The American Conservative: "Extractive Elites" and "Macro-Corruption"
It’s pretty amazing to read a cover story in, and by the publisher of, The American Conservative that could have run in The Nation, Mother Jones, or on Daily Kos — almost.
Certainly America’s top engineers and entrepreneurs have created many of the world’s most important technologies, sometimes becoming enormously wealthy in the process. But these economic successes are not typical nor have their benefits been widely distributed. Over the last 40 years, a large majority of American workers have seen their real incomes stagnate or decline.
Ordinary Americans who work hard and seek to earn an honest living for themselves and their families appear to be suffering the ill effects of exactly this same sort of elite-driven economic pillage. The roots of our national decline will be found at the very top of our society, among the One Percent, or more likely the 0.1 percent.
This is in The American Conservative!
Strangely disguised under the title China’s Rise, America’s Fall, Ron Unz riffs like so many of late on Daron Acemoglu and James A. Robinson’s new Why Nations Fail, describing America over recent decades as a country plagued by “extractive elites” and “macro-corruption.”
Macro-corruption is a great coinage. Former S&L enforcer Bill Black should adopt it in place of his perhaps more descriptive but not very catchy “control fraud.”
Unz (emphasis mine):
although American micro-corruption is rare, we seem to suffer from appalling levels of macro-corruption, situations in which our various ruling elites squander or misappropriate tens or even hundreds of billions of dollars of our national wealth, sometimes doing so just barely on one side of technical legality and sometimes on the other.
Sweden is among the cleanest societies in Europe, while Sicily is perhaps the most corrupt. But suppose a large clan of ruthless Sicilian Mafiosi moved to Sweden and somehow managed to gain control of its government. On a day-to-day basis, little would change, with Swedish traffic policemen and building inspectors performing their duties with the same sort of incorruptible efficiency as before, and I suspect that Sweden’s Transparency International rankings would scarcely decline. But meanwhile, a large fraction of Sweden’s accumulated national wealth might gradually be stolen and transferred to secret Cayman Islands bank accounts, or invested in Latin American drug cartels, and eventually the entire plundered economy would collapse.
Does this sound like the American financial industry to you?
But is Unz talking about the financial industry and its government (particularly Republican) toadies? Of course not. That would be admitting that he and his movement are largely at fault for the problems he’s describing.
When parasitic elites govern a society along “extractive” lines, a central feature is the massive upward flow of extracted wealth, regardless of any contrary laws or regulations. Certainly America has experienced an enormous growth of officially tolerated corruption as our political system has increasingly consolidated into a one-party state controlled by a unified media-plutocracy.
What’s amazing here is the two bolded passages. What in the heck does he mean by “regardless of any contrary laws or regulations”? Perhaps that the institutions responsible for enforcing and writing those laws and regulations are defunded, defanged, and co-opted by the extractive elite? Sound familiar?
And the final passage is just breathtaking. The financial industry, empowered and unleashed by that defanging (with American conservatives cheering and pushing every step of the way), has captured 20-40% of corporate profits over the last decade or so. But it’s the media that’s doing the extracting?
All I can say is they’re not very damned good at it. Wouldn’t you expect the extractive elite to successfully . . . extract a lot of money into offshore bank accounts? Exactly which industry is doing that?
Some might find it significant that the word “banks” never appears in the article.
I don’t need to detail all the other ironies that pervade this piece. (Notably: an excellent extended and off-topic rant against Obama’s continuation and expansion of Bush-era conservative, authoritarian military, intelligence, and surveillance policies, and their popular glorification in shows like 24: “Throughout all of modern history, I am not aware of a single even semi-civilized country that publicly celebrated the activities of its professional government torturers in the popular media.“). They’re rife and manifest.
But I would highly recommend this piece to those seeking to understand and explicate the problems plaguing this country. “Extractive elites” and “macro-corruption” encapsulate it pretty perfectly. It’s also essential reading for those like me who can’t seem to look away from the decades-long train wreck of contorted, self-contradictory conservative “thinking.”
