DEMOCRATIC
FASCISM KILLS GROWTH, By Roger McKinney | On April 25, 2016
Bob Bryan at Business Insider had an interesting column on why
economic growth in the US is dying. For the cause, he defers to Mike Thompson
of S&P Global Market Intelligence:
Instead
of continuing to invest in the business and focus on growing over time,
according to Thompson, managements are trying to undercut possible disruptions
by showing constant earnings growth and streamlined companies.
This
activist-style, short-term attitude is exactly what Blackrock CEO Larry Fink
decried in a letter to all S&P 500 CEOs at the start of 2016. Thompson said
that these larger firms are most susceptible due to their size.
Revenue
growth is predicated on economic growth and innovation,” he said. “We don’t
have that sort of economic growth, and, let’s be honest, big companies simply
aren’t that innovative. So instead these big companies shift their focus.
Thompson claims that
large corporations are doing three things: 1) cutting costs, 2) creating shell
companies or doing inversions to reduce taxes, and 3) buying back shares in
order to boost earnings per share.
Unfortunately, Thompsons
seems to think that the strategy suddenly struck executives like the zika virus
and made them act in a strange way. But I think the real cause demonstrates how
far down the road to socialism the US has traveled in the since WWII.
Executives are behaving very much like those of the old USSR.
Guinevere Liberty Nell tells in her
book, Rediscovering Fire: Basic Economic
Lessons from the Soviet Experiment, how
Soviet execs used tricks to meet unreasonable state goals for their
industries. For example, the state ordered glass manufacturers to produce
so many tons of glass in a year, so they produced thick, heavy glass to meet
the tonnage quotas even though few buildings could use the glass. The
bureaucrats responded by changing the quota to square meters, but caused the
managers to crank out very thin glass that would break in a slight breeze.
Outside of socialists, the
mainstream media and mainstream economists, large
corporations are the most persistent opponents of freedom and free markets.
They have labored and paid out huge sums in bribes to politicians for decades
with the single goal of reducing competition. They captured federal regulatory
agencies as James Buchanan taught in his public choice school of political
economy. Then they had the agencies create regulations designed to crush
smaller competitors, of course, all in the name of health and safety, which the
socialist mainstream media sell to a gullible and envious public.
Since the Reagan “revolution,” the
size of the Federal Register of new federal regulations has grown by an average
of 75,000 pages per year, totaling over four million new pages of regulations.
Those regulations cost businesses over $1 trillion per year to comply. The
largest corporations have little problem paying those costs, but they crush
smaller competitors. As a result, most industries have become concentrated in
the hands of four or five oligopolists who have a gentleman’s agreement not to
compete on price. Lacking a culture of innovation, they have no place to invest
their profits but in stock buybacks and financial engineering. They don’t want
to disrupt the status quo.
Thompson says that the effective tax
rate on large corporations is 29%, but it is still among the highest in the
industrial world. High taxes and the costs of complying with massive amounts of
regulations hurt the competitiveness of large US corporations in the
international marketplace, but they don’t really care about competing. They
have the US market, one of the world’s largest, pretty much to themselves.
Industries controlled by cartels of
the largest corporations are one of the chief characteristics of fascism, minus
the racism. We still have limited democracy, but in our state control of
business we are far more like the fascism of Italy and Germany before World War
II. US citizens should think of our system as democratic fascism, and that is
the cause of our requiem for economic growth.
Originally posted on ABCT
Investing. Roger
McKinney
Comments
Big
business and big government are killing US jobs and killing the US economy. The
regulations they conspired to create gives them monopoly power over their
markets. The cost of starting a small
business is up 500%.
We see
this in the decline in the products and services we overpay for. The offshoring of electronics has resulted in
lower quality. Our utilities are
overpriced with poor service. Healthcare is toast. Education is a travesty. Microsoft products
got worse with each annual iteration. Cable and phone bills are too high. Closing coal plants and building higher cost
solar and wind farms are increasing electricity costs.
The best
manufactured goods come from select companies in select countries. The Toyota Prius introduced in 2000 still has
no real rivals. Sweden’s Husqvarna
lawnmowers are superior. Sub-Zero (built-in) is still the best refrigerator,
but the price tripled.
US
environmental regulations need to be backed off to eliminate truly unnecessary
targets. There is no reason to require any limits to carbon. Most employment laws are useless, unnecessary
and conflicting. Dodd-Frank is useless
and expensive. Local ordinances and State laws create waste, overreach and
higher costs.
Businesses
are preparing for the US to have a lower GDP and expect a lower global GDP,
seemingly unaware that they are causing this contraction.
Norb
Leahy, Dunwoody GA Tea Party Leader
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