Wednesday, October 26, 2011

9-9-9: New Sign of the Beast

Revelation tells of the sign of the Beast
Where the unknowing lose all their money
And worship numbers to get to the feast
Implanting microchips in foreheads: how funny
But what if this scripture was read on its head
Would the number be upside-down?
Undoing all that you’ve read
Displaying a new circus and clown
Instead of updating the ancient fixes
For fighting the onslaught of sixes
We should be using these times
To tell the world about nines

In this political world of bumper sticker mentality and easy solutions to complex problems, we have found a new leader in the conservatives who are raising Cain. Herman Cain. Herman has stated that 9-9-9 is the way to prosperity. For whom, Herman? 9-9-9 means that we would have a 9% corporate income tax, a 9% individual income tax and a 9% national sales tax. There would be no exemptions…well maybe a few. And there would be no sales tax on used goods. You probably see where this is going. You want to buy a new car but do not want to pay tax on it. I am a Chevrolet dealer who wants to sell you a Chevrolet. I “use” the Chevrolet by driving it around the block and declare it used. What a deal! You pay no tax but pay full price and “big government” is none the wiser although somewhat poorer. The tax collection for my Chevy franchise is reduced to zero since I have been selling only used cars and 9% of nothing is nothing. I have nothing to report. Hmm. The loopholes begin. How do we define used? If I rebuild an auto, would that be “used?” What happens to the economy that does not build new homes and cars? That is clearly one of the myriad problems to begin, but 9-9-9 will reduce tax income for our republic. Reduced income for the republic means fewer services including fire, police, medical, parks, roads, waterways, safety and health inspections, etc. This reduction will have the effect of increasing air and water pollution because we will have fewer inspectors and more people will suffer from cancer, emphysema and environmental diseases. Aircraft will have reduced oversight and inspection resulting in more “accidents.” Roads will become deadlier. Death and disease from food contamination will rise. Fewer services equates to real everyday hazards for most of us. This same process is true for the income and corporate taxes. There is no free lunch although there may be beneficiaries for this policy. The Koch brothers have earned the reputation of the Patrons of Pollution and have amassed a record of coal sludge pollution of 2.6 million cubic yards of coal ash sludge that were released into the Emory River in Tennessee; air and groundwater pollution through Georgia-Pacific Industries in Crossett, Arkansas recently cited for extremely and abnormally high cancer rates among its neighbors. The Koch brothers have initiated a full court press to kill the EPA, and they have paid direct support dollars to House Republicans willing to defang or eliminate the EPA. These are the same Koch brothers that have received $2.3 Billion in tax breaks in Washington. In other words, they have severely damaged our environment and the people living in it and have been given tax breaks by the people who benefit by political contributions from the same Koch brothers. Now what could this possibly have to do with 9-9-9 and raising Cain?

Actually, Herman Cain has been on David Koch’s payroll since at least 2005 through Americans for Prosperity, a front organization wholly owned and run by the Kochs. Incidentally, so has Rich Lowrey who is the author of the 9-9-9 scheme (and not an economist; has a bachelor’s degree in accounting and works in a branch for WellsFargo). So given this, is Cain the stealth candidate for the Kochs? My answer is a resounding “YES.” A vote for Cain is a vote for the Koch brothers and their hirelings (Rich Lowrey, Mark Block, et. al.). Mark Block, the cigarette smoker in the new Cain advertisement is Cain’s nominal campaign manager. Block was fined $15,000 for illegal campaign activity in Wisconsin and has been linked with voter suppression there. He is also on the Koch payroll. Cain was also paid by the Kochs for his speaking engagements for the “Prosperity Expansion Project” from 2005-2006. A vote for Cain is a vote for deadly pollution, not only in Wisconsin, but in Arkansas where Georgia-Pacific in 2010 released over 913,000 pounds of toxic chemicals in the air and 136,000 pounds of toxins in waterways and deposited 444,000 pounds in the soil. Formaldehyde is a major carcinogenic emission there. Additionally, in Louisiana, across the border from the Crossett plant, there is an investigation due to contamination of the Quachita River that flows from Arkansas. The Koch brothers and Herman Cain appear to be joined philosophically at the hip and at the bank as are Senator Vitter (the hooker chaser from Louisiana) and many “conservative” Republicans. Vitter has delayed the Quachita investigation.