* Irresistible aside: I heard an NPR interview years back with a businessman from a South American country saying that his country is far more democratic than ours. In his country, anyone can bribe officials. In America, only the rich get to make bribes.
Hat tip: Beowulf
Cross-posted at Asymptosis.
At some point, the worst excesses of some formerly beloved (by one or another group of individuals) come to light sufficiently that further defense of that ideology becomes very difficult.
Eventually, even most Bundists couldn’t defend the Thrid Reich, most committed Communists couldn’t defend the USSR, and later still, even most segregationists weren’t willing to defend Jim Crow. What we are starting to see, I think, is a bit of the same break-up on some segments of the far right. I noted in a recent post the tap-dancing we are now seeing by some at places like the American Enterprise Institute (and that follows outright abandonment by some, such as the Bartletts and the Frums). This is another example of “no, of course I don’t and have never said what you think I did, and by the way, it would be in bad taste for you check so just trust me on this.”
@Mike: Yeah, some at AEI seem to be realizing that the financial system is very far removed from, often antithetical to, real American “enterprise.”
I always go back to that Dawkins anecdote, about the senior professor after a presentation by a visiting lecturer: “I thank you sir. I have been wrong this fifteen years.”
You don’t see a whole lot of that, in any field. Civilization advances one funeral at a time.
don’t count on the advance.
like i said in your other post today, “the reach of the financial arm…”
but i think you are overreading “media plutocracy.” all he needs to mean is that the plutocracy owns the media and controls the “thought” of the masses. i see this every day, and there doesn’t seem to be a damn thing you can do about it.
ritual rant: even the “progressives” can’t break themselves free of the simple-minded formulas they live by.
oh, to the extent that some former true believers are falling away from the flock… i think at some point even the less thoughtful are capable of seeing that the second coming did not happen on schedule.
but this doesn’t mean they will give up their faith… only try to purify it from the corrupt clergy.
It’s interesting that Unz spends the first half of his article describing some of the details of China’s rise to economic success and then spends the second half taking apart Acemoglu and Robinson’s characterization of “China’s ruling elites as “extractive”—parasitic and corrupt—and predict that Chinese economic growth will soon falter and decline, while America’s “inclusive” governing institutions have taken us from strength to strength.” Unz further points out, “The glowing tributes this book has received from a vast array of America’s most prominent public intellectuals, including six Nobel laureates in economics, testifies to the widespread popularity of this optimistic message.” And then adds this cautionary remark.
“Yet do the facts about China and America really warrant this conclusi”on?
It is not only an amazing, for a conservative journal, lauditory review of the combination of China’s central planning and private capitalism as leading to its success, but more so that he turns Acemoglu and Robinson’s characterization on its head spending the entire second half of his article pointing out how it is America’s elite and captured government that are driving our economy into the crapper.
Me again. Read the article. If nothing else it is the most outspoken piece of conservative criticism of our political-economic structure you may find on wither side of the ideological divide. One might believe that Michael Hudson has written the coulmn under a nom d’ plume. What’s more amazing than what Stephen suggests is the statement, “When parasitic elites govern a society along “extractive” lines,….” in describing our economic system. Then, “it effectively illustrates the incestuous activities of America’s overlapping elites. Just a year earlier,…”. That’s not Ed Schultz talking on MSNBC. That’s a line from an article in the American Conservative. When does the other shoe drop?
Even more ironic that after lauding authoritarian states like China and Singapore, he diverges to rant against Obama’s continuation of Bush’s authoritarian policies. Utterly incoherent.
Singapore? Authoritarian? But Scott Sumner tells us its quite libertarian…
The financial industry’s primary activity is credit manipulation to extract wealth equivalent to that produced by useful economic activity from the debt-money-asset system. That churning turnover activity represents a very very small porton of the total worth of the debt-money-asset system.
The financial industry are the principals in both the debt portion of the system which represents in the US over 50 trillion of the total 190 trillion worth and the asset trading portion which represents the major profit area of the remaining 140 trillion of the US system’s worth.
The little people gets the crumbs representing an exchangeable turnover ten trillion a year.
