The Great Deformation: The Corruption of Capitalism in America by David A. Stockman (2013)
Yes, that David Stockman, the man who was:
elected as a Michigan congressman in 1976 and the the Reagan White House in 1981. Serving as budget director, he was one of the key architects of the Reagan Revolution plan to reduce taxes, cut spending, and shrink the role of government. He joined the Salomon Brothers in 1985 [and we all know what happened to them] and later became one of the early partners of the Blackstone Group. During nearly two decades at Blackstone and a firm he founded, Stockman was a private equity investor.
BTW, the Wikipedia link on his name above is funny because he has a very youthful photo of himself contrasting mightily with his book jacket photo. Odd because like so many men, he looks good as he has grown older. It is interesting that despite having the heading of “FISCAL LEGACY” in a section on him, it just cites numbers and not the plain truth of the disastrous economic policies of “trickle-down” economics, which has become a push it all up to the 1 percent reality of today.
Another section cited his time at Blackstone, as “mixed” and he was (forced?) to resign. They obviously thought they were getting a superstar between his role in Reagan’s administration and the sacred Salomon Brothers cred [The firm used to be spoken of in extremely reverential terms; now they are gone due to corruption and greed.] Blackstone is one of the vultures in America with assets over $5 BILLION dollars.
It is also funny that in the author blurb the name of the company he founded is not mentioned. Heartland Industrial Partners was founded by him in 1999. Wikipedia states they are “no longer actively investing.” Maybe it is because of criminal indictments or bankruptcy that were related to that venture.
It is just so INSANE to follow the links. Here is what happened to him, and you can decide if his 700+ pages are worth anything to read. Here’s a bit from Wikipedia:
In 2005, it was reported that Stockman handed control of the fund, Heartland Industrial Partners, over to his partners following his resignation as chairman of Collins & Aikman, which was a major investment for the fund that ended in bankruptcy.
On March 26, 2007, federal prosecutors in Manhattan indicted Stockman in “a scheme … to defraud [Collins & Aikman]’s investors, banks and creditors by manipulating C&A’s reported revenues and earnings.” At the same time, the Securities and Exchange Commission brought civil charges against Stockman related to actions he took while CEO of Collins & Aikman. Stockman suffered a personal financial loss, estimated at $13 million, along with losses suffered by as many as 15,000 Collins & Aikman employees worldwide. Stockman said in a statement posted on his law firm’s Web site that the company’s collapse was the consequence of an industry melt-down, not fraud. In August 2008, a trial date was set but on January 9, 2009, the U.S. Attorney’s Office announced that it did not intend to prosecute Stockman in this case.
I must note, however, that even a broken clock can be right twice a day, and some of the passages I read did actually have some good points. Kind of like when I read the hated Phyllis Schlafly book. Either way, he is hopelessly wrong in his apparent continued belief in the the return to a gold-backed dollar based on other articles and books that have discussed that change (Richard Nixon). But in the jacket flap commentary, he also criticizes “Fed chairman Greenspan and Bernanke, who fostered our present scourge of bubble finance and addiction to debt and speculation.” So yay, he got that right.
Oh best of all, the jacket copy list of bad actors says:
George W. Bush, who repudiated fiscal rectitude and ballooned the warfare state via senseless wars.
There is nothing in the jacket copy to say what his own assessment of his “fiscal legacy” rates in the context of the history he enumerates over decades. In his introduction he explains some about why he wrote the book.
Less than two weeks before The Great Deformation went to press, the powers that be in Washington pulled off a “deal” that allegedly stopped the country from going over the fiscal cliff. What they did, in fact, was to permanently add nearly $5 TRILLION to Federal deficits over the next ten years, ensuring that the national debt will continue to surge higher and that Washington will become strangled even more deeply in a fatal paralysis of governance. . . .
Why we are mired in this virtually unsolvable problem is the reason I wrote this book. It originated in my being flabbergasted when the Republican White House [W] in September 2008 proposed the $700 BILLION TARP bailout of Wall Street. When the courageous [?!] House Republicans who voted it down were forced to walk the plank a second time in betrayal of their principled stand, my sense of disbelief turned into a not-inconsiderable outrage. Likewise, I was shocked to read of the BLATANT DEAL MAKING, bribing, and bullying of the troubled big banks [bullying the banks? are you kidding me?] being conducted out of the treasury secretary’s office, as if it were the M&A [mergers and acquisitions] department of Goldman Sachs.
