First, we need to acknowledge that there are different definitions of free-markets. To some, the free-market is an economic system that is governed purely by private industry, not subject to any government taxation or regulation. To others, the free market is narrowly defined as a system of allocating goods within a society which abides by the laws of supply and demand. But, for the purpose of my article, free-market refers to a system where there is no intervention and regulation by a government except to enforce contracts and the ownership of property.
Believe me when I tell you I'm a big supporter of capitalism. It would be hard to argue against the quality of life improvements generated by free-markets and a capitalist society. For example, even as this flawed economic system (acknowledging any economic model is flawed) starts to wipe out the middle class and moves society inevitably back towards feudalism, the level of poverty witnessed in Western Europe and the United States of America pales (no pun intended) in comparison to the abject poverty chronically assaulting developing economies (please see my blog post, Life in Lubango, for a limited glimpse into hardships faced by these Angolans).
However, a new era of capitalism has emerged since the end of World War II. The Military Industrial Complex that Dwight D. Eisenhower presciently warned the USA to guard against in his farewell speech on January 17, 1961 has evolved into what Naomi Klein terms Disaster Capitalism, where predatory organizations of all forms (e.g. banking, oil, private security, et al) gorge on the carcasses of devastated cities, countries and regions. And, as I recently wrote in my blog post, "The Strength of Private Fundamentals", the world investment banking system turned the table in 2008 and audaciously went after the developed economies, as well.
Most hypocritically, these international investment and insurance organizations learned that they can camouflage their anti-competitive and illegal activities by cloaking themselves in the mantle of free-market ideology and declare themselves feudal lords over their fiefdoms. We have been hijacked by the largest corporations in history and they just created a new dual economy in America, where one sector is geared to local needs and another to the global market.
To demonstrate this new reality, President Obama officially signed the Small Business Jobs Act yesterday, September 27, 2010. I am extremely grateful for this new act. First, barring unforeseen developments, I am about to become a small business owner, and our small business is in desperate need of liquidity (short-term cash flow) right now. And second, I am not in the privileged class; I am subject to the confines of free market capitalism. In fact, even if I had the choice, I wouldn't choose the "privileged class" economic model that executives and high-end traders at Goldman Sachs get to manipulate. In my opinion, it is immoral, completely unethical, illegal and destructive to the common good of society . . . and I'm a big fan of morality, ethics and the common good.
Now, let's put this in perspective. Community banks are to support small businesses by having $42 billion injected into their coffers to kick-start lending. Also, let's not overlook the fact that over a $1 trillion in funding was given to international investment banking organizations to unfreeze lending, increase hiring and keep the world from entering a global depression. Of course, the largest banks used the money to pay off their pals, allow competitors to go bankrupt, purchase small banking competitors . . . or they simply kept it for a rainy day; lending certainly didn't ensue. So it seems a bit two-faced to say that these smaller, community banks should actually do what their colossal peers refused and continue to refuse to this day.
And here's another disturbing question: what is $42 billion compared to $1 trillion? Well, $1 trillion is $1000 billion. Therefore, this means the amount of money being given to community banks to increase lending and hiring for small businesses for the entire US is 4.2% of what taxpayers gave to the richest scumbags in the world.
However, let's take a moment of pause. According to the US Small Business Administration (SBA):
- Small businesses make up more than 99.7% of all employers.
- Small businesses create more than 50 percent of the non-farm private gross domestic product (GDP).
- Small patenting firms produce 13 to 14 times more patents per employee than large patenting firms.
- The 22.9 million small businesses in the United States are located in virtually every neighborhood.
- Small businesses employ about 50 percent of all private sector workers.
- Home-based businesses account for 53 percent of all small businesses.
- Small businesses make up 97 percent of exporters and produce 29 percent of all export value.
- Small businesses with employees start-up at a rate of over 500,000 per year.
- Four years after start-up, half of all small businesses with employees remain open.
- The latest figures show that small businesses create 75 percent of the net new jobs in our economy.
Matt Taibbi recently wrote a series of scathing articles regarding what he believes is really going down behind the scenes, inside the free-market mantle that obfuscates the too-big-to-fails' sordid, shady activities. The first article that impressed me was, "The Great American Bubble Machine", in the July 9-23 2009 Rolling Stone. Please read it for yourself, but the gist of it relates to how Goldman Sachs gets into a market privately, then artificially creates a massive financial bubble within that industry and reaps massive profits. From the housing bubble to the imminent "Cap and Trade" policy, Goldman Sachs is in there first, investing in private or otherwise non-accessible financial vehicles. Then they invest even more to fuel a bubble market and, as we just saw in 2008, they walk away completely unscathed by taxpayer bailouts when the market collapses; they are beyond any financial accountability and reproach, which is completely against the free-market system that enriches them daily.
Another article demanding your attention is Taibbi's March 31, 2010, "Looting Main Street", a damning indictment of the unfair, illegal and immoral activities of banks and their executives, executives who apparently will never see a day in jail for enriching themselves while destroying and enslaving American counties, states and foreign countries, alike. Accordingly to Taibbi, the state of California, the city of Chicago and the country of Greece are all similarly rigged by these too-large-to-fail corporate pirates. So, speaking of corporate pirates in parting, I wish to leave you with this appropriate Monty Python short film from their 1983 movie, The Meaning of Life. It's quite relevant . . . and a hoot!