Let us look a bit more closely at 9-9-9. It is a wet dream for the wealthy and a nightmare for middle and lower class citizens. The billionaire Koch brothers would see their total personal taxes reduced from about 28% to about 11% on average and their corporate taxes perhaps less than 9% when the loopholes are applied. The wage collecting American worker would see his take home pay reduced sharply when he must pay 9% on income (regardless how little he earns) and again must pony up an additional 9% on Federal sales taxes over and above the state and local sales taxes now in force. Actually, it is worse than that because states would receive less support from the federal government because the total federal tax income will be drastically reduced with this 9% limit. As a result, the states and local governments would be forced to increase their state income and sales taxes. So if you were making $ 1 Million per year, your federal contribution would be $90,000 and you would be left with only $910,000. However, if you made $10,000 per year, then you would be left with $9100 before you bought groceries, paid the rent, paid for transportation and wondered how you would ever escape poverty. Your sales tax alone would be a minimum of 18.5 % in California before it increased for the reasons cited above, even if the state did not increase your payroll taxes. The poor do not have that slack. The middle would become poor. The policy is massively regressive.

It is indeed strange that the far right has taken on the prophesies of Revelation that talk about weird mixes of technology with old fashioned fear mongering. Many religious right-wingers actually believe that our money will be no good and that we may already have implants in our foreheads or right hands (symbolic, maybe?) to conduct our money transactions. It is fundamentalist snake oil. It is dangerous and hardly worthy of being considered as an item of faith although, if followed, it could approximate the conditions of last days as the Bible suggests. We could bring it on ourselves.

As a friend recently reminded me, our response to 9-9-9 should be Nein-Nein-Nein. “No-No-No” in German. Bumper stickers are short and pithy, but they do not convey the disaster about to strike our United States should 9-9-9 become policy. You are not calling out for pizza delivery, you are voting to establish a fair tax and incentive policy that will help the nation and all the people grow while remaining healthy, safe and competitive in an international marketplace. The Koch brothers are in the top 4 wealthiest billionaires in America. What appears to be good for them may literally choke the rest of us or kill us through cancer or poverty. Friends don’t let friends vote for annihilation.

George Giacoppe
26 October 2011

Tuesday, October 04, 2011

Class Warfare Indeed

Over the last two decades or more, Republicans have been denouncing as “class warfare” any attempt at criticizing and restraining their mean one-sided system of capitalist financial expropriation.

The moneyed class in this country has been doing class warfare on our heads and on those who came before us for more than two centuries. But when we point that out, when we use terms like class warfare, class conflict, and class struggle to describe the system of exploitation we live under—our indictments are dismissed out of hand and denounced as Marxist ideological ranting, foul and divisive.

Amanda Gilson put it perfectly in a posting on my Facebook page: “[T]he concept of ‘class warfare’ has been hi-jacked by the wrong class (the ruling class). The wealthy have been waging war silently and inconspicuously against the middle and the poor classes for decades! Now that the middle and poor classes have begun to fight back, it is like the rich want to try to call foul---the game was fine when they were the only ones playing it.”

The reactionary rich always denied that they themselves were involved in class warfare. Indeed, they insisted no such thing existed in our harmonious prosperous society. Those of us who kept talking about the realities of class inequality and class exploitation were readily denounced. Such concepts were not tolerated and were readily dismissed as ideologically inspired.

In fact, class itself is something of a verboten word. In the mainstream media, in political life, and in academia, the use of the term “class” has long been frowned upon. You make your listeners uneasy (“Is the speaker a Marxist?”). If you talk about class exploitation and class inequity, you will likely not get far in your journalism career or in political life or in academia (especially in fields like political science and economics).

So instead of working class, we hear of “working families” or “blue collar” and “white collar employees”. Instead of lower class we hear of “inner city poor” and “low-income elderly.” Instead of the capitalist owning class, we hear of the “more affluent” or the “upper quintile.” Don’t take my word for it, just listen to any Obama speech. (Often Obama settles for an even more cozy and muted term: “folks,” as in “Folks are strugglin’ along.”)