Ha ha ha. He even discussed his fiscal fiasco for which he was not prosecuted as having been stupid but not fraudulent. He admits he “imprudently loaded [a $4 BILLION auto parts supplier” with MASSIVE AMOUNTS OF DEBT, and which had then been crushed by the bumbling corporate bureaucrats at GM (and Chrysler) ahead of their own crash landing. He says this right after criticizing the $13 billion dollar bailout of GM (W had provided a “bridge” loan in 2008, then Obama concluded the deal).
It would seem, however, that he still likes to blame others despite the not quite sincere mea culpas he makes.
As a consequence of my Detroit experience, I was in the midst of proving to a US prosecutor that my company’s bankruptcy was due to LEVERAGE and STUPIDITY (MINE), not fraud. But three years of fighting an indictment concentrates the mind, and by then I knew on thing for certain: the Detroit-based auto industry was a debt-enfeebled house of cards that had been a Wall Street playpen of deal making and LBOs [leveraged buyouts] for years, including my own; it needed nothing so much as a cold bath of free market house cleaning, along with a drastic rollback of the PREPOSTEROUS $100,000 per year cost of UAW [United Auto Workers union] jobs.
He claims the free market would have saved it all. Ha ha ha ha ha.
He also describes this book as a polemic, and it is that, but I never knew anyone but banksters who could claim stupidity to get out of a criminal prosecution. All criminals that are stupid enough to get caught are stupid but most of them go to jail. I guess if you stupidly lose billions, it is not so bad as those pesky union employees demanding a living wage for their families.
Contrast that to the salary of the current CEO, who of course, happens to be a woman, so she will certainly be dethroned as all top women hires are scapegoated when they cannot fix the disastrous mistakes they inherit from the men before them. This happens so often it is a well-documented phenomena. In 2014 an article in USA Today reports her compensation at $14.4 MILLION but only $1.6 is in direct salary. But in this article it sounds like people are more pissed off that she was going to make MORE THAN THE MAN who preceded her, though it had seemed before this disclosure that she was going to be paid less, so that was an interesting twist. She gets $2.8 in “short-term incentives” as part of the full package. WTF!
Even more damning for her is that she made even more in 2015! $28.6 MILLION in total compensation and pension benefits. Grudgingly it was noted that she had done a good job managing the company and GM made a record revenue of $152.4 BILLION and a record EBIT-adjusted earnings of $10.8 BILLION.
I did not know what EBIT means, and I still don’t understand whether it is a good thing or a fake thing, but here is a link to a definition. The point I am trying to make is that it is very disingenuous to blame high pay of employees when management is all bloat.
Just for fun, note that $1 MILLION is = to 10 jobs at $100,00 (pre-tax, union dues, unemployment insurance, disability premiums, share of medical and dental coverage, and social security. Here is a link to a fact check on auto worker wages. Wow that is a really great article. N.B. The freaking Heritage Foundation came up with a spurious $75 an hour for auto workers in order to turn all the poor minimum wage saps against them. $100,000 / 12 = $8,333 a month / 20 = $416.65 a day / 8 =$52 an hour.
Oh I learned a new word trying to get a figure for the average hourly pay of automobile manufacturers’ CEOs: Brobdingnagian. This word was used in an excellent somewhat dated, but super graphics and data, article linked here. Among other notes, I saw that now, with all the union give-backs, the average starting salary for a new auto worker is only $16 an hour, just above what the Fight for Fifteen has determined to be the necessary minimum wage to pay rent and food (and not a lot else since the foreclosure killing banksters now have a lot of rental property and millions of people with no alternative).
Chapter 34 does have some surprising suggestions that the alt-right extremist Republicans will not accept, such as restoring and improving Glass-Steagall. He suggests:
. . .the large banks would be forced to divest their deposit banking business, and cap their balance sheets a 1 percent of GDP ($150 BILLION) for TEN YEARS in order to regenerate honest [!!!], competitive financial markets and to reduce the risk of crony capitalist recidivism. (p. 707)
WOW he goes completely wild with the proposal to ABOLISH DEPOSIT INSURANCE (you probably have seen “It’s a Wonderful Life” and the so understand why FDIC was put in place originally after the bank runs of the Great Depression). and limit the Fed discount window to narrow depositories. He does claim to support POSTAL BANKING and that would be great!!! Alas he loses many points by describing postal banking as being “for BLUE-HAIRED LADIES and TIMID savers WHO WERE UNWILLING TO RISK putting their savings into uninsured, chartered banks. . .” He even would PENALIZE postal banking customers by mandating a “PENALTY INTEREST RATE” below the charted bank rate to COMPENSATE the federal government for use of its balance sheet and credit rating.” WTF!!
