Why Capitalism Thrives–and how it self-destructs

Earlier conservative press reports-4

This is a relatively new website and “the conservative financial press” is going to be a huge file. To keep downloads faster, it’s broken up into stages. This is the overflow from the previous one.


Everyone with an I.Q. over 80 agrees that invading Iraq the second time was a horrible mistake. Most agree that our continued presence there has made us a higher, not lower, priority target for terrorists.

If America’s pro-military-force-no-matter-what advocates are still in doubt that we should exit that country as soon as possible, the following article should remove all doubt.


From The Wall Street Journal, November 18, 2011


Standoff at U.S. Airbase in Iraq

BAGHDAD—A tense standoff between local police and the Iraqi Army played out on Thursday at the gate of the U.S. airbase in the northern city of Kirkuk, where a dispute over land and oil threatens national stability and unity as U.S. forces withdraw.

The territorial conflict, between the central government in Baghdad and the semiautonomous Kurdistan region, is just one flashpoint that some American and Iraqi officials say could boil over after the full pullout of U.S. troops at the end of December….

Time to face reality. Iraq is a mass of “flashpoints”—conflicting tribes, religions and economic self-interests—and our continued presence there is not going to change that fact.

It doesn’t matter if we leave immediately or ten years from now—the Iraqis will have to work out their differences on their own. It’ll be much better for our economy if we leave immediately.

Obama’s decision to leave was correct. Mick Mulvaney and her Republican critics were flat-out wrong.


Our economy’s problem isn’t a lack of “jobs, jobs, jobs.” Our problem is a lack of decent paying jobs, period.

A major reason for the wealth and income disparity between the rich and everyone else is that investors and top corporate executives have won the class war against working Americans.

This Wall Street Journal report describes what is happening all across our nation. Caterpillar has been our country’s premier union busting corporation, forcing huge union concessions by threatening to abandon U.S. well-paid workers and sending more operations overseas or to right-to-work states.


From the Wall Street Journal online, November 13, 2011

Caterpillar to Shift Some Production to U.S.

Caterpillar, which is based in Peoria, Ill., said it expects to begin construction during the first half of 2012.

Caterpillar last year announced plans to move some of Sagami’s excavator production to a new plant being constructed in Wujiang, China.

Caterpillar also is moving assembly of its larger excavators from Akashi, Japan, to a new plant in Victoria, Texas, to free up production capacity for Asian markets where sales of Caterpillar equipment have been surging in recent years. The new Texas plant is expected to be completed by the middle of 2012.

Caterpillar’s announcement of a new plant without naming a location will likely set off an intense competition between U.S. states hungry for manufacturing jobs. States interested in hosting plant can be expected to offer the company incentive-laden aid packages with tax breaks and government grants for training new employees.

Nearly all of Caterpillar’s investments in new U.S. plants in recent years have been the South, particularly Texas and North Carolina, where the company’s Building Construction Products division is based. Caterpillar already builds compact construction machinery in Clayton and Sanford, N.C.

As stated elsewhere on this website, the Taft-Hartley Act of 1947 gave corporations power to pit states against each other (…”intense competition between U.S. states hungry for manufacturing jobs”), and NAFTA and free trade agreements gave them the power to pit nations against each other. Ya’ cain’t do no bettern’at.

Politicians like Mick Mulvaney think that’s the way it should be.



Even those with IQs under 80 should now begin to understand the disaster that our outsourcing well-paid industrial jobs to Third World countries has caused.

News reports like these three from today’s Wall Street Journal are becoming almost a daily occurrence.

From the Wall Street Journal, November 10, 2011.


Michigan Sizes Up Taking Over Flint


Michigan officials are declaring a financial emergency in Flint, paving the way for a state takeover of the struggling industrial city’s finances.

The specter of state control comes as labor talks are going on 70 miles to the south in Detroit, where Mayor Dave Bing has given municipal unions a Nov. 21 deadline to agree to $42 million in concessions or risk the same fate as Flint….

Three other Michigan cities—Pontiac, Ecorse and Benton Harbor—as well as Detroit’s school district are run by emergency managers. Flint, the state’s seventh-largest city by population, would be the largest municipality under state control….

Home Prices Keep Dropping

U.S. home prices fell in nearly three-quarters of metropolitan areas in the third quarter and the national median price dropped 4.7% as the housing market continued to show weakness….

Paul Dales, senior U.S. economist at Capital Economics, forecasts that U.S. home prices will fall a further 3% by the end of this year, due to weak demand, a poor economy and a high supply of foreclosures and other distressed properties on the market. It will take “years rather than months for a proper recovery to get going,” said Mr. Dales, who predicts home prices nationally won’t mount a sustained rise until 2014.

Largest Municipal Bankruptcy Filed

Jefferson County, Ala., which owes more than $3 billion on a failed sewer deal, filed Wednesday for what would be the largest municipal bankruptcy in U.S. history after a tentative rescue plan with creditors unraveled.

