2008-05-30 / Columnists

The Progressive

New Economic Times
Commentary By John Paul Culotta

Right wing conservative pundits on our airwaves and in our print media often pontificate about the sanctity of the free market system. Their viewpoints often do not reflect the reality of the changes in capitalism. No longer does the market decide what businesses will survive and flourish or which will fail and cease to exist. In many ways our new system of capitalism is a system that rewards negative social and economic behavior. Government is actively engaged in our economic life by giving subsidies, bailouts and contracts. Rush Limbaugh often reminds his listeners that the New Deal is dead. He is, unfortunately, correct. Government oversight that protects and promotes economic benefit for the public and the worker is now at the mercy of our corporate elite. Workers' compensation for injuries and deaths across the nation is under attack because of poor administration. Government regulations regarding child labor, unpaid wages and overtime are not enforced because of poor funding of agencies that handle labor enforcement. Our social contract between labor and business management after the Second World War is now broken.

Many corporate leaders are rewarded handsomely financially as employees are dismissed, jobs are sent to foreign lands, dangerous and faulty products are produced, our ecology is harmed, and the companies lose value and stakeholders lose their investments. Fraud is commonplace. Labor is treated as a commodity - easily discarded. Our modern day style of capitalism is similar to the economic situation that existed in dictatorships and is a threat to our representative democracy.

Our political leaders are part and parcel of the disruption of the free market system - their first loyalty is to increase the share of campaign lucre in order to be elected and reelected.

Our new style of capitalism has established a new form of corporate ownership called private equity firms. This new corporate entity often takes capital directly from foreign governments in the Middle East, China, and India through sovereign wealth funds. Often sovereign wealth funds investments are in strategic areas such as ports, airports and energy infrastructure. In brief, we are becoming beholden to foreign countries for our economic security and social welfare.

Private equity firms are increasingly buying out firms not to run businesses but to increase profit margins by pressuring management to cut positions for workers and to minimize benefits; for example, health insurance benefits and defined pensions. It is often said that this must be done in order to compete. Collective bargaining is frowned upon and hostile activity towards union organizing is commonplace. Political leaders assist the new type of capitalism because the ever-increasing need for campaign finance feeds the lust of politicians to secure their place in the new system. Former presidents, congressmen and senators, as well as former governors of states, the wives of our politicians and family members are often on the boards of these new private equity firms. It has the appearance of the type of state capitalism that existed in the former Soviet Union.

Our democratic system is in danger because corporate leadership in control of our media does not report in detail the political corporate incestuous relationships. It, concentrates instead, on the lurid sexual peccadilloes and minor fraudulent behavior of political leaders who steal less than a half million dollars while billions of our taxpaying dollars have become entwined in activities that promote military activity, for-profit hospital chains, exorbitant pharmaceutical and energy profits. As I write this column I understand there has been strike activity in many GM plants across the country for the past month. Most Americans are unaware because the media has ignored reporting the issues involved in a serious, consistent manner. Spitzergate was covered ad infinitum. Did you know blue collar workers who are employed by the city of Buffalo, New York have not had a raise since 2001? Our media does not report on the difficulties of working Americans.

According to a Washington Post article of April 20, 2008 private equity firms are buying entire industries with foreign dollars and no government oversight at an alarming rate. The article stated: " In the United States alone, there were 881 buyouts worth a total of $390 billion in 2006 and 752 deals totaling $397 billion in 2007, according to Dealogic, an analytical firm." George H.W. Bush has a close relationship with the Carlyle Group, which purchased an energy infrastructure company, Kinder Morgan, for $22 billion. National Grid, a British firm, is purchasing many energy utilities across the country. Foreign investment is desirable but strategic industries need to be protected. Many nations dislike our corporations' control of their vital economic resources. Are we to become a poor nation that exists to enrich others?

There are organizations that are attempting to make Americans aware of the economic kleptocracy that runs the political and economic life of our nation.

These are the Service Employees International Union, ACORN, Working Families Part, and United Students Against Sweatshops. Please attempt to educate yourself about the new type of capitalism and the danger our American way of life is in.

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