- Paperback: 224 pages
- Publisher: Black Rose Books (May 18, 2006)
- Language: English
- ISBN-10: 1551642808
- ISBN-13: 978-1551642802
- Product Dimensions: 6 x 0.6 x 9 inches
- Shipping Weight: 10.6 ounces
- Average Customer Review: 6 customer reviews
- Amazon Best Sellers Rank: #1,219,429 in Books (See Top 100 in Books)
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Rigged Game Paperback – May 18, 2006
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Tax cuts benefit the wealthy more than anyone else and they do not hire more people or reinvest in manufacturing, they buy more stock and live off the dividends until another war is started to respond to the mass unemployment created and the war creates jobs--unless it is a nuclear war--but either way they then restart the cycle once again---endless war.
A tiny wealthy elite, through corporations, have absconded with a larger and larger share of the wealth from the working people. It also analyses the consequence of doing this to excess, such as happened in the Great Depression. To boost dividends, corporations lay off employees, outsource or reduce wages. The wealthy who now have the lion's share of the money don't buy more food, stereos etc. They invest their wealth. So over all, when many corporations do this at once, demand for goods collapses and the economy goes into recession. Similarly, to boost dividends, co-operating so-called "competitors" simultaneously raise their prices. This is the opposite of what you normally do in times of slowing sales. The strategy lowers demand even further, in a vicious downward spiral.
"The Bakers of Financial Debauchery" chapter near the start of the book goes into the disconnect between CEOs and shareholders on one hand, and the actual companies they run on the other. CEOs make the headlines but can't possibly know more that a small fraction of what goes on in their ever more gigantic, publicly-traded companies. This in comparison to small business owners, who must know everything about their customers, employees and supply chain to survive.
The shareholders of large corporations want to see increasing quarterly profits. Hively clearly explains ways corporations keep quarterly profits on the rise - from cutting worker's wages, benefits, hours and jobs, shifting manufacturing operations to countries with lower and lower wages (as has happened with companies shifting jobs to Mexico right after the passage of NAFTA, then those same jobs to countries with even lower wages, such as China), to getting government welfare/bailout money (the best example being defense spending), to using rainy day money to beautify profit statements, to using questionable accounting practices (Enron), etc. etc.
The recent passage of major health care reform backs up some of these themes. The 2 major flaws of the reform are that it doesn't cover all Americans and doesn't effectively control costs. These two major flaws had little to do with what ideas would be best for the health care provided to hundreds of millions of Americans, who pay by far the highest health care costs per capita in the world while falling somewhere between 30th and 50th internationally in terms of overall quality of care. Millions of people will be left without health care even after all the reforms take place in a few years, by which time costs will continue to artificially be raised higher than overall inflation. When health care providers make more and more profits, they can buy off more and more politicians.
Hively points out that many Americans were traveling to Canada to get their prescription drugs at drastically reduced prices, or ordering the drugs from Canadian companies. The drugs are often made by U.S. companies or otherwise deemed safe for Canadians. In 2000, Democratic U.S. Senate candidate Brian Schweitzer drove busloads of seniors from Montana to highlight these differences and nearly beat incumbent Republican Conrad Burns even though Burns had to spend twice as much as Schweitzer and the state voted heavily in favor of George W. Bush that year. In 2003 Bush made illegal these purchases of Canadian drugs by Americans and gave U.S. citizens a trillion dollars a year to subsidize their high drug prices. Hively points to this as a grave example of corporate welfare, that is does nothing to control increasing health care prices, and doesn't cover all of the costs.
According to Hively, Adam Smith would not approve of the anti-competitive nature of corporate growth and subsequent manipulation of the political system. The record $4 billion spent in the 2010 elections, a vast majority of it going to conservative politicians, is the real "invisible hand".
With effective examples, Hively highlights the Great Depression in chapter 5, stressing that during 1929 - 1932, people continually had their hours, benefits and jobs cut in order to keep dividends rising for shareholders. Company profits/dividend payments rose for 15 months straight after the stock market crashed near the end of 1929 even as people were laid off, the demand for goods and services plummeted and corporate earnings went negative. Inflation was actually in the negative percentiles because the working and middle classes had less and less money to spend. FDR came into power in early 1933 and enacted huge public works projects, minimum wage laws, unemployment benefits, the Securities and Exchange Commission, and Social Security. These measures greatly benefited the demand sector of the economy, reversed deflation, and gave people more money to spend and ways to take care of themselves and their families - and business profits rose.