The county, home to Alabama’s biggest city, Birmingham, filed its Chapter 9 petition in U.S. Bankruptcy Court less than an hour after county commissioners voted 4-1 to do so. The document was signed by Commission President David Carrington. …

When inflation is caused by our wealthiest citizens—and middle- and low-income workers lose their jobs or their wages stagnate or decline relative to inflation—home payments are missed, domestically produced goods and services are not purchased, and taxes to municipalities decline.

Republicans like Mick Mulvaney then make the situation worse by replacing not-for-profit government functions with for-huge-profit businesses. They don’t stop there, however. They make the public frustrated with government functions by “starving the beast” (government), and by doing everything they can to hinder government’s ability to function effectively.

If you ever wondered about the Republican philosophy about government, remember Richard Darman’s description of when Newt Gingrich’s talked to a gathering of right-wing conservatives: “In his cheerful, confident, radical professorial way, Gingrich explained that to do what he wanted, government first had to be completely discredited—ethically, programmatically, managerially, philosophically… Once Washington-based government was totally discredited, hard-right conservatives could then sweep to power.” (Darman was George Bush’s Budget Director who also served under Nixon, Ford and Reagan.)

In other words, Republicans want to replace Democratic Capitalism with hard-right capitalism (an aristocracy).



As you read the following article, bear in mind that these are the kinds of countries our brilliant Republicans and conservative Democrats in the federal government decided we should give our best industries to—and all because they offered cheap labor and few or no environmental restrictions.

When corporations like General Motors and Motorola located facilities in China, one of the requirements was that they share the latest manufacturing equipment and technologies with the Chinese. In other words, the Chinese didn’t even have to spy on GM or Motorola to get their latest proprietary information. It was done willingly. And only because it enabled American corporations to abandon American communities and their workers in the pursuit of the lowest labor costs.

Today, the Chinese can out-compete us—not only on the basis of labor costs—but also on the basis of the most advanced technology that they have stolen from us.

From the Wall Street Journal, November 3, 2011.

U.S. Report Cites ‘Persistent’ Chinese, Russian Spying for Economic Gain

WASHINGTON—The U.S. government accused the Chinese of being the world’s “most active and persistent” perpetrators of economic spying, an unusual move designed to spur stronger U.S. and international action to combat rampant industrial espionage that threatens economic growth.

Russian intelligence agents are also conducting extensive spying to collect U.S. economic data and technology, according to a U.S. intelligence report released Thursday that concluded China and Russia are “the most aggressive collectors” of U.S economic information and technology….

The threat will accelerate in the coming years and presents “a growing and persistent threat” to U.S. economic security, according to the intelligence report, which reflects the views of 14 U.S. intelligence agencies. Fueling that threat is the increasing intermingling between U.S. and Chinese companies and the increasing employment by U.S. companies of Russian immigrants with high-tech skills who may be recruited by Russian spies.

The senior official said it was necessary to single out specific countries in order to confront the problem and attempt contain a threat that gotten out of control. Economic espionage is condoned by both China and Russia and is part of each country’s national economic development policy, the official said. Industrial espionage is illegal in the U.S.

The Chinese see the theft of intellectual property as a way to fuel economic growth, the intelligence report concluded. Russia’s dependence on natural resources, desire to diversify its economy, and its belief that the global economic order favors the West drives its spying campaigns, according to the report….

Industrial espionage poses a number of national security threats to the U.S., including the risk that stolen military technology will be handed to hostile countries like North Korea or Iran, the intelligence report concluded….

It’s time the U.S. started producing goods and services in this country, for sale and distribution in this country. It will never happen as long as Republicans like Mick Mulvaney continue to insist that American workers compete with the lowest paid and most brutalized workers of the world.


Finally! The Wall Street Journal is willing to print the opinions of a professor and a legitimate objective observer of what’s happening to our country. Dr. Peter Cappelli is the George W. Taylor professor of management at the Wharton School and director of Wharton’s Center for Human Resources.

If it wasn’t obvious before, it should be obvious now: as Dr. Cappelli points out, corporations can’t find CHEAP qualified employees in the U.S., at least not as cheap as elsewhere.

In addition, multinational corporations no longer train expensive highly skilled employees in the U.S., simply because they can train them far more cheaply in other countries. Then they have the unmitigated gall to try to pressure Congress to allow them to bring them back to this country to fill jobs here.

From The Wall Street Journal, October 24, 2011

Why Companies Aren’t Getting the Employees They Need

The conventional wisdom is that our education system is failing our economy. But our companies deserve a lot of the blame themselves.

By Peter Cappelli

The perceptions about a lack of skilled workers are pervasive. The staffing company ManpowerGroup, for instance, reports that 52% of U.S. employers surveyed say they have difficulty filling positions because of talent shortages.

But the problem is an illusion.

Some of the complaints about skill shortages boil down to the fact that employers can’t get candidates to accept jobs at the wages offered. That’s an affordability problem, not a skill shortage. A real shortage means not being able to find appropriate candidates at market-clearing wages. We wouldn’t say there is a shortage of diamonds when they are incredibly expensive; we can buy all we want at the prevailing prices….

