Thursday, June 3, 2010

Understanding the System of Corporatacracy in the USA Inc.

From the SpearheadFiles
June 4, 2010

I pledge allegiance, to the TradeMarked Logo, of the United States Incorporated, and to all Big Business, for which it stands: one market, under law, divisible into niche segments, with rampant consumerism, debt slavery and serfdom for all.

Whenever there is some kind of economic trouble, you will always find some left wing, socialist Democrat blogger, pundit, journalist, talking head on TV, or a columnist in the print media declare that the problem is "greedy capitalism" and the "lack of regulation" (or "de-regulation") as the root of the problem.

Since most of the mainstream mass media propaganda corporations are largely composed of left wing socialist Democrat useful idiots, they dutifully espouse this party line at every opportunity. Unpopular TARP bailouts for banks "too big to fail?"


The advent of our current Great Depression 2.0 because of the housing bubble being inflated by the Federal Reserve, causing significant mal-investments in nearly every sector of the economy?


The anti-captalist/pro-socialist/pro-communitarians that spout this garbage really are useful idiots for the government-corporation complex. By screaming for MORE Government regulation, they are basically throwing the protesting Brer Rabbit into the briar patch.

The truth of the matter is that the USA has not been a free market, capitalist country for quite some time. We are a corporatacracy - in which corporations lobby the Government at every level to gain some sort of cartel having the Government officials "regulate" the industry...effectively stifling or eliminating the competition (usually a small business owner or local business) by enforcing regulations, fee schedules and safety requirements that are prohibitively expensive for the small business to handle.

As I've linked to in the preceding paragraph, I've written about this before...but I decided to reiterate this point again, after coming across an anonymous author at revealed his story about how this works in the real world of USA INC.

How Real World Corruption Works

I'm a mid-career guy in a business that does a lot of work with governmental and quasi-governmental agencies. I've never ripped anyone off personally, but I have seen and occasionally been an incidental beneficiary of quite a bit of patronage, insider dealing, nepotism, misuse of taxpayer money, and outright corruption. While I have always been honest in my own dealings on a case-by-case basis, I have refrained from many opportunities to be a "whistleblower".

A lot of stuff on reddit misunderstands the relationships between wealth, power, and influence. For starters, all the above three are always and have always been inter-related, and probably always will be. And that might not always be a bad thing: those who have risen to high levels of wealth are often pretty smart, and surprisingly often exceptionally honest. Those who rise to high levels of influence usually have some pretty good insight and talent in their area of expertise. Those who have acquired a lot of power tend to be good at accomplishing things that lots of people want to see happen.

None of which is purely democratic, nor even purely meritocratic, but there is a certain dose of both kind of baked into the cake: stuff like wealth or family connections only gets you so far in modern, developed, and relatively open and transparent societies such as the US. And while that can be pretty far by normal standards, at some point sunlight does shine through any crack, and outright robbery or complete incompetence is difficult to sustain indefinitely.

But there is an awful lot of low-level waste, patronage, and corruption that happens both in the private and in the public sector.

Without going ideological, the private sector in a free-ish market has a more immediate system of checks and balances if only because you have to actually persuade the end users to keep buying your stuff for the price you're charging: if it's no good, or if you are grossly over-charging, your customers will tend to catch on sooner or later.

But in the public sector, the "consumer" often has little choice... so-called "market discipline" is a lot more diffuse when you have a former-schoolteacher-or-real-estate-broker-turned city councilman whose job it is to disburse a multi-million-dollar street-paving contract or whatever. And neither the schoolteacher nor the real-estate broker has any clue how to write or evaluate a road-paving contract...

Let's say that there are three credible bidders for that street-paving contract:


Bidder 1 is "Paver Joe", a local guy with a driveway-paving company and three trucks who sees this as a big opportunity to expand his business and get the city to pay for five new trucks. He puts in a dirt-cheap bid that he wrote up himself with the help of his estate attorney. The cost to taxpayers is very low, but the certainty that he will complete it on schedule and as specified is a little iffy. Paver Joe plans to work overtime and bust his tail on the job, not for profits, but to grow his business. He's offering the taxpayers a great deal, but a slightly risky one.

