Growing up in The Bronx, the myth of capitalism and privatization was drummed into me. Publicly managed and controlled business operations were wasteful and, often, corrupt. It was the profit motive that made the private businesses efficient and profitable. If you want the job done right, you privatize.
The story left untold is the corruption and criminality of capitalism. I have a button which I often wear that says, “capitalism is organized crime.” People usually smile when they see the button and some give me the thumbs up, while others tell me they like my button.
People seem ready to question the benefits of a capitalistic economy and to whom these benefits accrue. It’s becoming more and more evident, especially because of the glaring disparity between the haves and have nots, that capitalism is not the answer. In fact, capitalism, with its waste and polluting, may lead us to the destruction of the Earth and humankind.
Capitalism has a long history of opportune exploitation and oppression. In an article written by Gilda Haas, she writes, “capitalism’s unique scheming made slavery profitable not only to the slave owner but to investors worldwide. She explains, “In the 1830s, powerful Southern slave owners wanted to import capital into their states so that they could buy more slaves. They came up with a new, two-part idea: mortgaging slaves; and then turning the mortgages into bonds that could be marketed all over the world.
“First, American planters organized new banks, usually in new states like Mississippi and Louisiana. Drawing up new lists of slaves for collateral, the planters then mortgaged them to the banks they had created, enabling themselves to buy additional slaves to expand cotton production. To provide capital for those loans, the banks sold bonds to investors from around the globe—London, New York, Amsterdam, Paris. The bond buyers, many of whom lived in countries where slavery was illegal, didn’t own individual slaves, just bonds backed by their value . . .
“As slave-backed mortgages became paper bonds, everybody profited, except, obviously, enslaved African Americans whose forced labor repaid owners’ mortgages. But investors owned a piece of slave-earned income. Older slave states such as Maryland and Virginia sold slaves to the new cotton states, at securitization-inflated prices, resulting in a slave asset bubble. Cotton factor firms like the now-defunct Lehman Brothers—founded in Alabama—became wildly successful. Lehman moved to Wall Street, and for all these firms, every transaction in slave-earned money flowing in and out of the U.S., earned Wall Street firms a fee.”
More recently, as all of us remember, Wall Street institutions, after speculating on a sub-prime loan market that was disproportionately and unfairly populated by African-American borrowers, produced a crisis that led to a 60% loss of Black household wealth—perhaps the largest loss of Black wealth since Black people were themselves wealth owned by others.
Their shenanigans almost crashed the economy of the U.S. causing mass unemployment and foreclosures. Only a bailout by the federal government allowed these criminals to stay in business and continue to exploit the public with their money-making schemes. Once again, we’re shown how capitalism provides, for their corporations, privatized profits but publicly shared losses. I always naively thought that capitalism, as the symbol of freedom, provided us with the freedom and opportunity to invest our assets as we chose and that if we increased our wealth, it was ours to keep and, if our investment went south, it was our burden to bear. Clearly, I was misled. The capitalist keeps his profits but shares his losses with the public. To coin an original phrase this is a form of “socialized capitalism.”
How do capitalists and privateers show their appreciation to the public for the bailouts that kept them in business? By using much of the bailout money to provide themselves with exorbitant bonuses as well as continuing to hide their assets off shore to avoid paying taxes, thus depriving us, the public, from much needed services.
It is almost a pledge we take, beginning in our formative years, that we equate capitalism with freedom. When the Berlin wall came down, Tom Brokaw, on NBC, said to the East Germans, “Welcome to the free world.” I realized that East Germany, in joining the world of capitalism and privatization, was now free to exploit others as any good capitalist is prone or required to do.
On the other hand, socialism is portrayed as a system that is oppressive and often equated with fascism. Think about the recent struggle to introduce some health care plan that would ensure that all Americans were covered by insurance. Many people panicked at the notion that this would result in socialized medicine. Many stated that they did not want the government involved in and making decisions about their medical care. Yet, they had no qualms accepting the health care decisions being made regarding their medical care by CEOs, people whose primary concern was corporate profit, of the health insurance industry.
If the Medicare or Medicaid programs were in danger of being dissolved, these same people would be in the streets ready to go to war to preserve these programs without recognizing that both programs are examples of socialized medicine. Both of these programs, along with the Social Security program are run by the government efficiently with little waste.
There are many other examples of privatized corporations that depend on public monies. Let us look at the world of sports.