Hively contends that FDR didn't do enough spending that would have continued to improve the demand sector, and unemployment went past 15% again in 1937. Only when FDR spent more money did the economy keep rebounding. Then WWII hit and everyone was employed.
Hively documents post-war America to 1970, more clearly detailing his contention that unemployment and corporate profits rise together. In other words, corporations reduce employment and business-to-business transactions in order to increase profits and keep those dividend payments to (usually wealthy) shareholders on the rise. But earnings can't simply rise forever. To keep profits and dividend payments rising quarterly to wealthy shareholders, worker hours and benefits have to be reduced and/or people laid off.
Hively documents economic trends through the second term of George W. He contends that artificially imposed inflation, as well as corporate welfare programs like war and tax breaks for the rich (who them spend their money not on durable goods, but stocks in companies) keep dividend payments on the rise. Meanwhile, trade agreements like NAFTA (pushed and passed by President Clinton) simply allow U.S. companies to ship good-paying jobs out of the country. Which increases dividend payments to the wealthy. Both Reagan and George W. gave legal status to millions of illegal immigrants, pushing wages down throughout our economy. Which increases dividend payments to the wealthy through lower salaries paid by LLCs. Meanwhile, both parents in nuclear families have to work more and more, lessening the social bonds that our churches, schools and friends provide.
It's interesting to note that in the three decades after WWII, the richest 1 percent of Americans never owed more than a third of all the wealth in the country. By most accounts, that disparity is far worse now. Hence the huge backlash by both conservative and liberally-minded Americans against the late 2010 efforts to continue Bush-era tax breaks for the wealthiest Americans. As U.S. Senator Jeff Merkley said while voting against the deficit-increasing tax breaks: cutting taxes for the richest among us is one of the least effective ways to create jobs.
"The Rigged Game" portends a deep, dangerous crash of the world economic system within the next 5-50 years, a time when artificial inflation, shipping good jobs overseas, welcoming more and more immigrants into this country (which is humane but lowers wages and does nothing to address a foreign policy not based on human rights and democracy, not based on keeping families and cultures together in their home countries), lowering interest rates further and further, and war will not be enough to keep dividend payments for the wealthy rising quarter after quarter (after quarter).
But the next chapter, "The Race to the Bottom on the Road to Serfdom", illustrates what corporations do internationally to keep their stock prices rising:
"We know the corporate economic system relies heavily, and increasingly, upon transfers of income from working people to wealthy shareholders and to the captains of industry and finance. In the U.S., however, it is politically palatable to transfer only so much income and wealth from the lower 98 percent or so of the population to the top during any particular year. Therefore during the last 30 years or so, as the need for higher profits has accelerated, U.S. corporations have pushed their federal government to open up the lesser developed world to free trade in order to more rapidly transfer income and wealth from those people to themselves..... it has proven helpful for many corporations to exercise even more political and economic power in lesser developed countries than they do in the United States." (pg. 116)
Chapter 9 addresses the author's take on corporate welfare. There is a detailed account of all the politicians during both the Clinton and Bush administrations that Enron paid to allow it to cook its accounting books and subsequently destroy the pensions of thousands of workers and bilk Californians through skyrocketing electricity prices in the year 2000. In 2011, the Senate failed to increase taxes on oil companies even as the companies have record profits and the price of gas is close to $4 a gallon. There as been a lot of criticism of corporate welfare in the form of lower and lower taxes for large companies, such as GE, with federal and many state politicians too scared to equalize tax rates for the companies that have filled their campaign coffers. It's as if staying in power as a politician were the only truly important thing in the world.