Bidder 2 is "Muni Paver Inc", a company who has the experience and expertise to do the job, who knows what's involved and who has done this work before. They already have the trucks, their workers are all unionized and paid "prevailing wage", everything will be done by the book, all their EPA certifications are in place, etc... The bid is a lot more expensive than Paver Joe, but it's credible and reliable. They are offering the taxpayers a degree of certainty and confidence that Paver Joe cannot match.

Bidder 3 is me, "Corruptocorp". Instead of Paver Joe's 2-page contract with typos, or Muni-Paving's 20-page contract, I'm offering the city council a full package of videos, brochures, and a 40-page contract with a price just a tad higher than Paver Joe (my quoted price is meaningless, as we will see). Moreover, I'm inviting the city council to Corruptocorp-owned suites in a golf resort near my headquarters to give my presentation (all expenses paid, of course, and of course, bring your spouses). There the city council members will, after the first day of golf, dinner, dancing, and cocktails, see a slideshow and chorus-line of smiling multi-ethnic faces and working mothers talking about how much Corruptocorp's paving improved their town and their lives. I'll then stand up and tell a self-effacing joke about being one of those corporate guys trying to get their money, and then I'll wax a bit emotional about my small-town roots and how Corruptocorp was started by a man with a simple dream to make life better for everyone, and to do well by doing good in local communities, and that we actually plan to hire local contractors such as Joe's Paving to do the work, backed our economies of scale and reliability. I'll mention that paragraph 32 subsection B of our proposal mandates twice-yearly performance reviews by the city council, to of course be held at the golf resort, at Corruptocorp's expense, ("so I hope to see you all back here every February and August!"), and of course I make sure that each of them has my "personal" cell phone and home numbers in case they have any questions....

So needless to say I get the bid, and six months later it's time for our review at the golf resort. After dinner and cocktails I step up to the podium and announce that there is both good news and bad news:

"The bad news is that our subcontractor has found over 1,000 rocks in the road. And as I'm sure you know, paragraph 339 subsection D.12 specifies that any necessary rock removal will be done at prevailing wages, currently $1,500 per rock, for a total cost overrun of $1.5 million. But the good news is (and believe me, I had to fight long and hard for this with the board of directors), Corruptocorp has agreed to remove those rocks for only $1,000 apiece! So even though there have been some cost overruns, your smart decisions have saved your taxpayers half a million dollars! Give yourselves a round of applause!"

"Now, the other situation is that there has been some 'difficult terrain' as described in subsection 238b, which I'm sure you're all familiar with. And as you know, 'difficult terrain' is not covered by the contract, which is for paving, not for turning mountains into flat roads... (wistful chuckle). Now, technically, according to the contract, we should be charging your town prevailing rates for these sections, but I've worked it so that you will be allowed to re-bid them, if you wish, since our contract doesn't specifically include terrain as described in subsection 238b."

Now the contract price has doubled, and Corruptocorp has completely sidestepped all of the difficult and costly work, taking profits only on the easy stuff. The city council members can either admit that they were duped and bought (political suicide), or can simply feed corruptocorp's line to the voters. Which do you think will happen?

And it gets even worse on smaller scales: look up your local building or electrical inspector. Ten-to-one he is a relative, friend, or campaign donor to the mayor or city council. What's in it for him? Every single construction or home improvement project not only has to pay him a fee, it also has to pass his inspection. Guess which contractors are most likely to pass his inspection? His brothers, friends, family... or the cheapest guy who for some reason has a hard time finding work in this town? Guess how the local inspector feels about homeowner self-improvements: does he think they are a great way for regular people to improve their wealth with a little elbow grease, or does he see them as stealing work from his friends and family?

I've seen this exact thing play out to a "T" like this in my own 2 year stint of working for the State Government here in Hawaii.

In our current system, at the County, State and Federal level, this is how business is really done in this country...which is also why most budgets are in the red and States like California are about to go completely broke.

Notable Commentary from the Original Post

TrollKing June 4, 2010 at 12:26:

Most states are going broke. Seatle just passed a sin tax on candy and bottled water. Feminism and the police state is funded on the backs of men. I havn’t paid taxes in years and I don’t have a ‘real’ job. I do ok. Starve the system

Robert June 4, 2010 at 12:58:

I know a man who is helping Tennessee go broke.