“Class” is used with impunity and approval only when it has that magic neutralizing adjective “middle” attached to it. The middle class is an acceptable mainstream concept because it usually does not sharpen our sense of class struggle; it dilutes and muffles critical consciousness. If everyone in America is middle class (except for a few superrich and a minor stratum of very poor), there is little room for any awareness of class conflict.

That may be changing with the Great Recession and the sharp decline of the middle class (and decline of the more solvent elements of the working class). The concept of middle class no longer serves as a neutralizer when it itself becomes an undeniable victim.

“Class” is also allowed to be used with limited application when it is part of the holy trinity of race, gender, and class. Used in that way, it is reduced to a demographic trait related to life style, education level, and income level. In forty years of what was called “identity politics” and “culture wars,” class as a concept was reduced to something of secondary importance. All sorts of "leftists" told us how we needed to think anew, how we had to realize that class was not as important as race or gender or culture.

I was one of those who thought these various concepts should not be treated as being mutually exclusive of each other. In fact, they are interactive. Thus racism and sexism have always proved functional for class oppression. Furthermore, I pointed out (and continue to point out), that in the social sciences and among those who see class as just another component of “identity politics,” the concept of class is treated as nothing more than a set of demographic traits. But there is another definition of class that has been overlooked.

Class should also be seen as a social relationship relating to wealth and social power, involving a conflict of material interests between those who own and those who work for those who own. Without benefit of reason or research, this latter usage of class is often dismissed out of hand as “Marxist.” The narrow reductionist mainstream view of class keeps us from seeing the extent of economic inequality and the severity of class exploitation in society, allowing many researchers and political commentators to mistakenly assume that U.S. society has no deep class divisions or class conflicts of interest.

We should think of class not primarily as a demographic trait but as a relationship to the means of production, as a relationship to power and wealth. Class as in slaveholder and slave, lord and serf, capitalist and worker. Class as in class conflict and class warfare.

And who knows, once we learn to talk about the realities of class power, we are on our way to talking critically about capitalism, another verboten word in the public realm. And once we start a critical discourse about capitalism, we will be vastly better prepared to act against it and defend our own democratic and communal interests.

Michael Parenti

Michael Parenti is an internationally known, award winning author and scholar. Included among his recent books are The Face of Imperialism (2011), Democracy for the Few 9th ed. (2011), and God and His Demons (2009).

Saturday, October 01, 2011

The Inhuman Side of Enterprise

Ah, the human side of enterprise
Has long been taught in schools
Where love for work is a prize
And slackers are but fools
Except in the mind of the “employers”
Who do not accept humanity
And become the destroyers
Of life and limb and sanity
To prove that men are but cogs
Without worth or soul
Except to cut wood from the logs
And to spend time on parole
In jobs that are becoming the dregs
Yet without which a grown man begs

Back in the dark ages of 1960, a fresh voice supported by research and understanding proposed a new concept for the workplace. His theory of work and motivation was that people did not have to be coerced to work and that work itself is inherently satisfying; that work was as natural as play and that systems for production should recognize this essential humanity. McGregor postulated that managers and employers held basic assumptions of their employees. Those who held “Theory X” assumptions felt that work was not natural and that people had to be coerced to work or given extrinsic rewards that paid them directly for their efforts; that they had to be watched and monitored by systems and supervisors to stay on task and get work done. Those managers and employers holding “Theory Y” assumptions held beliefs that work itself had intrinsic rewards and that it was as natural as play; that if people were trusted with work tasks, they would monitor and manage themselves to get work done and that they resented coercion. McGregor was a product of Detroit and understood the stress of assembly line production. He also worked at several levels from senior management to gas station attendant when we had such work. Although he began studies in Detroit, he initially left college for the world of work and then resumed studies at Harvard where he got an MA and a PhD. On graduating, he moved to MIT, a matter of a few hundred yards, and began serious work on motivational studies with some of the best minds in the nation. He later was President of Antioch College at age 41 and he then returned to the Sloan School of Management at MIT. He died relatively young at age 58.

