The Growth Of Global Rentier Capitalism And Poltical Discontent

A paper presented at the University of Chicago's Booth School of Business described the "vicious circle" of business concentration which has led to the development of rentier capitalism.  This was a process that started in the US, but has become a global phenomenon.  As the business sector becomes more concentrated it becomes more profitable.  That leads to greater political power which leads to even greater business concentration and more political power.

The study was based on data derived from the financial statements of publically traded corporations in 56 developed nations.  One measure of market concentration used in the study is the market capitalization of publically traded firms.  In 1995 the market capitalization of the top 100 firms was 31 times that of the bottom 2,000 firms.  By 2015 the market capitalization of the top 100 firms grew to 7,000 times the market cap of the bottom 2,000 firms.  That has not been accompanied by employment growth.  The market cap of the top 100 firms grew by a factor of four.  Employment growth was less than half of the growth in their market cap.

They measured economic rents by comparing profits with the return on assets.  Economic rent is the difference between the return on assets and profits.  Economic rent, or surplus profit, was 4% between 1995 and 2000.  It grew to 23% between 2009 and 2015.  Most of the growth in surplus profits or rent occurred in the top 100 firms.  Rents were 16% of total profits 1995-2000.  They were 40% of profits 2009-2015.

Hyper-globalization contributed to market concentration and the growth of economic rents.  The primary goal of corporate executives has been to increase shareholder value.  Much of their compensation is based upon the growth in earnings per share of stock.  That determines their bonuses and stock options constitute the bulk of their total compensation.  Over the last 30 years they have shaped trade and investment agreements; they have captured state regulators and they have increased their market power.  The power of nation states has declined in relation to the growth of market power that is concentrated in our largest global corporations.  That has contributed to much of the public discontent that we see in the US and in Europe.  It has also been a major source of growing income and wealth inequality.

Meet Roy Moore Who Is Republican Nominee For Alabama Senate Seat

Jennifer Rubin has been one of the conservative voices on the Washington Post and a devout Republican.  She has been a Trump critic who has expected her party to temper his bad behavior.  The Republican nominee for the Senate, who is being supported by  Republican leaders, has caused her to give up hope.  She describes Roy Moore's background in this article and delivers her eulogy for her favorite political party.  She can no longer remain part of a party that shares the values of Trump and Roy Moore.  Our country is being defined a small segment of our society which forms Trump's base.  He will not give them what he has promised them, but Trump understands that his base is his most important asset.  No Republican can win an election without support from Trump's base which he has captured from them.  They were concerned that Trump would form a third party with his base after he lost the GOP primary or the general election.  Instead he has taken over the Republican Party after winning the nomination and the presidency. 

David Brooks Describes The Selling of The GOP Soul For A Tax Cut

The Republican Senate bowed down to its beloved leader and smugly told the TV news reporters that they were united over the possibility of passing a tax bill that rewarded their donors, which they pretended to be a victory for its populist base.  They also explained that they had to pass a tax cut bill to avoid being humiliated by Trump's base in the 2018 election cycle. They sold their soul in order to preserve their jobs. It did not occur to them that their jobs would not be the same as they were before Trump. They will no longer perform in the service of their nation or the Constitution. Trump will order them to do his bidding.  He has a weapon to use against any Republican who crosses him.  He will tell his base of true believers not to vote for any of them who refuse to obey his tweets. They have made Congress subservient to the executive branch.  It is no longer an equal branch of the government and a check on the power of the power of the president.

Why Republican Leaders Should Not Decide To Die In The Dark

Ross Douthat is a remnant of the old Republican Party.  He is an intellectual who has used his platform on the NYT to defend conservative principles that once defined his political party.  Jeff Flake's decision not to fight against a Trump inspired primary challenge bothered him for two reasons.  Flake embraced all of the conservative ideals that Douthat has supported durng his career but he concluded that Republicans in Arizona would not vote for a candidate that was critical of Trump.  The other reason for Douthat's disappointment was that Flake decided to "die in the dark".  He believes that Republicans should not defiantly retire like Flake and Bob Coker.  Nor should they cravenly collaborate with Donald Trump.  The battle over the soul of the Republican Party should be fought in the light of a political campaign.  That would be better than dying in the dark as members of the British House of Lords decided to do in 1911 when it gave up the privilege of veto power over bills passed in the House of Commons.

Flake and Coker chose to resign because they understand the battle for the soul of the Republican Party.  The deck is stacked against conservative idealists.  For example, Steve Bannon is leading the Great American Alliance to purge establishment Republicans from the party.  Trump's campaign slogan was to "Make America Great Again".  It is not a coincidence that the name of his alliance resembles Trump's campaign slogan.  Bannon's organization is promoting primary candidates to run against Republican incumbents who are critical of Trump.  He is joined in this battle by alt-right organizations and media outlets which share his vision of Trumpism.  He is also supported by the Mercer family which is willing to share some of its billions to anoint Trump as the Czar of the Republican Party.

