Sanders called JPMorgan’s CEO
America’s "biggest corporate socialist" — here’s why he has a point
Sen.
Bernie Sanders called JPMorgan CEO Jamie Dimon the “biggest corporate socialist
in America today” in recent ad
PAUL
ADLER
FEBRUARY 13, 2020 9:59AM (UTC)
Sen. Bernie Sanders called
JPMorgan Chase CEO Jamie Dimon the "biggest corporate socialist in America today" in a recent ad.
He may have a point
— beyond what he intended.
With his Dimon ad, Sanders is
referring specifically to the bailouts JPMorgan and
other banks took from the government during the 2008 financial crisis. But
accepting government bailouts and corporate welfare is not the only way I believe
American companies behave like closet socialists despite their professed love
of free markets.
In reality, most big
U.S. companies operate internally in ways
Karl Marx would applaud as remarkably close to socialist-style central
planning. Not only that, corporate America has arguably become a laboratory of
innovation in socialist governance, as I show in my own research.
Closet socialists
But inside JPMorgan and most
other big corporations, market competition is subordinated to planning. These
big companies often contain dozens of business units and sometimes thousands.
Instead of letting these units compete among themselves, CEOs typically direct
a strategic planning process to
ensure they cooperate to achieve the best outcomes for the corporation as a whole.
This is just how a socialist
economy is intended to operate. The government would conduct economy-wide
planning and set goals for each industry and enterprise, aiming to achieve the
best outcome for society as a whole.
And just as companies rely
internally on planned cooperation to meet goals and overcome challenges, the
U.S. economy could use this harmony to overcome the existential crisis of our
age — climate change. It's a challenge so massive and urgent that it will
require every part of the economy to
work together with government in order to address it.
Overcoming socialism's past
problems
But, of course, socialism
doesn't have a good track record.
One of the reasons socialist
planning failed in the old Soviet Union, for example, was that it was so top-down that it lacked the
kind of popular legitimacy that democracy grants a government. As a result,
bureaucrats overseeing the planning process could not get reliable information
about the real opportunities and challenges experienced by enterprises or
citizens.
Moreover, enterprises had
little incentive to strive to meet their assigned objectives, especially when
they had so little involvement in formulating them.
A second reason the USSR
didn't survive was that its authoritarian system failed to motivate either
workers or entrepreneurs. As a result, even though the government funded basic
science generously, Soviet industry was a laggard in innovation.
Ironically, corporations
— those singular products of capitalism — are showing how these and
other problems of socialist planning can be surmounted.
Take the problem of
democratic legitimacy. Some companies, such as General Electric, Kaiser Permanente and General Motors, have
developed innovative ways to avoid the dysfunctions of autocratic planning by
using techniques that enable
lower-level personnel to participate actively in the strategy process.
Although profit pressures
often force top managers to short-circuit the promised participation, when
successfully integrated it not only provides top management with more reliable
bottom-up input for strategic planning
but also makes all employees more reliable
partners in carrying it out.
So here we have
centralization — not in the more familiar, autocratic model, but rather in
a form I call "participative centralization." In a socialist system,
this approach could be adopted, adapted and scaled up to support economy-wide
planning, ensuring that it was both democratic and effective.
As for motivating innovation,
America's big businesses face a challenge similar to that of socialism. They
need employees to be collectivist, so they willingly comply with policies and
procedures. But they need them to be simultaneously individualistic, to fuel
divergent thinking and creativity.
One common solution in much
of corporate America, as in the old Soviet Union, is to specialize
those roles, with most people relegated
to routine tasks while the privileged few work on innovation tasks. That
approach, however, overlooks the creative capacities of the vast majority
and leads to widespread
employee disengagement and sub-par business performance.
Smarter businesses have found
ways to overcome this dilemma by creating cultures and reward systems that
support a synthesis of individualism and collectivism that I call
"interdependent individualism." In my research, I have found this
kind of motivation in settings as diverse as Kaiser
Permanent physicians, assembly-line
workers at Toyota's NUMMI plant and software
developers at Computer Sciences Corp. These
companies do this, in part, by rewarding both individual contributions to the
organization's goals as well as collaboration in achieving them.
While socialists have often recoiled against
the idea individual performance-based rewards, these more sophisticated
policies could be scaled up to the entire economy to help meet socialism's
innovation and motivation challenge.