In the second to last chapter, "History of the Corporate Economic System", Hively describes the start of the first corporation in England in 1600, the British East India Company, and how this was a legal and militaristic extension of the aristocratic class. It started the phenomenon of shareholders in England not working, receiving dividends and other payments, and not having a very good idea about what their company was doing in different parts of the world. The chapter goes on to describe how child and slave labor fueled the Industrial Revolution and how corporations designed poll taxes, literacy tests and property qualifications to keep poor blacks and whites from voting - effectively diluting the power of the Populist Party. It demonstrates how segregation was used to keep working class whites and blacks from organizing together and how politicians were constantly bribed by the wealthy executives of corporations, particularly railroad barons. It then describes how corporations went from being limited charters considered "artificial persons" to the status of citizen by a 1886 Supreme Court decision. Corporations were then persons with 14th Amendment protections, even though this posed many legal contradictions and that the U.S. Constitution makes no mention of corporations. The 14th Amendment was meant to protect the rights of blacks after the Civil War. Since corporations are owned by shareholders - making them slaves - they cannot get 14th Amendment rights. The 13th Amendment outlaws slavery. The chapter ends with descriptions of brutal government-sponsored attacks against unions all across the country in the late 19th century and early 20th century. Then:
"The New Deal programs of President Franklin Roosevelt provided citizens and their labor unions greater rights to organize in order to achieve higher standards of living. However, these rights were never as great as the privileges enjoyed by wealthy investors, inasmuch as average union members simply did not have the financial clout necessary to make purchases in the supermarkets of politics to the same degree as wealthy investors." (pg. 183)
In the last chapter, "The New American Revolution", Hively is as bold in his recommendations to fix the system as he is bleak in describing the effects of the increasingly powerful presence of large, limited liability companies. The recommendation to enhance and assist small businesses and break apart large, publically-trade companies is no surprise. Hively describes oil and pharmaceutical economic hegemonies as big reasons to change, to take control from corporations at every level of government. He recommends reversing the 1896 Plessey vs. Ferguson Supreme Court decision that gave personhood to corporations, using the grassroots growth of the NAACP and its subsequent ability to reverse the policies of segregation through the 1950s Supreme Court case Brown vs. the Board of Education as formula to eliminate personhood for corporations. Hively wants to increase criminal penalties to CEOs - even shareholders - for any damages their companies commit anywhere in the world. He would like to see the proliferation of more independent media outlets and political parties. While he doesn't mention establishing an international minimum wage, it's hard not to see both conservatives and progressives supporting the idea as a way to reduce immigration into the United States, to giving working people more political and economic clout around the world, to keeping more families and cultures intact and to hopefully reduce the backlash against immigrants trying to make a living and a life within our borders.
The recommendations in "The Rigged Game" are doable and helpful, at least as incremental steps. All the issues raised in this book can be a part of discussions in communities across the country meant to improve everyone's standards of living - the working class, the middle class, stockholders and corporations. There is a lot of work ahead to reduce the rancor dividing our two political parties and/or move beyond the two party system to get to more profound and local solutions.
There is also work ahead to move beyond superficial, sensationalist mass media stories and to figure out the context and ideas for solutions behind so much of what is put forth as `news' in this country. The power and attention given to the Tea Party and Chamber of Commerce over the last year or so provides an example. According to an article in the March edition of Z Magazine, the Chamber of Commerce says it represents 3 million businesses - yet almost half of its $140 million in donations in 2008 came from only 45 donors. The national Chamber of Commerce recommends privatizing Social Security and our nation's transportation and water infrastructure - ideas not supported by a vast majority of Americans.
Overall, Hively could reference even more objective source material, but the sources he uses are solid - the Wall Street Journal, the Oregonian and the New York Times, for example. To put it differently, the author uses sources that adequately back up his theory. And the order of the book is not sequential historically, but by the last page this somehow enhances what the author describes/prescribes.
It will now be interesting to read sort of a counter-argument in Alan Greenspan's autobiography "Age of Turbulence" and see what specific things ordinary citizens are doing in their communities to turn things around in Jay Walljasper's new book "All That We Share".
John Hively predicts the economic meltdown of 2008 all the way back in the spring of 2006, when this book was originally published.
John Hively has done a great job presenting a plausible analysis of modern american economic history in layman's terms. The only thing missing are charts and data tables - maybe a couple photos would be nice as well.
Mr Hively's chief assertion in this book is that the incessant drive for increasing corporate dividends is what sends America into recessions / depressions. When dividends rise faster than profits, CEOs begin to cut spending and slash jobs - which actually causes recessions due to weakened demand. Lost wages are thus transformed into corporate profits, which are then spit out as dividends. His arguments are very compelling.
Mr Hively's visions for a future free from corporations are a bit northwest-idealist unrealistic, but they take up so little of the book that I wasn't even annoyed. Nonetheless, he makes a very valid point that limited liability corporations are bad for the common man in many ways.
This is the best book I've read for many years. More exciting than 'the Stranger', more useful than 'the Prince', more insightful than Freud and Nietzche combined (well...). This book is the 'Origin of Species' of modern macroeconomics.