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Broke and Broken

Mark A. Goldman                                                                       Dated: 9/29/05


This commentary was written in 2005 and published in my book by the same name.  You can purchase the book Here.

ONE of the dire consequences of the Bush administration is the acceleration of what I would call the cannibalization of the American economy resulting in the destruction of real wealth in its many forms.  This did not start five years ago, but the acceleration is now hyper.   

This process goes largely unreported because results are not directly reflected in national income accounting.  What allows this to happen is sleight of hand propaganda and accounting coupled with the fact that principles of economics are not widely understood by the general public.   

One of the great tragedies of our time is the fact that US citizens have been brainwashed over a period of many years into thinking that capitalism is equivalent to democracy.  It is not.  Capitalism is an economic system and democracy is a political system.  If you look at China and how it is transforming itself into a real powerhouse, you can begin to understand that totalitarianism and capitalism can coexist very nicely.  

Corporations are not democratic institutions and when corporate power marries political and military power, what that invites is fascism... which seems to be the path we are now on.  But there is a cost to all of this even though those who are drunk with power don't understand or care about that.  Their drunken stupor might persist long enough to destroy an entire civilization if we let them. 

Real wealth is that which adds to the quality of life.  Clean air, clean water, a warm place to sleep, having food on the table, and being in touch with loved ones are aspects of real wealth... and so is freedom from avoidable diseases, unnecessary stress, crime and insecurity.  In other words, those things that provide human beings with a true sense of security, well-being, and freedom are the main substance of real wealth.    

So how is your government and the global economy affecting your real wealth?  Well some of the choices being made on your behalf can add to your wealth in one context and destroy it in another.  For example, spend your tax dollars on some weapon systems and they might offer insurance against an enemy attack.  Spend money on weapons we will never need or use in order to provide jobs or to pay off political debts to unscrupulous individuals and corporations and it will rob those who pay taxes, those who get the jobs, and those who might have received something of value had the money been spent on something else.   

Well you might ask, how can having a job rob someone?  It can by having that person waste a lifetime of hours doing something meaningless when they could have been doing something useful with their time instead.  This robs them of their dignity and the experience they might have had if, in those same hours, they had been employed adding something meaningful to life.  Dignity is not an economic term and you won’t see it listed on a balance sheet even though it is an attribute of real wealth. 

Allowing a corporation to postpone the installation of anti-pollution devices, might bolster corporate profits, but it is also likely to diminish the wealth of everyone who lives downstream.  The added profits will show up as positive numbers on the company’s balance sheet and on the government’s GDP report.  But the real costs will not be measured or show up on any official document of either institution.             

In fact, to later clean up the accumulated mess that results might require relatively huge amounts of resources, which economic activity will then also be added to GDP even though the entire clean up effort would have been unnecessary had the original anti-pollution devices been properly installed in the first place.   

The savings that would accrue to a corporation in such a case will likely never balance out the real long term cost.  This is the squandering of real wealth and it takes its toll on real people who otherwise might have lived sustainable lives had those economic resources been properly spent in the first place, with the surplus invested at improving education, health care, or any number of other socially beneficial endeavors.  And of course if the product or service that the corporation was involved in was really of little use or social value anyway, the result is even more tragic.  

So what does GDP mean really in terms of real wealth.  Nothing… in fact it is now more likely to mislead, misinform, and outright lie. 

So when we spend billions of dollars on uncalled for tax cuts or on military adventures and weaponry, which then proliferate around the globe causing death and destruction everywhere, while at the same time diverting funds away from the building of adequate levies around New Orleans, for example, we are left wondering why are we so far in debt?  And how come we have to rebuild an entire city now when some of that money could have been used to keep the city dry and the rest used to help the poorest of New Orleans’ citizens become independent contributors to society? 

The American economy is mature now, home of the world's largest corporations.  The economy as a whole can be expected to grow perhaps at a sustainable annual rate of 3-6%.  But the investment community is looking to invest in corporations that will grow 15-20% per year.  There is tremendous pressure on executives to meet these targets.   How are they all going to do that year after year?  Well most can't... at least not without cheating...   

