ol·i·gar·chy [ol-i-gahr-kee] noun, plural -chies.
One of the most interesting comment streams that I have been following regarding the Herman Cain – Occupy Wall Street debate . . . okay I did stop long enough to offer my two cents as well, is in Facebook, and in particular the statement by one participant that the movement is based on Maxist/socialism principles.
Even though said participant acknowledged the fact that besides the movement being used by Democratic interests to distract from the failed policies of the Obama Administration, and that there are those in the Occupy Wall Street movement who do not have socialist leanings, the if you criticize Wall Street you are criticizing Capitalism undertone comes through loud and clear.
In essence, the to be a true capitalist you have to ignore the log in your own eye to find the potential sliver in another’s eye, seems to be the either or mindset permeating the social media channels.
So here is the question . . . is the growing Groupon controversy or the recently disclosed settlement in which Citigroup will pay a fine in the tens of millions for fraudulently selling snake oil in the form of portfolios that were heavily loaded with mortgage-related investments they knew would lose money, a reflection of capitalism gone bad or oligarchical Marxism at its worst?
Let’s face it, in both the Groupon and Citibank examples a relatively small, tightly connected group of people made money while sticking it to the markets and the people, in much the same way that the former Soviet Union did to its denizens during the heyday of communism.
Thinking that I might be a tad extreme with the above analogy? Well, let’s look at the facts.
As reported in my October 19th post Groupon Chairman Eric Lefkofsky had, in a pre-IPO round earlier this year, distributed $810 million of the $950 million that was raised to fellow investors and employees (keeping of course $319 million for himself ). If this isn’t an example of oligarchical self interest that is reminiscent of the leadership over most communist countries, then I do not know what is.
In fact I would contend that any closely held interest in which the benefits are confined to a select few and are attained at the expense of the public, is anything but capitalism. For me, what makes America great (and capitalism work), is the fact that anyone from any station in life can through their own vision and gumption ascend to the heights of success (this is where Cain and I are in agreement). However, such ascension becomes a virtual impossibility if the cards are controlled and subsequently stacked in the favour of only a few.
For example, when I had interviewed Scott Burns who is considered by many to be one of the top investment journalists in the game (he ranks as one of the five most widely read personal finance writers in the country), he shed light on how financial institutions charge fees that diminish the returns on investors funds to the point that they no longer keep pace with inflation. They then take said fee-driven capital and throw that money into high risk investments . . . in essence the bank is playing with other peoples money to pursue big profits with questionable investment strategies, the risk of which is offset by an onerous fee structure for those who worked hard all their lives to save. Is this capitalism? Is this the reward awaiting those who have responsibly and diligently built a nest egg that is eventually going to dissipate well before these individuals have shed their mortal coils?
It seems like Marxism at its worst to me? And if those who call out the Occupy Wall Street movement participants has being Marxists or socialists for their condemnation of Wall Street, then isn’t said condemnation a case of people living in glass houses shouldn’t . . . that is if the movement is Marxist in nature. I of course do not think that it is.
My point is simply this, reducing the complexities of the issues with Capitalism gone bad to an America love-it-or-leave it mentality where even a modicum of criticism warrants cries (and accusations) of socialism, misses the real point. Specifically, that which is wrong with Wall Street and our financial institutions is one of diminished moral imperatives! Or to put it another way, unbridled and unchallenged avarice serves only one master . . . itself!
In this context my sentiments are similar to those of another individual who made the comment in Facebook that in his “humble personal opinion the only one that I could hold in high esteem for his integrity would be Warren Buffett.”
To which I responded “I could not agree with you more re Warren Buffet, which goes to prove that ethics (both business and personal knows know nationality, ideology or political leanings).”
Until we get to the stage of addressing the Groupons and Citibanks within this framework of understanding, we will all invariably miss the boat and in the process continue to undermine rather than bolster capitalism and the economy as a whole.