AnonymousProtagonist June 4, 2010 at 14:00:

Corporatocracy exists because we let it. The power corporations have over our lives would be much much less if we simply didn’t consume as much as we do. And it’s not like we are forced to consume – we simply choose to live our lives that way. This is a cage of our own creation.

The other thing we’re seeing now is that the current system has become so efficient in terms of delivering products and services, in order to maintain social order gov and the corporatocracy is increasingly in the business of "make work". This goes counter to what most people think is happening. If you look at more socialist western countries (the US obviously excluded) you see class stratification becoming a real problem. Simply put, more people are getting gov jobs that provide a fixed income with little or no actual contribution to society but a lot more bureaucracy. In places like Canada it’s common for people to get gov jobs or jobs in monopolies and engage in office power struggles to maintain their position. Canada is especially brutal for this. Since there are only so many of these jobs out there the remainder are forced to make a living in the so-called free market. Well when you start to increase the labyrinth of bureaucracy the wealthy segment of this remainder become the ones who can succeed as either the barriers to entry are too high or the knowledge of the regulatory system so rare that an otherwise skilled person can’t make a living. Everyone else falls out and becomes part of the margins. Thus the social stratification.

I’ll give you an example. I’ve completely written one system for a dominant company in Canada (in it’s vertical) that does hundreds of millions of dollars a year in transactions. I’ve been involved significantly in another. Yet in Canada people aren’t knocking down my door to give me work. Now I’ve just moved to the States to take my proven record of building systems like this and monetize my skills by doing it a 3rd time – this time with direct compensation for the volume I can pull off. Such a thing would never happen to me in Canada. I’m too much of a threat for people in their comfy jobs to allow me to play in their ballpark.

Corporatocracy has become the defacto governing mechanism of the west because corporations are the ones that maintain social order. Gov has a role sure. But corps and gov are so deeply linked that they can be considered one unit in practice. So that’s where we are now, and we are that way because we have let both corp and gov dictate, through our consumption nature, the social order. This is also, btw, why the valuation of currency has nothing to do with economic fundamentals. Rather currency has a value artificially assigned to it by the powers that be (gov + corp) and is just a tool to reform the social order.

The simple answer is to remove yourself from the consumptive cycle and find alternate ways to exchange goods and services outside of the monetary system. It shouldn’t surprise anyone that every time there is a breakdown of society by war or disease or whatever, the people who operate the black markets are the ones who are least affected by the breakdown. The historical record of this is undeniable. And really, the black market, as unregulated as it is, is the most meritocratic system we have. So if you’re unhappy with the fumblings of the social architects, just remove yourself from their grasp. Don’t consume as much. Don’t put yourself into any unnecessary legal contracts (marriage, property ownership fall under this umbrella). Find a currency hedge like physical gold that can be used to insulate yourself from artificial currency disaster. And so forth. It’s really not that hard to identify your core needs and put yourself in a position to meet those core needs at a very low cost. Like I mentioned at the top, the efficiencies of the now-dying free market are so high that core goods are very inexpensive.

PrairieLark June 4, 2010 at 15:13:

I agree with the idea that corporations control America. But I disagree with the conclusions you draw from it. The reason corporations lobby the government is to keep any meaningful regulations from being passed in the first place. It’s not as you suggest that that corporations dearly want the regulations and actively lobby for their creation. It’s that they fear honest politicians will pass regulations that will harm their profit-making, and they lobby to gut the regulations and make them meaningless. They did it will the health-care bill, they did it with financial reform. Every time there is a groundswell of support among the public for real reform and regulation of business, and there is a Congress that might pass such reform, the corporations spend millions of dollars a day to kill such reform (by weakening and watering down the legislation).

I think that since you are a libertarian, you probably oppose all government regulation of business. So you are trying to find a way to explain why government regulation of business does not work. The reason why it appears not to work in our present day is because the regulations that end up getting passed have been watered down by the corporations due to millions of dollars of lobbying money. We don’t even have real regulations of business. We have sham regulations. Both Congress and corporations are to blame. Congress because they take the money and write the regulations to benefit industry. Corporations because they work to kill any meaningful reform. If we had public financing of elections, Congress could pass meaningful regulations because they would not need the corporate money to run for re-election.

