The leftist (i.e. dominant) version of America’s ongoing bank debacle typically begins and ends with rants about excessive greed among money-grubbing, capitalist pig bankers. "Silly leftists," is my first reaction, but then I pause.
Every banker in America operates inside the protective envelope of the Federal Reserve’s and U.S. government’s banking cartel. Inside this cozy system bankers borrow at artificially low rates "money" that represents the savings of no one (actually, it is all based on treasury debt, whose value rests on future extortion via the IRS) and originate outsized loans on assets whose prices are artificially raised by the very demand created by such "credit-from-nowhere" operations.
A banking charter was, for decades and decades, a system for generating income that was all but guaranteed because, absent a systemic disintegration, losses would be wiped clean by the central bank as "lender of last resort" and by government deposit insurance.
Heads I win, tails I don’t lose. You gotta’ love it.
When we think about it, the word "cartel" describes nearly every major industry in the United States today. When the big pharmaceutical companies and their health care industry brethren lobby in favor of a near complete takeover of medical service delivery by the central government, even a child realizes that there’s something in it for them.
Not to single out one entity, but the Pharmaceutical Research and Manufacturers of America (PhRMA) is run by people who can see how good business is for Lockheed Martin, Raytheon, and others in the Military-Industrial-Congressional Complex. Why battle for business when it is simpler (and more profitable) to aggregate all your customers into one entity that clearly prefers to deal with Big Firms? People running congressional re-election campaigns sure as heck understand how this game is played. It’s their bread-and-butter.
Let’s face it, America’s drug companies already have a lot of experience working with the men and women running Uncle Sam’s boisterous offspring (the FDA, CDC, DEA, OSHA, EEOC, HHS, others I forget, and of course their related vassals at the state level). An overtly nationalized system would simply codify the existing cartel system more explicitly, to the relief of business executives everywhere.
Those who are surprised to see executives at Pfizer, Johnson & Johnson, and many other health-related firms attempt to steer so-called health care reform legislation clearly are ignorant of the support for anti-trust legislation that came from American Big Business early in the 20th century. In both cases the logical conclusion is that any industry cartelized by the government results in business stasis; the big players stay big because only they have the legal and lobbying departments needed to swim with the biggest predator of them all, Uncle Sam. Smaller upstarts have to get in bed with a "rich uncle" among the established firms in order to get their voice heard inside the teak-furnished boardrooms where "negotiations" take place. "Rich uncles" enjoy that kind of relationship with pretty young firms.
The drug industry is currently laying off tens of thousands of salespeople. One reason is that government-licensed physicians are apt to have less input into what drug the patient will be offered. Simple economics is part of this, but in a government-run system like Canada’s, a central bureaucrat determines which drug will be used for a given condition. Instead of an army of salesperson/lobbyists invading doctors’ offices, the "sale" is made by a couple of the firm’s "home office" executives visiting the Health Administration offices. Why, it’s so civilized. How else does anyone think a centrally-run system negotiates lower pricing on drugs, for instance? The bureaucrat promises exclusivity and enforces it.
Consumer choice? You’re joking.
Think about how good it looks to a firm’s executives if they can eliminate the huge headcount expense of a large sales force. Employees come with payroll taxes, EEOC hassles, sexual harassment lawsuits, and a host of other messy human issues. This is the drug business parallel to a manufacturer replacing line employees with robotic machinery (another trend that politicized government amplifies, for all the same reasons).
Returning to the left’s unfavorable characterization of bankers, I decided that there was some truth to their epithets. Bankers are all money-grubbing participants in a cartel that systematically robs me and everyone else by escalating prices and helping build, brick-by-brick, a monetary system so unstable as to constitute a virtual economic suicide pact.
When leftist money-grubbing, socialist pig organizations (e.g. ACORN and Rainbow/PUSH) extort funds from banks and other businesses they are only one more gang of robbers demanding a share of the loot. The same is clearly the case for cops in police unions, members of AFSCME, public school teachers, executives in healthcare firms (and every single one of their employees and shareholders), firms selling everything from Hellfire missiles to toilet paper to the feds and states (and every one of their employees and shareholders), telecom companies selling network access to the Feds for eavesdropping (and every one of their employees and shareholders), regulated utility companies (and every one of their employees and shareholders), and probably a thousand other entities I’m forgetting.
We’re all cartel members now.
Contrary to American Mythology, the USA is the inversion of a free country because nearly every industry, nearly every walk of life and occupation exists inside a political cartel system. People don’t know any better because it’s all they’ve ever experienced.
How do you explain the concept of "being wet" to a fish?
We know that this system is unsustainable. The USSR appeared mighty and permanent too until one day it precipitously turned into a mature dandelion and blew away in the breeze.
Perhaps we are living in the time when the fish tank finally cracks and the water drains out, leaving citizens shocked and gasping in the few stagnant pools that remain. Then people may see, for the first time, the bubble in which they were living. Sadly it will be too late for many, having so fully adapted to the fishbowl of an artificial system that they cannot adjust to its absence.
September 18, 2009