The battle for control of the Republican Party is not ideological.  It centers on emotion more than it does about political policies.  Trump continues to attack Obama and Hillary Clinton for a good reason.  His base shares a strong dislike for the Democratic Party.  Affective polarization is one of his weapons.  Loyalty to Trump as a person, and building hatred in his base against Democrats, is the foundation of Trumpism.  Some might argue that Trump's focus on his base will cause more traditional Republicans to leave the party.  Some might become independents but they won't vote for independent candidates or for Democrats.  John McCain selected Shara Palin as his Vice President candidate when he won the Republican nomination for president.  He chose Palin because most of the Republicans, that are now part of Trump's base, have an emotional attachment to her.  Palin's support in the Republican Party has never dropped below 67% despite her absence from government.

The Republican leadership in Congress does not like being attacked by Trump or by Bannon. However, they are more likely to "die in the dark" and to collaborate with Trump while he and Bannon complete the takeover the Republican Party.  After all, they may be able to pass a tax bill that benefits their large contributors with Trump in the White House.  The Koch Brothers are already spending millions against Democratic senators who face re-election in 2018.  The Koch Brother ads assume that Trump's tax policies will create jobs and raise wages just as Trump has falsely proclaimed.  Their ads claim that the Democratic candidate opposes job creation and wage growth.

Trump's takeover of the Republican Party is the first step in his effort to establish a more autocratic form of government in the US.  He has not experience running an organization over which he does not have complete control.  After he gains complete control of the Republican Party he will be better prepared to rid himself of the institutions that have been put in place to constrain presidential power.
 

What Will Republicans Pay For Tax Reform?

This article provides a good answer to the price that Republicans will pay for tax reform.  There is no ceiling on the price they will pay.  They are willing to turn their party over to Trump/Bannon in order to pass a tax reform bill that is still undefined.  Cutting taxes for the rich is consistent with their ideology.  They also believe that they can continue to convince their base to exchange minor cuts, that some  of them will receive, for large cuts to the super rich.  They are also willing to reduce government tax revenue even if the loss of tax revenue produces large budget deficits.  They pretend to be the fiscally responsible party, but that only applies when Democrats are in office.  Deficits are fine when Republicans are in office.  Richard Nixon made that point many decades ago.  He said that "We are all Keynesian's now".  He understood that cutting taxes, and running budget deficits stimulated the economy just as Keynes had stated during the Great Depression.  He also knew that this was a good path to reelection.  Of course, that is why Republicans pretend to hate Keynesian economics when Democrats are in office.  They prefer to take away the Keynesian tool from Democrats even if it might reduce unemployment during a recession.

There is an even more important reason why Republicans want to pass a tax reform bill this year.  They need to show their base, and those that fund their campaigns, that they can get something done before the 2018 election.  This should be easy with control of the House and the Senate.  The only problem that they might have is with a small number of Republicans in Congress who actually believe in fiscal conservatism.  They can't afford to lose three votes in the Senate because of their slim majority.  They will not get any Democratic votes in the Senate for a tax bill that primarily benefits the super rich.  Democrats may be able to use the tax bill against Republicans in the 2018 election but that may not be easy.  Trump's base is almost totally concerned with social, cultural and religious issues. Moreover, the lies that Republicans use to defend their tax policies are not easy to overcome.  There are not many economically literate voters in any democracy, and Trump will criticize the media that provides an honest analysis of his tax bill as "fake news".  Unfortunately, this is the point at which we have arrived today in our nation.  There is no reason not to lie when the price of telling lies has fallen to an historically low level.

Transcript of Jeff Flake's Senate Speech

Jeff Flake, a Republican Senator from Arizona, told his Senate colleagues he could no longer be complicit in supporting the current administration.  He will not run for reelection in 2018.  The full transcript of Flake's speech is posted here.  His elegant and scholarly speech should make many of his colleagues wonder why they are being complicit with this abnormal administration.

Fox News Demonstrates Its Commitment To Fake News

Fox News interviewed a person who claimed to be a former Navy Seal who was wounded several times in action and had received two purple hearts.  During the interview he praised Donald Trump and said that he had created a glass figure that honored Trump.  Fox News was more than happy to run the interview without checking out the claims made by their interviewee who lied about his military background.  Fox News continued to run the story on its Facebook page for ten days after learning about their error.  It had received over a million hits before it was removed.  This is not the first time that something like this has happened on Fox News.  Its first goal is to maintain its leading share of the cable news market.  Its market share is derived primarily from conservative viewers who were targeted in their marketing strategy.