Minnesota built a new baseball stadium for the hometown Twins. Target Field is luxurious and spacious and the perfect confines for a competitive baseball team. The Minnesota Vikings, however do not play baseball and thus need a stadium of their own, or so they say. The Hubert H. Humphrey Metrodome housed both teams for upwards of 25 years, but the Twins moved and the Vikings lease on the stadium has run out. The team had lobbied the state legislature for public funding for the stadium, claiming that the Metrodome was no longer profitable enough for the team to compete. Thus, a $975 million stadium will be built in its place, with just over half the funds coming from taxpayers.
It is clear that the refusal of a metropolitan area to finance these requested stadiums would result in the team seeking an agreement elsewhere in another city that would accommodate them.
In 2008, Lucas Oil Stadium opened in Indianapolis, Indiana, as the home of the Indianapolis Colts. The cost of the stadium was $720 million, 86% of it borne by public monies.
In 2010, 121 professional sports facilities in use for all five major sports leagues required $43 billion in investments in new construction or major renovations. About half of that investment came from the public, according to research by Harvard urban planning professor Judith Grant Long. These figures do not include public money made available for improved roads to and from the stadiums, improved public transportation to and from the stadiums, and increased parking facilities to accommodate the fans.
Is the private industry’s fleecing of the public limited to the sports industry? Of course not. Major corporations have notoriously negotiated favorable tax deals with local governments in order to stay put. In New York State, we currently have advertisements claiming that new businesses will get 10 years of tax free operations.
What this translates to is a loss of tax revenue in order to keep these or attract new corporations who will supposedly provide jobs to local residents. Somebody must pay somewhere along the line either financially or in the loss of public services but, it will not be the privateers.
Then we have some major corporations, like Walmart, Burger King McDonalds, etc., who insist on paying their workers minimum wages which will not allow them to support themselves. These are corporations making hundreds of millions of dollars in profits. But they are not without caring. They often provide counseling to their workers on how to apply for food stamps to supplement their incomes. This means that you and I, the taxpayers, are helping to supplement the pay that the workers of these corporations earn.
Corporations have the leverage to demand special treatment or they will abandon you and move to a locale that will meet their demands. As the Mafia is claimed to have said when executing a competitor, “It’s not personal, it’s business.”
What’s the difference between corporations and the Mafia? The Mafia pays its workers better.
Dave Alpert has masters degrees in social work, educational administration, and psychology. He spent his career working with troubled inner city adolescents.
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The myth of capitalism and privatization
Posted on April 1, 2015 by Dave Alpert
Growing up in The Bronx, the myth of capitalism and privatization was drummed into me. Publicly managed and controlled business operations were wasteful and, often, corrupt. It was the profit motive that made the private businesses efficient and profitable. If you want the job done right, you privatize.
The story left untold is the corruption and criminality of capitalism. I have a button which I often wear that says, “capitalism is organized crime.” People usually smile when they see the button and some give me the thumbs up, while others tell me they like my button.
People seem ready to question the benefits of a capitalistic economy and to whom these benefits accrue. It’s becoming more and more evident, especially because of the glaring disparity between the haves and have nots, that capitalism is not the answer. In fact, capitalism, with its waste and polluting, may lead us to the destruction of the Earth and humankind.
Capitalism has a long history of opportune exploitation and oppression. In an article written by Gilda Haas, she writes, “capitalism’s unique scheming made slavery profitable not only to the slave owner but to investors worldwide. She explains, “In the 1830s, powerful Southern slave owners wanted to import capital into their states so that they could buy more slaves. They came up with a new, two-part idea: mortgaging slaves; and then turning the mortgages into bonds that could be marketed all over the world.
“First, American planters organized new banks, usually in new states like Mississippi and Louisiana. Drawing up new lists of slaves for collateral, the planters then mortgaged them to the banks they had created, enabling themselves to buy additional slaves to expand cotton production. To provide capital for those loans, the banks sold bonds to investors from around the globe—London, New York, Amsterdam, Paris. The bond buyers, many of whom lived in countries where slavery was illegal, didn’t own individual slaves, just bonds backed by their value . . .
“As slave-backed mortgages became paper bonds, everybody profited, except, obviously, enslaved African Americans whose forced labor repaid owners’ mortgages. But investors owned a piece of slave-earned income. Older slave states such as Maryland and Virginia sold slaves to the new cotton states, at securitization-inflated prices, resulting in a slave asset bubble. Cotton factor firms like the now-defunct Lehman Brothers—founded in Alabama—became wildly successful. Lehman moved to Wall Street, and for all these firms, every transaction in slave-earned money flowing in and out of the U.S., earned Wall Street firms a fee.”