Essentially, McGregor was the first serious and qualified manager and educator who postulated that the assumptions a manager makes actually affect the outcome of production and the support of workers in the cause of production. How you, as a manager, feel about workers affects the way that workers respond to your style based upon those assumptions. Apparently some in Congress have not read McGregor or still feel that business ownership includes total control of employees as in the days of Charles Dickens. Allow me to relate the story of a close friend who experienced the real results of management under the conditions of mistrust and arbitrary leadership.

The curtain opens in an office of a property casualty insurance company in the Northeast that was, at the time, a subsidiary of CIGNA (Connecticut General). In its early days, this company wrote insurance on slaves just as Aetna Life and Casualty did during the mid 1800s. The major difference between these two companies, besides size, was that Aetna Life and Casualty wrote life insurance on slaves. “Little Aetna,” unrelated to AL&C, wrote property insurance on slaves. To call Little Aetna conservative is hyperbolic understatement. Little Aetna was a reactionary throw back to the 19th century. As a single point of reference, when the women of Little Aetna petitioned to change the name of the “Aetna Girls Club” to “the Aetna Women’s Club,” the women were rebuffed, and this is in the late 1970s. One day early in my friend’s tenure at Little Aetna, his boss called him in to his office for a confidential talk. “I believe that trainer “Susan” spends too much time in the ladies room. I want you to log in all her time in the restroom and to put a stop to her lazy habits.” Now, “Susan” is black and also the most productive of five management trainers. My friend is in a quandary because of the possibility that monitoring her toilet time might backfire as a productivity issue as well as a racial sensitivity issue. He chose to talk with “Susan” who claimed that she brought her work into the restroom because one of the other trainers was a total distraction and that she could not sit by her and avoid constant conversation. Her professional work bore that out. Things then got worse. My friend’s secretary reported to him that management was rummaging through his desk drawers after hours looking for something (union affiliation evidence/my friend was not a union member). Finally, they brought in the company attorney and fired him alleging lack of output. My friend then filed an Open Line complaint to CIGNA. The CIGNA investigation showed that his unit had higher productivity than the technical training unit and recommended rehiring only to be told that Little Aetna would rather risk lawsuit than concede.

My friend left the company and went where he was wanted. No surprise there. A few years later at Christmas, the Little Aetna President resigned without warning. On the first business day of the following year, all 4,000 employees were fired. For two years prior to that calamity, CIGNA had touted the property casualty job opportunities that awaited Aetna employees at INA in Philadelphia, but failed to hire or transfer any employees. When queried by the press, CIGNA simply stated that they did not want the employees to let down their efforts or conduct sabotage. Instead, they created a fiction that opportunities would be greater rather than eliminated. It was like the movie line from “A Few Good Men.” “You can’t handle the truth!” Employees were not told the truth that might have allowed them to get jobs. There were record heart attacks, suicides and strokes among the 4,000 because a company applying clear Theory X assumptions assumed that the employees were like destructive children who had to be protected from the truth, lest they sabotage Aetna. Many employees were older and deprived of their pensions meaning that they might not find work for months if at all. The trump card was unemployment insurance. Aetna was still liable for that compensation along with the employees (for 180 days). Is this beginning to sound familiar? Now what about those who were unable to find work after 180 days? Were they lazy as the company assumed? Does the government owe them anything to protect their homes, health and families? Just what happens to a breadwinner (man or woman) who cannot find work and has the responsibility to feed, clothe and house a family? Is it simply another day when their self-image, health and identity as well as that of their families are destroyed?

Today, this nation is experiencing record unemployment, record corporate profits along with the monetary and human pain and suffering that comes with extended periods without living-wage work. The House political extremists want to cut off unemployment compensation saying it is a counter-motivation for people to find work. I have personally known hundreds who have lost work and have yet to find one that so preferred it that way so as to stop searching for work. That is a serious Theory X assumption about people that will cause further pain, displacement and grief for them and all their friends and family. Work is what keeps body and soul together. To do what the extreme right threatens will damage our nation as well as the psyche of the workers directly affected and those who depend upon them. Enterprise cannot be permitted to be inhuman without catastrophic and long lasting results.