Big problems require big
government
The idea of such a socialist
transformation in the U.S. may seem remote today.
But this can change,
particularly as more Americans, especially young ones, embrace socialism. One reason
they are doing so is because the current capitalist system has so manifestly
failed to deal with climate change.
Looking inside these
companies suggests a better way forward — and hope for society's ability
to avert catastrophe.
Paul Adler, Professor of
Management and Organization, Sociology and Environmental Studies, University of Southern California
Thirty per cent of mortgages could default and Fannie Mae and Freddie
Mac could require ANOTHER bailout like the Great Recession if lockdown
stretches into summer, warn analysts
·
Some 15 million households could default if the US economy remains
closed
·
Officials say Fannie Mae and Freddie Mac can survive 12 weeks of the
crisis
·
After that they would require a second bailout, as in the Great
Recession
·
Mortgage giants are offering payment holiday to homeowners out of work
·
So far 300,000 forbearance claims have been granted, with more to
follow
This chart shows single-family home delinquency rates since 1991, peaking at 11.54% in 2010
The US government seized control of Fannie Mae and Freddie Mac during the Great Recession, and a second drastic intervention could be required if the coronavirus crisis persists
As many as 30 percent of Americans with home loans, or
some 15 million households, could default if the nation’s economy remains
closed through the summer, Mark Zandi, chief economist for Moody’s Analytics,
wrote in a report.
That
would be nearly triple the record delinquency rate of 11.54 percent in the
aftermath of the Great Recession in 2010, wreaking havoc with the nation's
financial system.
After
10 million people filed jobless claims in the past two weeks, Zandi predicts that
millions more will lose their jobs if the coronavirus pandemic shutdowns
stretch out for months, destroying their ability to pay off debt.
Meanwhile,
mortgage giants Fannie Mae and Freddie Mac would likely require a bailout if
lockdowns last longer than 12 weeks, according to a federal
official.
·
This chart shows single-family home delinquency
rates since 1991, peaking at 11.54% in 2010
+2
·
The US government seized control of Fannie
Mae and Freddie Mac during the Great Recession, and a second drastic
intervention could be required if the coronavirus crisis persists
'If we start to go more than two or three
months, then there is going to be real stress in the mortgage market, we're
talking in terms of what happened during the Great Recession,' Mark
Calabria, director of the Federal Housing Finance Agency, told Financial Times on Friday.
Nearly
half of all U.S. mortgages are backed by Fannie Mae and Freddie Mac, which are
offering payment relief to homeowners in the form of forbearance programs of up
to 12 months for those who have lost income in the current crisis.
Calabria
said that 300,000 mortgage holders under Fannie and Freddie had already
requested relief from April 1 payments.
Since
the two agencies own more than 40 percent of all mortgages, that implies a
total of 700,000 homeowners sought forbearance for April.
That
number is expected to skyrocket in May, since many people were paid for part of
March, but roughly 10 million filed unemployment claims in the final two weeks
of the month.
Homeowners
with the federally backed loans do not have to prove lost income to seek
forebearance -- a system that could lead to fraudulent claims, but is intended
to speed up the process for seeking relief in the crisis.
But if
the crisis continues for long enough, Fannie and Freddie could suffer extreme
financial distress, as occurred in the implosion of the subprime mortgage
market that triggered the Great Recession.
In that
case, the two agencies were taken over by the federal government in a bailout
that cost roughly $238 billion.
In the
current crisis, Fannie and Freddie have also suspended all foreclosures and
evictions for homes owned by their companies.
The
agencies said on Monday they would freeze mortgage payments on sublet
properties provided that landlords agree not to evict their tenants.
The
eviction relief, announced by the Federal Housing Finance Agency that oversees
Fannie and Freddie, aims to limit evictions by reassuring landlords that they
will not be penalized if their tenants cannot pay the rent.
The
relief is available to any multifamily property owners who have a mortgage that
is guaranteed by Fannie and Freddie, which accounts for roughly 20 percent of
the multifamily market.
Fannie
and Freddie do not offer mortgages, but buy them from private parties, package
them into securities, and guarantee them for investors.
The
announcement followed a Sunday night move by the Fed and other banking
regulators to clarify that bank examiners will not look harshly on bank efforts
to modify loans for borrowers struggling amid the pandemic, so long as they are
made in a 'safe and sound' manner.