And make no mistake: There are plenty of people out there who could step into jobs with just a bit of training—even recent graduates who don’t have much job experience. Despite employers’ complaints about the education system, college students are pursuing more vocationally oriented course work than ever before, with degrees in highly specialized fields like pharmaceutical marketing and retail logistics.

Unfortunately, American companies don’t seem to do training anymore. Data are hard to come by, but we know that apprenticeship programs have largely disappeared, along with management-training programs. And the amount of training that the average new hire gets in the first year or so could be measured in hours and counted on the fingers of one hand. Much of that includes what vendors do when they bring in new equipment: “Here’s how to work this copier.”…


We’re seeing a repeat of 1929, including the later revision of history. Although the fiscal and monetary policies of the 1920s caused the huge income and wealth disparity beteen the rich and everyone else, and the stock market creash of 1929, conservative economists still blamed the ’30s depression on the Smoot-Hawley tariff and the international trade war that followed.

Although the present huge income and wealth gap was caused by our economic policies of the past three decades—conservatives again warn us that tariffs will create the economic mess we’re already in.

From Barron’s, October 17, 2011

Editorial Commentary

Chuck Schumer’s Dream

By Thomas Donlan

Democrats are on their way to repeating a giant Republican mistake.

The U.S. House of Representatives needs a new Hawley to go with the U.S. Senate’s reincarnation of Smoot. Then the whole Congress can rerun the disaster of 1930 that helped make the Great Depression a world-wide catastrophe.

Playing the part of Republican Sen. Reed Smoot of Utah today is Sen. Charles Schumer of New York. He leads the wing of the Democratic Party that wants to declare a trade and exchange-rate war with America’s largest creditor.

In a vote Oct. 6, 46 Democrats and 17 Republicans joined to pass the Schumer bill, which would require the Treasury and the Commerce Department to impose retaliatory tariffs on nations that have overvalued currencies. That is to say, China.

A lot of economists say that if China had a freely floating currency and no capital controls, the yuan might be worth 15% to 38% more against the dollar. Some economists say there wouldn’t be much change, and others say it wouldn’t matter very much if it did change, but those who condemn the Chinese for currency manipulation are numerous and loud….

Just as trade always enriches both parties, artificial reductions of beneficial trade do the opposite.

Setting rates that were the highest in American history, the Smoot-Hawley tariff act was one of the more successful measures in the history of trade. It knocked 15% off the value of U.S. imports almost instantly. That made it one of the grandest ventures of congressional stupidity in the history of trade, because other countries, importantly including Canada, were quick to erect trade barriers of their own.

U.S. exports fell 50% in less than three years, reducing profits and increasing domestic surpluses, decreasing employment. It took a world war and more than 50 years of tedious negotiations to undo Smoot-Hawley’s harmful effects.

Key passages from above:

“Just as trade always enriches both parties, artificial reductions of beneficial trade do the opposite.”

This is a half-truth that amounts to a deliberate lie. When investors from two countries convince their governments to enter into trade agreements, they always make sure that they benefit, and often at the direct expense of workers in each country. NAFTA was an economic boon to investors in both the U.S. and Mexico—but a disaster for Mexican farmers and our own industrial workers.

“Setting rates that were the highest in American history, the Smoot-Hawley tariff act was one of the more successful measures in the history of trade. It knocked 15% off the value of U.S. imports almost instantly. That made it one of the grandest ventures of congressional stupidity in the history of trade, because other countries, importantly including Canada, were quick to erect trade barriers of their own.”

Again, half-truths. The real effect was that the U.S. and other countries protected enough of their own industries and jobs to recover some control over their own economies. Citizens were paid to produce products and services within their own countries, and international corporations were less able to pit workers in different nations against each other.

“U.S. exports fell 50% in less than three years, reducing profits and increasing domestic surpluses, decreasing employment. It took a world war and more than 50 years of tedious negotiations to undo Smoot-Hawley’s harmful effects.”

The reality: For 50 years our industries and their jobs were protected from low-wage countries. As a result, the U.S. produced products and services for our own country and created the largest and most prosperous middle class in history. Labor unions grew and forced wages to go up, even for nonunion workers (corporations could remain nonunion only if they approximated union wages.)

Although this was a good economic system for workers, it terrified America’s investors, and “free-market” advocates. They claimed that such an economy was an historic anomaly, unnatural, and probably against the will of God. Bottom line: America’s aristocrats were losing control of the economy, and that situation had to be reversed.

For the past 30 years, increasingly conservative governmental policies have given corporations the “freedom” to pit nations against each other in offering the lowest tax rates, the biggest financial incentives (free roads, utilities, etc.), the lowest wages and fewest worker protections, and the weakest environmental protections.

Today’s individual countries’ “threats” to use tariffs to protect what’s left of income producing jobs—are the result of 30 years of pro-investor, anti-labor governmental practices. We’re in for a very bad economic future worldwide, but tariffs and protective industrial policies are results, not causes, of what’s happening.

The U.S. needs an industrial policy—very much like the one we had between 1932 and 1980. And guess what: Mick Mulvaney is doing his very best to make sure we don’t have one.

(For earlier conservative financial press releases, go here.)

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