By the way, that friend of mine was actually me. How does it feel to have been treated as a mushroom (kept in the dark and fed bullshit)? Lies are never for the good of the employee or the reader. Lies hide the people from knowledge and actions they might take to improve their lives. Don’t let the House lie about employee motivation or extending unemployment benefits. Write them for your own good and the good of the hard working people of this great nation. Do not let them diminish us all by being inhuman and ask them to demand that jobs pay living wages and do not get exported for an extra buck to go to executive bonuses. These are the executives that have disowned McGregor. They now maximize short-term profit by exporting jobs to venues with cheaper labor, destroying protective laws and unions and millions of families in the process. All the Right’s horses and all the Right’s men can’t put these people together again.

George Giacoppe
1 October 2011

Greed be Good

In 1965, Alan Greenspan wrote:

“It is precisely the greed of the businessman, or more precisely, his profit-seeking, which is the unexcelled protector of the consumer” (Madrick, 228).
This should really be the epitaph inscribed on the tombstone of the American economy. Far from ‘protecting’ consumers, the greed that has defined American business and especially Wall Street these last 40 years has decimated the economy, loaded businesses with debt, put millions of Americans out of work, and transferred huge chunks of American industry to foreign countries such as China. Therein lies the theme of Jeff Madrick’s crucial book, The Age of Greed, (Knopf: 2011). To read it, with its portraits of banksters and junk bond traders and acquisition specialists and CEOs of America’s largest corporations, is to learn of chicanery, conniving and contempt for average Americans on such a scale as to sometimes deceive the reader into thinking he is reading Dante’s Inferno. Such characters—some of the mightiest names in corporate and political America in the latter years of the 20th Century, names like Rubin and Weill and Reagan and Greenspan and Friedman and Milken and Boesky and Welch—do deserve a poet like Dante to fix them in an appropriate level of pain and torment. While Madrick is not that poet, he does a creditable enough job of this to sicken even the most cynical reader, for his is the tale of the outright looting and crippling of the American industrial might (along with its workers) that was once the envy of the world.

The book begins with the general proposition that while industry and transportation and communications and retailing were once the foundations of American wealth and prosperity, “by the 1990s and 2000s, financial companies provided the fastest path to fabulous wealth for individuals” (24). And where government was once seen as a needed supporter and regulator of such enterprises, Milton Friedman’s economic doctrines, put into saleable form by Ronald Reagan and Alan Greenspan, turned government into the enemy. As Friedman wrote, “The fact is that the Great Depression, like most other periods of severe unemployment, was produced by government (mis)management rather than by the inherent instability of the private economy.” The answer to all problems, in this tortured view, lay not in government actions to help those who need it, but in reducing government and lowering taxes so as to (allegedly) make the poor better off, eliminate inequality and discrimination, and lead us all to the promised free-market land. As noted above, Alan Greenspan believed wholeheartedly in these and other theories (especially those espoused by his friend Ayn Rand), and Ronald Reagan became the shill for selling such pie-in-the-sky nonsense to the American public. As with his sales work for General Electric, Reagan marketed the kool-aid more successfully than anyone could have anticipated. In office in California as governor, he blamed welfare recipients for the state government’s financial problems: “Welfare is the greatest domestic problem facing the nation today and the reason for the high cost of government.” When he got to the national stage with inflation rampant, he hit government profligacy even harder. “We don’t have inflation because the people are living too well,” he said. “We have inflation because government is living too well” (169). All this was coupled with his mantra that getting back to the kind of “rugged individualism” that had made America (and himself) great required reducing taxes. And reduce he did. From a tax rate that was at 70% on the highest earners when he took office, he first signed the 1981 Kemp-Roth bill to reduce it to 50%, and then, in 1986, with the Tax Reform Act, reduced it even further to 28%. Meantime, the rate for the poorest Americans was raised from 11% to 15%, while earlier, Reagan had also raised the payroll tax (for Social Security) from 12.3% to 15.3%. This latter raise, it should be noted, coupled with the provision that only wages up to $107,000 would be taxed for SS, meant that “earners in the middle one-fifth of Americans would now pay nearly 10% of their income in payroll taxes, while those in the top 1% now paid about 1-1/2%” (170). And what Reagan never mentioned about his “rugged individualism” is that he was made wealthy by those rich men who cajoled him to run for office: his agent arranged for 20th Century Fox to buy Reagan’s ranch for $2 million (he had paid only $65,000 for it), giving him a tidy profit with which to buy another ranch that also doubled in price when he sold it.