Remember a corporation’s true function in life, and the reason they were granted a charter to do business in the first place, was theoretically so that they would contribute something of real value to the economy and to society.    

Real growth accrues through innovation, improvements in efficiency and ends with consumer wealth and satisfaction... what we used to call progress.  You find examples in every industry, but it’s becoming harder and harder for most companies to be good corporate citizens and still grow at these high rates.   

A computer you buy today is vastly superior to what you could have purchased just ten years ago.  You can get several thousand songs on a portable player that can fit into the palm of your hand.  A telephone now weighs just a few ounces, can go anywhere, and doesn't require a hundred thousand telephone poles and a million pounds of copper to complete a call to your mother.  These are examples of what progress and the accumulation of real wealth looks like.  

But if a company has to cheat in order to grow... if it actually produces a net loss to society... that's not real growth. That’s just a stealth transfer of wealth from the weak and vulnerable to the rich.  So when a corporation installs TV sets in schools where they use stealth advertising to promote unhealthy foods or other products to impressionable youngsters who then develop lifetime consumption habits that will shorten their lives, increase their medical bills, dim their intelligence and corrupt their values... that might look good on some corporate balance sheet, but it leaves society with such unimaginable,  immeasurable and unmanageable costs, that if we directed all of our available resources to make up for the losses incurred, we would never have enough money to do it… and we don’t.  This is an example of an economy and a society cannibalizing itself in the pursuit and production of illusions.   

Corporations are devouring our accumulated wealth right under our noses.  When corporate executives don’t have the talent, the courage, or the integrity to grow their businesses “the old fashioned way” — by earning it through innovation, dedication, and simple hard work — but instead look for short cuts, like using their resources to corrupt the body politic or engaging in questionable marketing schemes in order to gain special undeserved favors and incentives, every aspect of society is diminished.  When an executive’s life becomes the pursuit of bottom line goals at any cost, rather than simply contributing to life through the successful production of goods or services that add something tangible to life, real wealth is inevitably sacrificed. 

So what do we have now?  What we have are once-forbidden and socially undesirable mergers taking place, resulting in a reduction of competition, innovation, and real value added services.  Which is to say, real wealth is being destroyed.  Real wealth has physical as well as social and spiritual attributes.  The media, for example, has the potential to educate, facilitate, and inspire society in its pursuit of real wealth.  But now instead, we have radio station owners, for example, who own more than a thousand stations where they broadcast dumbed-down news and programming that replaces the public’s need to know with their own selfish desire to grow.   

Other forms of mainstream media, now owned by big corporations, are also engaged in this same destruction of the public wealth.  They’ve lost their ability to function as the vehicle by which we as a people can find out what we need to know and understand in order to maintain a vibrant democracy.  We have instead a military-industrial-corporate-complex dominated government that is now powerful enough to corrupt this media and also shape foreign policy… and they use that power not for the good of our country or humanity but rather to accumulate even more power for themselves and to transfer more public wealth into their own coffers.  

This happened when capitalism married government and gave birth to defective offspring.  Like church and state… when you fail to keep Capitalism and Government separate... what you get is the corruption of both... and freedom, democracy, and real wealth is sacrificed.  In fact, what I am describing is the destruction of a nation as we thought we knew it... the slow but accelerating decay of its infrastructure and social fabric.  We are a super powered political economy intent on consuming itself.  If allowed to continue, eventually the decline in real wealth could make most of us so poor, economically and socially, that we will no longer recognize the country we now live in.   

We now have in America more millionaires than ever before.  But among the rich nations of the world, the real wealth of most Americans lags behind most if not all of them… higher infant mortality, lower life expectancy, higher cost and lower availability of health care, poorer health, less financial security, more criminal incarceration, a failing educational system, unfair tax policies, extreme gaps between the rich and poor… all the result of a corrupt system that is destroying the real wealth of most Americans. 

The system is broken. Only when enough citizens begin to understand where, how and why... will we really try to fix it.

This link will take you to my basic strategy for fixing it:

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