush in all important respects. They are where they are because of family money and influence, and by virtue of having attended the right schools, which they got into and through for the same reasons of money and family influence.

They don't know squat about how life is in America for most people, and aren't much interested in finding out. Their ideas come out of cans, filled long ago by earlier generations of aristocrats and never since questioned. (Why should they question; they have the money and power.)

Those who rose from poorer backgrounds did so because they have catered to the egos of the people who inherited the wealth and power, and they have taken on the same coloring through years of kissing royal behinds.

They “fit in.” And they have lived for years isolated from what you and I know as the real world: They live in $8 million houses (and up) cared for by maids and gardeners. Most are driven from their homes to their offices by chauffeurs. Other people do their shopping, take their clothes to be cleaned, bring them their meals and their coffee; they need never step outside in winter if they choose not to. Others do their research, narrow down their choices to an easy few; their barbers come to them.

Besides, and importantly, intelligence and free thinking are not highly valued in the upper levels of the corporate world – at least not beyond the second generation in entrepreneurial enterprises, such as the recently arisen tech businesses.

In oil, commercial banking, investment banking, insurance and the like, old money and tired blood are the norm.

These things, friends, are why you can't get reasonable answers to important questions you ask yourselves and each other, questions such as "Why can't those people see that if they don't do something, global warming will destroy the planet?" and "Why do the damned fool car makers insist on trying to sell us cars we don't want and refuse to make the cars we do want?"

Such questions, even if they are life or death questions, are beyond the parameters of permissible thought.

Oh, dear. Am I indulging in “class warfare?” So be it; this is the flat-out truth.

Never assume that somebody with a whole lot of money and a high-level title at some corporation, even the biggest of them, is smart, or even competent.

The odds are good that you're more capable of thought, more skilled at some useful activity and that you are possessed of more understanding of how the world really works. The boss of Citibank should doff his hat and shut up and listen to you, rather than the other way around. Really.

* The big guys who run things are paid enormous sums, unbelievable sums, and no one would pay them that kind of money if they didn't know how to run a giant and complex business successfully, right?


There have been so many stories over recent years about executives getting tens of millions of dollars in annual bonuses at the very times that their corporations are sinking into bankruptcy that you can't have missed at least some of them. I won't spend time on repeating them here, though I have plenty of them in my files.

Executive pay works this way: The guys at the top of the corporations are “elected” directors of each other's companies.

The chairman and CEO of X Corp. goes onto the board of Y Corp., which is run by someone with whom he has a cozy working relationship. The X Corp. guy is made head of the compensation committee of Y Corp., and quickly sees to it that the pay of his pal at that company rises to the level of the Costa Rican gross national product. Then another guy who is cozy with the X Corp. boss does the same for him, and round and round it goes.

There are supposed to be some rules to prevent those terribly cozy deals, but like all regulation of business in recent decades, that's almost entirely sham. If anybody were enforcing the rules, we wouldn't have a subprime mortgage meltdown, because the entire system that created the mess would have been stopped before it truly got rolling.

Corporations, the U.S. Chamber of Commerce, the National Association of Manufacturers and hundreds of other such (mostly tax exempt) organizations have supported the system by selling the public the belief that corporations must pay their top executives those huge salaries because there are so few people capable of doing the jobs and handling the responsibility.

As to that, see first point above. In any large corporation, there are hundreds of individuals, in some cases thousands, who have the training, education and general smarts to do a better job than the guy who has it now. What they lack are the familial and social connections to get the office.

* That point about business being more efficient and wanting to run government as a business? Absolute twaddle.

In fact, it's a rare government organization in this country that comes close to matching the routinely swamplike bureaucracy of almost any large corporation. “That's not how we do it,” is the normal response to every suggestion for improved efficiency or a better way of doing something offered in a U.S.-based corporation. Well, to every suggestion except that of cutting staff.

Ever try to get your cell phone company or an insurer to correct an error they've made that's costing you money and/or time? Good luck and hallelujah.

Further, and let's get this straight, the purpose of any government is to serve the people of the city, county, state, nation, to provide services and infrastructure we need. We now have a federal government, and quite a few state governments, in the clutches of those oh-so efficient business people, and what has it got us? “Heckuva a job, Brownie” in spades.

Regulatory bodies don't regulate because they are run by people from the industries they are supposed to rein in. The federal government is operated as a profit center for giant corporations – so blatantly that if you step back and look at the facts, you will see a government more corrupt than that of an old-fashioned banana republic. Literally every week there are true stories – though not on television or in most newspapers – about corporations being rewarded for stealing billions of dollars from us by receiving new and larger noncompetitive contracts.

You wanted “government run like a business?” You got it.

* Recently, newspapers and television have been going frequently to professional economists to explain for us what's going on with the national economy. They've been telling us that, yes, a recession is “possible,” but maybe it will be headed off, and the basic economy is as strong as a locomotive, and we'll be just fine.

Well, most of them. Paul Krugman does write twice a week for the New York Times, but he's a lone voice in the wilderness of corporate news. Another rational fellow, Paul Craig Roberts, shows up on various Internet sites with some regularity.

Before you nod your head too often in understanding of what the Fox-blessed and CNN-anointed economists are saying, note this: Almost all of the economists you get on television are closely tied to corporations, banks, insurance companies and/or right wing organizations. Even those who aren't outright ideologues have mostly taken on the coloration of the organizations that pay them.

Hey, we all do it to some extent; I defended the Minneapolis Star Trivia right up to about three or four years before I left it, up until it was all but impossible to deny how the owners had stripped and reduced it.

Most academic economists – the people at the universities – are involved in complex games that color what they believe, or at least what they say. There's competition for reputation and choice jobs and for grants, always for grants. There often is intense rivalry, to the point that of Joe Economist says we're going to see a 4 percent inflation next year, Bob Economist will feel compelled to say there will be no inflation next year. Honest. I've watched that more than often enough.

The best, straightest thinking and most honest economists I ever dealt with were employees of the Federal Reserve system and Federal Reserve banks. However, the people they work for have to keep certain politicians happy, or at least they think they have to keep certain politicians happy. The real working economists I knew with the Fed wouldn't lie – but they might fudge a little, or clam up on a given issue, if political pressure was being applied to the system. I can't say if any of this still is true, but I'd be surprised if it has changed greatly.

And, as in all things, ideology is a major factor in the analyses of economists. See who they have their pictures taken with.

To be completely truthful, some of the economists you're going to hear from the most – especially on television – are outright frauds. There are a lot of them in the economics racket. The late Milton Friedman, whom I knew on a working basis, is one of the political right's most revered saints. He was, I believe, one of the most successful con men in history, and the damage he did to this country was massive.

* Now about that mantra: The U.S. economy is a powerful engine, and as strong as an economy can be...

There are two U.S. economies, as you know if you watched what has happened to you and your neighbors on the one hand, and the corporations and wealthy elite on the other since Ronald Reagan took the presidency.

The rising tide has not lifted all boats, folks, because while you've been looking up at the billionaires leaning on the rails of their megayachts, scuba divers wielding augers – frequently with “Congressional Dive Team” lettered on the backs of their wet suits – have been drilling holes in your little rowboat. The rich get richer and you have to bail faster and faster.

Don't expect that to change any time soon.


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