But such tales treat only the enablers. It is when we get to the actual hucksters of this story that things get interesting (or nauseating, depending on your point of view.) The basic scheme went like this: find a company that is undervalued—often because it had managed its assets so well it had cash on hand—and acquire it, using debt to finance the takeover. Then make money—and I mean millions and billions—on all the steps involved in the takeover, including the debt service, the legal fees, and the rise (or fall) in the stock price. For in the age of greed that Madrick documents, the stock price was all. Anything that pushed the stock price of a company up was good. Anything that pushed it down was bad (unless you were one of those smart guys like hedge-fund ace George Soros who worked the “shorts”). And of course, the best way to get a company’s stock price to go up was to increase profits. And the best way to do that was not to innovate or develop better products, but to slash costs, i.e. fire workers. Here is how Madrick puts it:

American business was adopting a business strategy based on maximizing profits, large size, bargaining power, high levels of debt, and corporate acquisitions…Cutting costs boldly, especially labor costs, was a central part of the strategy. (187)
What began to happen in the 1980s and into the 1990s was that all companies, no matter how successful, became targets of the ruthless merger mania that replaced normal business improvements. Lawyers like Joe Flom and takeover artists like Carl Icahn and T. Boone Pickens could spot an undervalued, or low-stock-price company (the process reminds one of wolves spotting a young, or lame deer in a herd) to take over, using borrowed money to finance it (90% of the purchase price). The borrowing then demanded that the new merged company cut costs in order to service the huge debt required for the merger—which in turn required firing workers. If a company did not want to be taken over, the only way to do so was to get its stock price to rise, and this, too, required the firing of workers. In either case, the workers took the hit. But the CEOs running the merged ventures, often sweethearted into selling by generous gifts of stock, “usually made a fortune.” As Madrick notes, in 1986, Macy CEO Ed Finkelstein arranged for a private buyout of his firm, for $4.5 billion, and became the “envy of fellow CEOs” (174). Like many other mergers, however, this one drained what was one of America’s most successful retail operations, and Macy’s went bankrupt in 1992. Madrick concludes:

The allegiance of business management thus shifted from the long-term health of the corporations, their workers, and the communities they served, to Wall St. bankers who could make them personally rich... (173)
In the process, of course, the Wall Street bankers and leveraged buyout firms (LBOs) like Kohlberg Kravis Roberts who arranged the buys and the financing took in obscene amounts of money. So did risk abitrageurs (who invest in prospective mergers and acquisitions, angling to buy before the stock price rises on the rumor of a merger) like Ivan Boesky. Earning $100 million in one year alone (1986 when he was Wall Street’s highest earner), Boesky required information to buy early, and got into the little habit of paying investment bankers for that information, i.e. on upcoming deals. Unfortunately for him, he got caught in his banner year because one of his informants (Dennis Levine of Drexel Burnham) was arrested and made a deal to name those he had tipped off. Boesky was one (the deal was to pay Levine 5% of his profits for early information on a takeover), and he too was subpoenaed in the fall of 1986. Boesky immediately agreed to finger others (agreeing to wear a wire at meetings), and nailed Martin Siegel, also with Drexel, who, in turn, kept the daisy chain of ratting out associates going by naming Robert Freeman, an arbitrageur at Goldman Sachs. Nice fellows. Boesky ended up serving three years in prison, but he fingered an even bigger fish, Michael Milken. Then the wealthiest and most ruthless Wall Streeter of all, Milken, who made his money in junk bonds (risky high-interest bonds to ‘rescue’ companies in trouble) was sentenced to 10 years in jail (reduced to 2 years for good behavior) for securities violations, plus $1.3 billion in fines and restitution. He’d made so much money, though, that he and his family still had billions, including enough to start a nice foundation for economic research, to commemorate his good name in perpetuity.