Banks
will not be required to categorize such relief as 'troubled debt
restructurings,' which typically require banks to carry more capital to offset
the risk.
NO ENTITY
HAS WORKED HARDER TO DESTROY AMERICA’S MIDDLE CLASS MORE THAN THE GLOBALIST
DEMOCRAT PARTY AND THEIR WELFARE SUCKING BANKSTERS, BILLIONAIRES AND “CHEAP”
LABOR DEM VOTING ILLEGALS!
The Clinton White House
famously abolished the Glass–Steagall legislation, which separated commercial
and investment banking. The move was a boon for Wall
Street firms and led to major bank mergers that some analysts say helped
contribute to the 2008 financial crisis.
Bill and Hillary Clinton
raked in massive speaking fees from Goldman Sachs, with CNN documenting a total
of at least $7.7 million in paid speeches to big financial firms, including
Goldman Sachs and UBS. Hillary Clinton made $675,000 from speeches to Goldman
Sachs specifically, and her husband secured more
than $1,550,000 from Goldman speeches. In 2005 alone, Bill Clinton collected over
$500,000 from three Goldman Sachs events.
Transaction Man: The Rise of the Deal and the Decline of
the American Dream
by Nicholas Lemann
Farrar, Straus and Giroux, 320 pp.
Berle
was alarmed by the wealth of these mega-corporations and the political power it
generated, but also believed that bigness was a necessary concomitant of
economic progress. He thus argued that corporations should be tamed, not broken
up. The key was to harness the corporate monstrosities, putting them to work on
behalf of the citizenry.
Berle
exerted major influence on the New Deal political economy, but he did not get
his way every time. He was a fervent supporter of the National Industrial
Recovery Act, an effort to directly control corporate prices and production,
which mostly flopped before it was declared unconstitutional. Felix
Frankfurter, an FDR adviser and a disciple of the great anti-monopolist Louis
Brandeis, used that opportunity to build significant Brandeisian elements into
New Deal structures. The New Deal social contract thus ended up being a
somewhat incoherent mash-up of Brandeis’s and Berle’s ideas. On the one hand,
antitrust did get a major focus; on the other, corporations were expected to
play a major role delivering basic public goods like health insurance and
pensions.
Lemann
then turns to his major subject, the rise and fall of the Transaction Man. The
New Deal order inspired furious resistance from the start. Conservative
businessmen and ideologues argued for a return to 1920s policies and provided
major funding for a new ideological project spearheaded by economists like
Milton Friedman, who famously wrote an article titled “The Social
Responsibility of Business Is to Increase Its Profits.” Lemann focuses on a
lesser-known economist named Michael Jensen, whose 1976 article “Theory of the
Firm,” he writes, “prepared the ground for blowing up that [New Deal] social
order.”
Jensen
and his colleagues embodied that particular brand of jaw-droppingly stupid that
only intelligent people can achieve. Only a few decades removed from a crisis
of unregulated capitalism that had sparked the worst war in history and nearly
destroyed the United States, they argued that all the careful New Deal regulations
that had prevented financial crises for decades and underpinned the greatest
economic boom in U.S. history should be burned to the ground. They were
outraged by the lack of control shareholders had over the firms they supposedly
owned, and argued for greater market discipline to remove this “principal-agent
problem”—econ-speak for businesses spending too much on irrelevant luxuries
like worker pay and investment instead of dividends and share buybacks. When
that argument unleashed hell, they doubled down: “To Jensen the answer was
clear: make the market for corporate control even more active, powerful, and
all-encompassing,” Lemann writes.
The
best part of the book is the connection Lemann draws between Washington
policymaking and the on-the-ground effects of those decisions. There was much
to criticize about the New Deal social contract—especially its relative
blindness to racism—but it underpinned a functioning society that delivered a
tolerable level of inequality and a decent standard of living to a critical
mass of citizens. Lemann tells this story through the lens of a thriving
close-knit neighborhood called Chicago Lawn. Despite how much of its culture
“was intensely provincial and based on personal, family, and ethnic ties,” he
writes, Chicago Lawn “worked because it was connected to the big organizations
that dominated American culture.” In other words, it was a functioning
democratic political economy.