The answer is not to do away with all regulations of business. That would be worse than what we have now. The answer is to pass real regulations that protect the public interest over the interests of private corporations. I’m not holding my breath.

keyster June 4, 2010 at 15:14:

I work as a consultant for several county governments. What I’ve found is that most of the management and workers are more incompetent, inept and lazy than corrupt. When a shit storm brews over something the public is outraged and starts screaming about conspiracies and corruption, but this is rarely the case. Yet the governments don’t want to admit their incompetence either. They spend more effort managing the PERCEPTION that they’re honest and competent, than they do actually BEING honest and competent.

The real corruption happens at the elected official levels. They use the various government agencies as political whipping boys to gain points in the eyes of the public. Politician HAVE to be corrupt to rise up through the ranks. From school board to county commisioner to state senator to congressman to senator to president. It’s a transactional business. It takes a million dollars just to run for state senator. Where will they get all that money? From people who expect quid pro quo of course. It’s IMPLIED in the business of campaign donations.

fedrz June 4, 2010 at 19:53:

The very notion that we have had a “jobless recovery” in the economy ought to set of the alarm bells as to what is really going on. That certainly must be an oxymoron of the highest order, and yet we hear it trotted out daily on the news.

As well, the American and various Western Economies have had positively enormous growth over the past 20 years. Our economies are much, much, much larger, and have more “value” than before (on paper anyway, heh heh), and yet, for the past 20 years – when adjusted for inflation – the average worker is not making any more money than he did in 1990.

How can the economy grow, and “the Country” become more prosperous, while the people who live in the country are stuck at stagnant or declining levels of prosperity? If the economy grows 40% but your wages and/or level of wealth has risen 0%… well, what the hell is going on? Jobless recovery in the economy? LOL! Talk about Media Spin for saying that Microsoft made billions last quarter and grew by X%, and only Microsoft Inc. made money – not the Microsoft Employees, nor the guy who operates the hot-dog stand selling lunch to said employees, fared any better.

Also, our society has twisted itself somehow into thinking that Corporations have “rights.” This is nonsense. You as a human being in your country have “rights,” one of which is the right to your property – so if you own shares in Microsoft, or your own private business, you have property rights to those things, including the “right” to not have your property degraded by the actions of others, including the government… but, it is absurd that we view corporations themselves, absent humans, to have “rights.” Trees don’t have rights either… but a tree in my front yard has rights through me, a human being who owns it as property.

keyster June 4, 2010 at 22:01:

A corporation in the USA has been actually deemed to have individual rights. It’s a Supreme Court ruling.

It’s a “jobless recovery” because while US based corporations are expanding into global markets, they’re stagnant here. All those jobs that went overseas chasing the lower labor dollar also produced a new class of foreign consumer. They want what we’ve had. Houses, cars and stuff… To the extent a US worker can find employment in the private sector it will be to support foreign development and business or marketing operations. After we stopped borrowing money to buy things we couldn’t afford, are economy flatlined. Our quality of life is in decline while other nations, embracing capitalism, rise.

Keoni Galt June 4, 2010 at 23:59:

@ AnonymousProtaganist –

-"Corporatocracy exists because we let it. The power corporations have over our lives would be much much less if we simply didn’t consume as much as we do."

Because we let it? I hardly think so…first, you need to understand that our system of corruption is deeply entrenched and are the very reason as to why most of us are mindless, wasteful consumers of the corporations products. When you research the background of public education, you will find that our modern educational system was specifically designed to dumb down the populace to create human resource wage slaves, kept distracted and ignorant of their situation by being programmed to value materialistic consumerism is the key to temporal happiness. That is the entire purpose of having an utterly commercialized society in which everywhere you turn and look, hear, see and smell is some kind of advertisement to try to get you to consume. Who’s paying for that kind of subliminal, pervasive influence? The Corporatocracy, of course!

The molders of our reality are the multi-billion dollar philanthropic foundations that have donated massive sums of money to socially engineer society to give us our current dystopia. The Rockefeller, Carnegie, Mellon, Ford and more recently the Gates, and other Foundations have spent enormous sums of money on R&D and to create programs to design public schooling curriculum and mass media programming to reinforce that curriculum…all with the deliberate purpose of socially engineering our society to be the corporate wage slave consumerists that we are.