More recently, as all of us remember, Wall Street institutions, after speculating on a sub-prime loan market that was disproportionately and unfairly populated by African-American borrowers, produced a crisis that led to a 60% loss of Black household wealth—perhaps the largest loss of Black wealth since Black people were themselves wealth owned by others.
Their shenanigans almost crashed the economy of the U.S. causing mass unemployment and foreclosures. Only a bailout by the federal government allowed these criminals to stay in business and continue to exploit the public with their money-making schemes. Once again, we’re shown how capitalism provides, for their corporations, privatized profits but publicly shared losses. I always naively thought that capitalism, as the symbol of freedom, provided us with the freedom and opportunity to invest our assets as we chose and that if we increased our wealth, it was ours to keep and, if our investment went south, it was our burden to bear. Clearly, I was misled. The capitalist keeps his profits but shares his losses with the public. To coin an original phrase this is a form of “socialized capitalism.”
How do capitalists and privateers show their appreciation to the public for the bailouts that kept them in business? By using much of the bailout money to provide themselves with exorbitant bonuses as well as continuing to hide their assets off shore to avoid paying taxes, thus depriving us, the public, from much needed services.
It is almost a pledge we take, beginning in our formative years, that we equate capitalism with freedom. When the Berlin wall came down, Tom Brokaw, on NBC, said to the East Germans, “Welcome to the free world.” I realized that East Germany, in joining the world of capitalism and privatization, was now free to exploit others as any good capitalist is prone or required to do.
On the other hand, socialism is portrayed as a system that is oppressive and often equated with fascism. Think about the recent struggle to introduce some health care plan that would ensure that all Americans were covered by insurance. Many people panicked at the notion that this would result in socialized medicine. Many stated that they did not want the government involved in and making decisions about their medical care. Yet, they had no qualms accepting the health care decisions being made regarding their medical care by CEOs, people whose primary concern was corporate profit, of the health insurance industry.
If the Medicare or Medicaid programs were in danger of being dissolved, these same people would be in the streets ready to go to war to preserve these programs without recognizing that both programs are examples of socialized medicine. Both of these programs, along with the Social Security program are run by the government efficiently with little waste.
There are many other examples of privatized corporations that depend on public monies. Let us look at the world of sports.
Minnesota built a new baseball stadium for the hometown Twins. Target Field is luxurious and spacious and the perfect confines for a competitive baseball team. The Minnesota Vikings, however do not play baseball and thus need a stadium of their own, or so they say. The Hubert H. Humphrey Metrodome housed both teams for upwards of 25 years, but the Twins moved and the Vikings lease on the stadium has run out. The team had lobbied the state legislature for public funding for the stadium, claiming that the Metrodome was no longer profitable enough for the team to compete. Thus, a $975 million stadium will be built in its place, with just over half the funds coming from taxpayers.
It is clear that the refusal of a metropolitan area to finance these requested stadiums would result in the team seeking an agreement elsewhere in another city that would accommodate them.
In 2008, Lucas Oil Stadium opened in Indianapolis, Indiana, as the home of the Indianapolis Colts. The cost of the stadium was $720 million, 86% of it borne by public monies.
In 2010, 121 professional sports facilities in use for all five major sports leagues required $43 billion in investments in new construction or major renovations. About half of that investment came from the public, according to research by Harvard urban planning professor Judith Grant Long. These figures do not include public money made available for improved roads to and from the stadiums, improved public transportation to and from the stadiums, and increased parking facilities to accommodate the fans.
Is the private industry’s fleecing of the public limited to the sports industry? Of course not. Major corporations have notoriously negotiated favorable tax deals with local governments in order to stay put. In New York State, we currently have advertisements claiming that new businesses will get 10 years of tax free operations.
What this translates to is a loss of tax revenue in order to keep these or attract new corporations who will supposedly provide jobs to local residents. Somebody must pay somewhere along the line either financially or in the loss of public services but, it will not be the privateers.
Then we have some major corporations, like Walmart, Burger King McDonalds, etc., who insist on paying their workers minimum wages which will not allow them to support themselves. These are corporations making hundreds of millions of dollars in profits. But they are not without caring. They often provide counseling to their workers on how to apply for food stamps to supplement their incomes. This means that you and I, the taxpayers, are helping to supplement the pay that the workers of these corporations earn.
Corporations have the leverage to demand special treatment or they will abandon you and move to a locale that will meet their demands. As the Mafia is claimed to have said when executing a competitor, “It’s not personal, it’s business.”
What’s the difference between corporations and the Mafia? The Mafia pays its workers better.
Dave Alpert has masters degrees in social work, educational administration, and psychology. He spent his career working with troubled inner city adolescents.