Capitalism has failed: Face the facts

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By
Saul Landau                                                                       Read Spanish Version

When
the Soviet Union and its state socialism collapsed, the promoters of
capitalism kvelled. But
ten years later, in the early Bush years, ENRON, a super giant
corporation got caught cooking its books to disguise the real state
of its operations. It defrauded its stockholders and bilked
California taxpayers by planning for an energy shortage at peak times
and then jacking up prices. In doing its hanky panky ENRON colluded
with a major accounting firm, Arthur Anderson.
WorldCom and Adelphia went through similar versions of this corporate
hanky panky — pre-dating the later banking and insurance horrors.

The
monster-sized companies stole billions. Some of the thieves went to
prison. Until
then,
they had been role models for Republicans and even some Democrats.
Business, not government, should run the economy became the mantra of
the 1980s, 90s and first eight years of the 21^st
Century. Business did run the economy — right into the ground. The
men — and a couple of women — who directed the scandalous companies
came from a culture in which large-scale theft masqueraded as solid
business practice. Bernie Madoff and his imitators were only extreme
examples. Create a façade. That’s the premise from which grand
corporate theft derives. Dress well (expensively), rent a high priced
office and promise easy money. The public (suckers) will come like
flies to honey.

When
the house of cards collapses — the U.S. economy among many other
economies — a few of the more obvious (super greedy) thieves get
caught and even go to prison. The conservative bankers and Wall
Street moguls turned out to be reckless radicals who played fast and
loose with other people’s money. The rest of the country is paying
a terrible price.

The
scandals should teach us lessons at a time of economic — dare I say
it? — depression. Driving through Oakland, California, one doesn’t
have to explain how giant banks suckered poor people into buying home
mortgages they couldn’t afford. I wonder if one added up the
salaries, bonuses and stock options of the former masters of the
universe together with the money they spent on vacations, parties,
mistresses and yachts, and if we could somehow rematerialize it,
could we then use it toward bringing some of the public and private
buildings up to modern standards! Slums have reemerged along with the
expression “poor people.” Drive through Newark, New Jersey,
Wilmington, Delaware, or Pontiac, Michigan — or dozens more cities
throughout the country whose governments have not invested in their
poor or in infrastructural repair for decades. Capitalism has failed
— again!

It
still warps the minds of public servants — excuse the word.
Oakland’s mayor and city council now drool at the chance to build a
new police station and a municipal building — not to repair schools
or build clinics.

“What
do they need new buildings for?” asked a long time Bay Area
resident. “They can continue to do nothing in the lousy buildings
they now occupy. And what the Hell does the government do with all
the money it gets from all the taxes? They sure can’t spend it all
on wars and boondoggles.”

“Why
don’t they rent the space just vacated by Toyota? [Alameda Toyota
moved to larger quarters in Oakland and a month later went belly-up]
They weren’t selling cars. The place is big enough to house a new
police station and mayor and his impotent staff.”

In
Contra Costa County, home to about 1 million people, 40,000 families
have applied “for just 350 affordable-housing vouchers.” (Vivien
Lou Chen, Bloomberg, Feb. 26)

People
routinely line up to get free food in the cities of Antioch,
Pittsburg and Oakley. But local churches don’t have enough to
satisfy the growing numbers of needy. In Antioch, a Family Stress
Center now occupies the place where a bank once thrived: a symbolic
illustration of the state of the economy. In Watsonville, south of
Santa Cruz, they would discover that many Mexicans have had to return
home because they cannot find work.

California
agencies
can no longer accommodate the hordes of formerly middle class people
who now need “social services.” Those who had job-related medical
coverage now seek help from the sparse public health services.

Page
1 of the March 1 New
York Times focused
on how
people
who lost well-paying executive jobs have taken menial labor jobs for
$12 an hour. The casualties cascade and as they do under-funded
government agencies, federal, state and local cannot cope with the
stress — on their shrinking funds and personnel.

The
once fabled free market brought boom to California’s Silicon Valley
during which “developers” bought fertile farmland and converted
it into tract homes for commuters to San Francisco and other high
tech centers. Food shortages now loom throughout the world as once
good soil got converted into single home foundations. Lots of people
in the area got laid off, or saw their home values shrink; or lost
them. State tax revenue dried up and social service budgets
diminished at a time they were most needed.

A
construction worker in San Bernardino
County told me he hadn’t worked one day since November. He paved
driveways (his specialty) for new homes. “I just took a job
stocking shelves for $8.50 an hour [a cut of $41.50 an hour] because
I needed some income. What the Hell!”

He
told me that a four bedroom house he helped finish near Riverside had
sold for $495,000
in
2006. “I saw the same place on sale for $90,000. I wonder if
someone will buy it.”

One
of his relatives pays a little more that $200 a month on his
mortgage, but a balloon payment due in May will drive payments up by
more than $1,000. “He just got moved from full to part time and had
some of his benefits stripped away. No way they can make their
mortgage payment and still buy groceries.”

A
real estate agent who deals in Contra Costa property complained that
home prices in one year have fallen almost 60%. According to MDA
Dataquick in San Diego (a resource for business students studying
real estate), between October and January 2009, more than 3,100
default notices were filed (first stage of foreclosure) there.

“Bank-owned
home” signs
in areas of California’s Central Valley have become as common as
the Golden Arches. Malls,
they will observe, have grown significantly less populated; except
for grocery and pharmacy chains the other stores have
few
customers. TJ Maxx, Old Navy, See’s Candy and even Radio Shack look
bereft of buyers.

What’s
happening in California reflects the rest of the country as well. The
Agriculture Department reported in November last year it had
qualified more than 31 million people as eligible for food stamps —
almost 15% higher than a year before.

By
early February, some 5 million collected unemployment insurance
checks. The official jobless rate in Contra Costa County, 9.3
percent, was higher than the U.S. 7.6 percent. But worse is coming.
In the Bay Area, like much of the country, employers have cut jobs,
reduced work from full to part time or furloughed staff.

What
happens to people when they lose jobs and receive foreclosure
notices? They apply for employment insurance and get stressed. Some
lose their cars, which limits their chances of finding jobs. Family
tensions increase — divorce, separation and worse. This analysis of
system breakdown should become part of “business ethics” classes.

The
behavior of the large property owning class remains constant.
Landlords continue to seek opportunities to squeeze more from
tenants; bosses from workers. The owner of an apartment complex in
Alameda demanded that tenants begin to pay for water and garbage
collection. The tenants expressed their sentiment by threatening to
move.

Socialism
failed in the Soviet Union and East Europe.
Nature
now threatens alongside economic chaos caused by failing capitalism.
But rather than face facts the political class still freaks out over
the mention of the word “nationalization.”
Refusal to face dire economic facts will cause foolishness or
inaction. The President cannot afford to put his head in the sand on
the economy or health care. Yet, Obama apparently fears to even raise
the idea of a national health system. Without a national plan the
corporate insurance companies will continue to waste precious
resources and suck blood from the poor.

Isn’t
it time that the poor — previously called the middle class — who
put him in the White House begin to organize themselves to force him
to promote their own interests: survival?

Saul
Landau is an Institute for Policy Studies fellow and filmmaker. His
DVDs are available at roundworldproductions@gmail.com.