Corporatocracy has become the defacto governing mechanism of the west because corporations are the ones that maintain social order.

This is astounding that you actually believe this! Corporations (combined with their Government lackeys) are the ones that have contributed MOST to the social DISORDER we live in! Can you not see how the escalation of familial dysfunction is the direct product of the corporatocracy’s mass media/education propaganda mill?

How do you think they were able to change a homogeneous, American value system based on Christian Patriarchy that at it’s foundation was the nuclear family…into our current feminist-driven Matriarchy of broken homes, a permanent criminal class and an industrial incarceration industry thriving off of the victims of the system?

Take the example given in this post about the road pavers…now swap it out with the developers of private prisons. Same system, same game.

Our socially engineered dystopia has been very lucrative for the corporations behind it.

AnonymousProtagonist June 5, 2010 at 00:21:

I hear you, but I still stand by what I wrote.

Regarding your first point, if people didn’t consume corps would go out of business (to be replaced by businesses that support what people do consume no doubt). Otherwise I agree with your sentiments about the brainwashing. But hey, that’s what societies do, they brainwash. It was no different hundreds of years ago. Which is to say that I agree that it sucks that this is going on, but the only solution is for people to recognize it for what it is and exercise choices that avoid the traps.

Regarding your second point. You are exactly right. And so am I. The social disorder IS caused by corps. That is the other side of the coin. But social order IS maintained by the status quo of which corps are key players. Hey I’m not trying to be an apologist for corporations. I just think that we live in a chaotic system and these agents of control will pop out of that chaos one way or the other. It’s neither good nor bad. It just is.

Big Jay June 5, 2010 at 17:30:

I haven’t seen this on a municipal level, but I have seen it on a corporate level. I work for a company that does outsourced facilities management. As such I have worked for a dozen or so very recognizable corporate headquarters. I have been amazed at the amazingly high level of incompetence supply management ‘professionals’ have in what is a relatively simple project: 1-Getting the service they are actually buying, and 2-Not paying more than they have to pay.

Usually it works such that they get one or the other. If they don’t pay much, they don’t get what they want. If they are getting what they want, they are usually paying too much for it.

fedrz June 7, 2010 at 12:57:

Some of the things that are going in the world are becoming so incredibly obvious – what is really a crying shame is that it hasn’t all been put together yet.

A prime example of high level corporate corruption is Goldman Sucks latest quarter, where they bragged that they made money every single day in the last quarter, and yet, 7 out of 10 people who invested in Goldman’s funds lost money – how could this be? Also of enormous shiftiness in nature, these slimebag bastards loaded up one fund with the most toxic debt they could find, then went to their clients and told them to buy the fund – selling it to them as a rock solid investment – and then Goldman shorted the fund (bet that it would go down in value) because of course it would, since they were the ones who purposefully put it together with garbage that was about to fail, and Goldman made billions of dollars by ripping off their own clients. Of course, it is not technically illegal, but it sure is lacking in scruples… and this company, America, was a major recipient of your billions of bail-out dollars – the same slimey operation that is so intertwined with government that its high-level execs constantly hop from the board of Goldman to high-level gov’t cabinet positions and back. It doesn’t matter Republican or Democrat, either. Both parties freely invite people from this crooked outfit to sit in unelected positions at the highest levels of government power.

Also, the “goldbugs” out there are getting slapped in the face with the same kinds of issues that we are facing – high level corruption – that is getting so obvious, that the corrupt are hardly even trying to cover their tracks anymore. But more and more people are betting against the government and placing their vote in gold bullion. A purchase of gold is a vote against government and is a vote for freedom.

That there is gold price manipulation by the central banks is virtually regarded as fact by anyone who has been trading gold for the past few years. These are all people who understand “something is going on” and they are becoming more and more open to the notion that it is not just their area where the corruption stops.

Eric Sprott, for example, is a fairly famous guy in the investment world who constantly points out the corruption of central bankers. Nobody laughs at him either, since Sprott Asset Management has been bang on and one of the most successful investment firms in the past decade. Sprott even hired a full time researcher about five years ago or so, who investigated “who” was behind all of this market manipulation, and of course, the answer he got was central bankers, the CFR etc. etc. – the usual suspects.