Then
came the 1980s. Lemann paints a visceral picture of what it was like at street
level as Wall Street buccaneers were freed from the chains of regulation and
proceeded to tear up the New Deal social contract. Cities hemorrhaged
population and tax revenue as their factories were shipped overseas. Whole
businesses were eviscerated or even destroyed by huge debt loads from hostile
takeovers. Jobs vanished by the hundreds of thousands.
And
it all got much, much worse after 2008, when the schemes collapsed and, as
Lemann points out, Barack Obama did not aggressively rein in Wall Street as
Roosevelt had done, instead restoring the status quo ante even when it meant
ignoring a staggering white-collar crime spree. Neighborhoods
drowned under waves of foreclosures and crime as far-off financial derivatives
imploded. Car dealerships that had sheltered under the General Motors umbrella
for decades were abruptly cut loose. Bewildered Chicago Lawn residents
desperately mobilized to defend themselves, but with little success. “What they
were struggling against was a set of conditions that had been made by faraway
government officials—not one that had sprung up naturally,” Lemann writes.
Toward the end of the
book, however, Lemann starts to run out of steam. He investigates a possible
rising “Network Man” in the form of top Silicon Valley executives, who have
largely maintained control over their companies instead of serving as a sort of
esophagus for disgorging their companies’ bank accounts into the Wall Street
maw. But they turn out to be, at bottom, the same combination of
blinkered and predatory as the Transaction Men. Google and Facebook, for
instance, have grown over the last few years by devouring virtually the entire
online ad market, strangling the journalism industry as a result. And they
directly employ far too few people to serve as the kind of broad social anchor
that the car industry once did.
In
his final chapter, Lemann argues for a return to “pluralism,” a “messy,
contentious system that can’t be subordinated to one conception of the common
good. It refuses to designate good guys and bad guys. It distributes, rather
than concentrates, economic and political power.”
This
is a peculiar conclusion for someone who has just finished Lemann’s book, which
is full to bursting with profoundly bad people—men and women
who knowingly harmed their fellow citizens by the millions for their own
private profit. In his day, Roosevelt was not shy about lambasting rich
people who “had begun to consider the government of the United States as a mere
appendage to their own affairs,” as he put it in a 1936 speech in which he also
declared, “We know now that government by organized money is just as dangerous
as government by organized mob.”
If
concentrated economic power is a bad thing, then the corporate form is simply a
poor basis for a truly strong and equal society. Placing it as one of the
social foundation stones makes its workers dependent on the unreliable goodwill
and business acumen of management on the one hand and the broader marketplace
on the other. All it takes is a few ruthless Transaction Men to undermine the
entire corporate social model by outcompeting the more generous businesses. And
even at the high tide of the New Deal, far too many people were left out,
especially African Americans.
Lemann
writes that in the 1940s the United States “chose not to become a full-dress
welfare state on the European model.” But there is actually great variation
among the European welfare states. States like Germany and Switzerland went
much farther on the corporatist road than the U.S. ever did, but they do
considerably worse on metrics like inequality, poverty, and political
polarization than the Nordic social democracies, the real welfare kings.
Conversely,
for how threadbare it is, the U.S. welfare state still delivers a great deal of
vital income to the American people. The analyst Matt Bruenig recently
calculated that American welfare eliminates two-thirds of the “poverty gap,”
which is how far families are below the poverty line before government
transfers are factored in. (This happens mainly through Social Security.)
Imagine how much worse this country would be without those programs! And though
it proved rather easy for Wall Street pirates to torch the New Deal corporatist
social model without many people noticing, attempts to cut welfare are
typically very obvious, and hence unpopular.
Still,
Lemann’s book is more than worth the price of admission for the perceptive
history and excellent writing. It’s a splendid and beautifully written
illustration of the tremendous importance public policy has for the daily lives
of ordinary people.
Ryan Cooper
Ryan Cooper
is a national correspondent at the Week. His work has appeared in the
Washington Post, the New Republic, and the Nation. He was an editor at the
Washington Monthly from 2012 to 2014.
THE GRIFTERS:
HILLARY CLINTON AND HER
SERIAL RAPIST HUSBAND
“The couple
parlayed lives supposedly spent in “public service”
into admission into the upper stratosphere of American wealth, with incomes in the top 0.1 percent bracket. The source of this vast wealth was a political
machine that might well be dubbed “Clinton, Inc.” This consists essentially of
a seedy money-laundering operation to ensure big business support for the
Clintons’ political ambitions as well as their personal fortunes.
into admission into the upper stratosphere of American wealth, with incomes in the top 0.1 percent bracket. The source of this vast wealth was a political
machine that might well be dubbed “Clinton, Inc.” This consists essentially of
a seedy money-laundering operation to ensure big business support for the
Clintons’ political ambitions as well as their personal fortunes.