There are, of course, lots of other admirable characters in this tale, but one in particular deserves mention--Jack Welch, the revered CEO of General Electric. This is because Welch’s reign at GE typifies what greed did to a once-great American institution, the very one that Ronald Reagan shilled for in a more innocent age, the one that brought the Gipper to the attention of the big money boys. Welch made enormous profits for GE (in 2001, the year he left, GE earnings had grown by 80 times to more than $5 billion), and for himself, but he didn’t do it the “old fashioned way,” i.e. by developing new and better products. He did it by shifting the emphasis at GE from production to finance. Welch saw the value of this early:

“My gut told me that compared to the industrial operations I did know, the business (i.e. GE Capital) seemed an easy way to make money. You didn’t have to invest heavily in R&D, build factories, or bend metal…” (191)
To give an idea of how this works, Madrick points out that “in 1977, GE Capital…generated $67 million in revenue with only 7,000 employees, while appliances that year generated $100 million and required 47,000 workers” (191). Welch did the math. It didn’t take him long to sell GE’s traditional appliance business to Black & Decker, outraging most employees, though not many of them were left to protest: in his first two years, Welch laid off more than 70,000 workers, nearly 20% of his work force, and within five years, about 130,000 of GE’s 400,000 workers were gone. Fortune Magazine admiringly labeled him the “toughest boss in America.” And by the time he left the company in 2001, GE Capital Services had spread from North America to forty-eight countries, with assets of $370 billion, making GE the most highly valued company in America. The only problem was, with the lure of money and profits so great, GE Capital acquired a mortgage brokerage (Welch was no mean takeover artist himself) and got into subprime lending. In 2008, GE’s profits, mostly based on its financial dealings, sank like a stone, with its stock price dropping by 60%. Welch, the great prophet of American competition, now had to witness his company being bailed out by the Federal Deposit Insurance Company: since it owned a small federal bank, the FDIC guaranteed nearly $149 billion of GE’s debt. So after turning a U.S. industrial giant into a giant bank, the man Fortune Magazine named “manager of the century” also succeeded in turning it into a giant welfare case. Perhaps there’s a lesson here somewhere.

There’s more in this disturbing book—such as the fact that Wall Streeters not only attacked corporations in takeovers, they also attacked governments (George Soros’ hedge fund attacked the British pound, as well as Asian currency in 1999, causing crises in both places, and ultimately, cutbacks in government programs for the poor)—but the story is the same. During several decades of Wall Street financial predation, insider trading, and more financial chicanery than most of us can even dream of, the high-rolling banksters made off with trillions of dollars, and most others (including union pension funds) lost their shirts. Madrick quotes John Bogle, founder of Vanguard Funds, concerning the bust of the high-tech IPO bubble: “If the winners raked in some $2.275 Trillion, who lost all the money?...The losers, of course, were those who bought the stocks and who paid the intermediation fees…the great American public” (332). The same scenario was played out again and again, in derivatives trading, in the housing boom, in the mortgage-backed securities boom, in the false evaluations of stock analysts like Jack Grubman, in the predatory mergers and subprime shenanigans of Citibank CEO Sandy Weill, and on and on, all with an ethic perfectly expressed in an email, made public by the SEC, commenting on how ‘the biz’ was now run:

“Lure the people into the calm and then totally fuck ‘em” (334).

That’s essentially the story here. And the sad ending, which most of us haven’t really digested yet, is that the very vipers who cleverly and maliciously calculated each new heist and made off with all the money while destroying the economy, then got federal guarantees and loans that came to more than $12 trillion, that’s trillion, to “save the country.” And now lobby for “austerity” and “leaner government” and fewer “wasteful social programs” like social security and Medicare, and fewer regulations so that their delicate business minds can feel safe enough to invest again. And save us all again with their unfettered greed.

In which case, I’ll sure feel protected. Won’t you?

Lawrence DiStasi