People are beginning to understand that there is enormous corruption being done by the central banks with our nation’s gold. For example, in order to “make a little interest” on gold bullion, they will lease gold forward so people can do a “carry trade.” (They will lend out the gold to bullion banks at say 1% interest, the bank sells the gold, and then invests the proceeds in “safe” investments getting 3% or 4%). The problem is, that the central banks refuse to be audited, and we know there is corruption because they their accounting practice is to count their accounts receivables as physical money/gold in the bank. If anyone besides central bankers tried to do bullshit like this, they would be in jail for fraud.

It’s the same scam as these Gold ETF’s that are being trumpeted across the land that are “as good as gold.” No they aren’t. They are selling them forward in the same way as the central banks are, seeking minor interest from the carry-trade – and yet, they tell their clients that a GLD share means that it can be redeemed directly for gold. Problem is, that some investors have hired lawyers to check into the legal wording of such ETF’s, and there are sufficient loopholes in them that no, you do not have first rights to “your” gold. They lend out your hard asset, but, if the person they lent it to goes broke and can’t pay the gold back, it will be you, the client who thought he was safe by buying gold, that will be left holding the bag. It should be noted that Gold ETF’s are derived from the Gold price (Derivatives, anyone? What set off the financial crisis?), and these ETF’s have sufficiently loose legal mumbo jumbo attached to them that there is no guarantee in a crunch, that the ETF’s will get their gold.

It is complete corruption. Many people believe that these ETF’s are now being used to suppress the gold price in the same manner as Central Banks have been using national gold to suppress the gold price. This is why there is such a glaring difference between the “spot price” (the number you see on TV) and the physical price of gold. In Germany last month, for example, you could sell an ounce of physical gold for about $1,600, whereas the spot price is between $1200-1240 an ounce. You just cannot get your hands on an ounce of physical gold in Europe right now. This certainly does indicate corruption at work, and gold price manipulation.

Of course, the government at the highest level has an active interest in suppressing the price of gold because gold is a thermometer for how sick the nation’s currency is, and the strength of a currency is a reflection of the strength, or confidence, people have in the government that issues said currency. If gold prices stopped being manipulated, the price would shoot through the roof, and the alarm bells would go off around the world. Many, many, many people are beginning to understand this, and understand that the government has an active interest in deceiving us into a false sense of security.

Eric Sprott, btw, has $235 Million dollars worth of gold on the way, and is starting up the first transparently accounted ETF, that will not be leased forward, nor anything else will be done with this gold except for being dust collectors in the vault. If you must buy an ETF rather than physical, this is the one to look into. And, btw, nobody in the world dares to call the guys at Sprott a bunch of morons for pointing their fingers at central bankers. Just like nobody scoffs at Marc Faber, who constantly is pointing his finger at central bank manipulations, and openly calls them crooks.


Big Jay said...

I haven't seen this on a municipal level, but I have seen it on a corporate level. I work for a company that does outsourced facilities management. As such I have worked for a dozen or so very recognizable corporate headquarters. I have been amazed at the amazingly high level of incompetence supply management 'professionals' have in what is a relatively simple project: 1-Getting the service they are actually buying, and 2-Not paying more than they have to pay.

Usually it works such that they get one or the other. If they don't pay much, they don't get what they want. If they are getting what they want, they are usually paying too much for it.

IurnMan83 said...

I lived in Arkansas for most of seven years and saw the "ol' boy" system up close and personal. I tried to buy a ten acre peice of property which was priced really good for the area. However, because I had a low-wage job, I had to pull an RV out there to live in until I could get a concrete floor poured to build my house on. A woman who worked for the county determined we weren' "her kind of people," so she got social services involved to try and take away my daughter (which they found nothing legaly to do so) and used my neighbors to try and force me and my family away. My hopes and dreams for the next ten years were smashed after a grueling summer of trying to work, manage my property, get the county codes met, and raise my family up. We ended up moving away with nothing but what we could put in the back of our van and drive away with because they were planning on coming out with the sherriff's deputy to take my little girl, the same deputy who happened to be married to this woman who worked for the county.

Anyway, that's my experience with the system and i would advise people to really research and be on the offensive if they try to do something themselves because that's what it takes.