The basic components of the operation are lavishly paid
speeches to Wall Street and Fortune 500 audiences, corporate campaign
contributions, and donations to the ostensibly philanthropic Clinton
Foundation.”
"But what the
Clintons do is criminal because they do it wholly at the expense of the
American people. And they feel thoroughly entitled to do it: gain power, use it
to enrich themselves and their friends. They are amoral, immoral, and venal.
Hillary has no core beliefs beyond power and money. That should be clear to
every person on the planet by now." ---- Patricia McCarthy -
AMERICANTHINKER.com
Why Hillary and Her Wall Street
Donors Don’t Want Trump’s Wall…
NO BILLIONAIRE WANTS TO PAY LIVING WAGES
TO ANY LEGALS!
"Hillary and her party supporters desperately need illegal
immigrants: Hillary is bought and paid for." Michael Bargo, Jr.
"But what the
Clintons do is criminal because they do it wholly at the expense of the
American people. And they feel thoroughly entitled to do it: gain power, use it
to enrich themselves and their friends. They are amoral, immoral, and venal.
Hillary has no core beliefs beyond power and money. That should be clear to
every person on the planet by now." ---- Patricia McCarthy -
AMERICANTHINKER.com
THE GRIFTERS: HILLARY, BILLARY and CHELSEA… global
looters!
"But
there is no doubt in my mind that the Clintons, thoroughly practiced
grifters
that they are, as well as their increasingly shady daughter, will not
hesitate
to use such classified information as they may be able to access for
personal
and political enrichment. They've been doing it for decades,
and
they're
not about to stop now." RUSS VAUGHN
CLINTON MAFIA AND THEIR BANKSTERS AT GOLDMAN SACHS
WHO IS TIGHTER WITH THE PLUNDERING BANKSTERS? CLINTON,
OBAMA or TRUMP?
The Clinton White House famously
abolished the Glass–Steagall legislation, which separated commercial and
investment banking. The move was a boon for Wall
Street firms and led to major bank mergers that some analysts say helped
contribute to the 2008 financial crisis.
Bill and Hillary Clinton
raked in massive speaking fees from Goldman Sachs, with CNN documenting a total
of at least $7.7 million in paid speeches to big financial firms, including
Goldman Sachs and UBS. Hillary Clinton made $675,000 from speeches to Goldman
Sachs specifically, and her husband secured more
than $1,550,000 from Goldman speeches. In 2005 alone, Bill Clinton collected over
$500,000 from three Goldman Sachs events.
GEORGE SOROS AND
THE CLINTON GLOBALIST AGENDA FOR BANKSTERS AND WIDE-OPEN BORDERS
NEW YORK — Demand Justice, an
organization founded by former members of Hillary Clinton’s 2016 presidential
campaign and associated with a “social welfare organization” financed by
billionaire activist
George Soros, is raising money
for an eventual court fight against what the group describes as President
Trump’s proposed “racist, unnecessary wall.”
“Obama would
declare himself president for life with Soros really running the show, as he
did for the entire Obama presidency.”
“Hillary was always small potatoes, a
placeholder as it were. Her health was always suspect. And do you think the
plotters would have let a doofus like Tim Kaine take office in the event that
Hillary became disabled?”
THE PHONY CLINTON FOUNDATION CHARITY slush
fund
“There is no controlling Bill Clinton. He does whatever he wants and runs up incredible expenses with foundation
funds,” states a separate interview memo attached to the submission.
“Bill Clinton mixes and matches his personal
business with that of the foundation. Many people within the foundation have
tried to caution him about this but he does not listen, and there really is no
talking to him,” the memo added.
Hillary Clinton is simply the epitome
of the rabid self – a whirlpool of selfishness, greed, and malignance.
It may well be true that
Donald Trump has made his greatest contribution to the nation before even
taking office: the political destruction of Hillary Clinton and her infinitely
corrupt machine. J.R.
Dunn
"Hillary will do anything to distract you from her reckless
record and the damage to the Democratic Party and the America she and The
Obama's have created."
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