In the US and Europe the financial industry has become a defacto oligarchy owning the political parties with the entertaining exception of Farage’s Ukip.
The financial industry makes most of its great money changer profits from leveraging debt, and as the GS paradigm has shown, has no ethical difficulty in shorting their long positions by selling bad overvalued assets to unwary valued GS customers.
Accumulative nonrepayable unrefundable bad debt load generated by the industry for forward consumption of overvalued overproduced assets is the rate limiting element on the debt-money-asset system causing periodic self corrections.
Because the oligarchy ruled macroeconomic system’s debt load has become so great over the last 30 years relative to the real economy’s demand for over produced and over valued assets, the countervailing asset valuation curves of quality repayable debt instruments, ie, US long term notes and bonds on the the one hand, and composite tax and rule advantaged equities and commodities on the other, have acquired a quantum pattern of evolution that provides a top down picture of what has happened, what is happening, and what will happen in the debt-money-asset system.
The quantum mathematical patterned behavior under the influence of enormous debt load relative to total asset worth represents a patterned science of the macroeconomic debt-money-asset system equivalent to physics and chemistry.
Yeah, that’s why 90% of Singaporeans live in government-built housing.
“Civilization advances one funeral at a time.”
An excellent insight which the late 18th Century French understood well, but which came under some disrepute when given over to the hands of Stalin and his ilk. It works much more effectively in a democracy or in the restoration of democracy. Do they still manufacture tumbrils?
The paleo-conservatives were among the first to warn us about the negative consequences of “free trade” and were labled kooks.
The paleo-conservatives warned us about unlimited wars and were labeled kooks.
Sometimes the kooks get it right.
I can’t say that I have total recall of positions taken ten years past, but I don’t recall any conservatives warning of the likely abysmal consequences of Bush’s foray into unprovoked aggression. Unprovoked by Iraq, that is. In fact I don’t recall any conservatives warning of the economic consequences of nearly total deregulation of the financial industry when Gramm Cracker was preparing for his retirement from government to the helm of the investment bank division of UBS. Has any one individual in the Congress at that time personally benefited to the extent that ded Phil Gramm, an economist by education if not training.
Each time I read one of these – and the concomitant wringing of hands – I am reminded that France still enjoys the benefits of their plebian ‘over reaction’ to the concept of royalty and accumulation of wealth at the expense of the middle class.
Tyranny yields NOTHING without a bloody demand. And until and unless the unwashed march through the leafy neighborhoods of, say, Connecticut – dragging occupants to their portable guillotines – nothing will change.
Names and addresses of the 1% should be posted on an internet site called The Jacobin Club. Names of wives, children, where they spa and school – together with personal schedules should be sufficient to empower the pitchfork brigades to begin the purges.
Jean Baptiste Carrier is remembered as the monster in the Noyade at Nantes – but without his thorough house cleaning of royalists – dumped en masse in the Loire – France would not have succeeded in purging itself of its demons.
To those who say they traded one set for another… I say – the small farms of Brittany would be Wal Mart parking lots but for the efforts of Carrier and the thorough cultural housecleaning of that era.
Today’s village culture holds on by a thread – because the collective memory of the French – includes an almost genetic loathing for the 1%.
Americans could learn a bit from Robespierre – instead of re electing Gerondins from both parties… year after year after year.
@ Jack: Actually, The American Conservative was launnced in 2003 in opposition to an Iraqi War. In 2006, it warned against deregulation of the financial industry. You are “not aware” because you are not paying attention. Epistemic closure?
@ Jack: You are “not aware” because you are not paying attention. The American Conservative was actually launched in 2003 in opposition to the Iraqi War. In 2006, it warned about deregulation of the financial industry. Are you feeling the symptoms of epistemic closure?
I’d suggest that my unfamiliarity of the position(s) outlined by Unz in the American Conservative are equally the result of my own incomplete Diogenic approach to expressions of conservative ideologies and Unz’s limited presence in the fore front of those expressions. He’s been drowned out be the epistemic closure of the right wing media circus that is often erroneously described as news analysis and serious political thought.
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