Another one from page 707 proposes to include a provision to abolish incumbency via an Omnibus Amendment, setting the terms of the House, the Senate and the President to 6 years! And the electoral college should be abolished. I think many people agree with that, especially with the 2016 debacle still to be played out. Public funding is mentioned on the following page, and the campaigning would be limited to two months every other year.
Wow! He supports an explicitly overturned Citizens United decision to ban election funding AND lobbying. “No former federal office holder would be allowed to lobby” is another nice idea.
The overall purpose of the Omnibus Amendment would be to rid the nation of a PERMANENT GOVERNING CLASS, and weaken the political parties to the point of their disappearance as they would have no useful purpose in the citizen-based government.
Of course, then he goes and spoils it all with eliminating government regulations and let the market run free.
Just to show us that he is still an asshole, best of all, “Abolish social insurance, bailouts, and economic subsidies. . . . public goods such as highways, education, and AMENITIES like recreational facilities to would revert to state and local governments.”
Social insurance, bailouts, and other forms of federal economic intervention and subsidization of the FREE MARKET would be abolished. These changes in the functions of the state and the level of government at which they are carried out would eliminate the FISCALLY SUICIDAL forces built into the current system, including INTERGENERATIONAL THIEVERY under social insurance and interregional LARCENY embedded in federal grants in aid and economic subsidy programs.
Given that we know for a fact that the single most predictor of remaining in poverty is being born in poverty, the slam of “intergenerational” dependency on the government really smells bad. It reminds me of the Carrie Buck decision to sterilize her because three generations of welfare — unspoken, sluts — were enough imbeciles. This despite the fact she had been raped and was not dimwitted.
He does follow this destruction with the elimination of 10 major federal agencies and departments, including of course LABOR. And number 9 on page 709 he backs up a little bit and advocates for a “means-tested” safety net as a ” primary function of the federal government.” The means testing “would be subject to a STRICT and INTRUSIVE means test, including the spend-down of ALL ASSETS to some minimum level,” Oh yeah, and instead eliminating oil and tobacco subsidies,
a WORK REQUIREMENT for the able bodied of NORMAL working age [child labor, welcome back] would be coupled with THE ELIMINATION OF THE MINIMUM WAGE and the scaling out of TRANSFER PAYMENTS to the working poor based on an all-in tax rate which rewards WORK and EFFORT. Finally, all existing programs including HOUSING, FOOD STAMPS, and MEDICARE [!!!] and MEDICAID [!!!!] would be converted to cash equivalents thereby eliminating the provider abuse and the crony capitalist policy and administrative exploitation that are inherent in in-kind programs. (p. 709)
Completely ignores the fact that Medicare sets prices for services and thus holds prices down for consumers. There is no enough cash equivalent to cover my MEDICARE expenses and that is before the cost of the Big Pharma priced drugs I need to take to prevent relapses of my multiple sclerosis and live a life.
He fantasizes on p. 710 about allowing the free market to control medical services, though he graciously concedes one tip of the hat to socialism by implementing “a system of federally licensed catastrophic insurance fund which would automatically cover the [INTRUSIVELY] MEANS-TESTED safety-net population regardless of pre-existing conditions in return for MANDATORY PREMIUMS; these would be WITHHELD from beneficiaries cash transfer payments and be set by competitive bid.”
Choke. Gag. Vomit.
If I understand this correctly, there will be no mandatory insurance premiums for anyone but the demonstrably bereft who would be forced to dispense with any assets (car? how to get to the grocery store?) accrued before disability or unemployment etc. and that premium will be taken out against their allocation for FOOD.
I can’t read anymore. He is completely detached from reality. Read the book out of sheer self-defense since you know if he has the balls to say this shit out loud, and the book was a bestseller, there is a politician who thinks some of this shit is a good idea.