Category Archives: Capitalism

Why Intellectuals Hate Capitalism – Reason.com

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Intellectuals have always disdained commerce,” says Whole Foods Market co-founder John Mackey. They “have always sided with the aristocrats to maintain a society where the businesspeople were kept down.” Having helped create the global grocery chain intellectuals arguably like best, Mackey has evolved into one of capitalism’s most persuasive champions, making the moral, practical, and even spiritual case that free exchange ennobles all who participate.

More than any other retailer, Whole Foods has reconfigured what and how America eats. Since opening its first store in Austin, Texas, in 1980, the company has helped its customers develop a taste for high-quality meats, produce, cheeses, and wines, as well as for information about where all the stuff gets sourced. Mackey, 62, continues to set the pace for what’s expected in organic and sustainably harvested food.

Because of Whole Foods’ educated customer base and because Mackey is himself a vegan and a champion of collaboration between management and workers, it’s easy to mistake him for a progressive left-winger. Indeed, an early version of Jonah Goldberg’s bestselling 2008 book Liberal Fascism even bore the subtitle “The Totalitarian Temptation from Hegel to Whole Foods.”

Yet that misses the radical vision of capitalism at the heart of Mackey’s thought. A high-profile critic of the minimum wage, Obamacare, and the regulatory state, Mackey believes that free markets are the best way not only to raise living standards but to create meaning for individuals, communities, and society. At the same time, he challenges a number of libertarian dogmas, including the notion that publicly traded companies should always seek to exclusively maximize shareholder value. Conscious Capitalism, the 2013 book he co-authored with Rajendra Sisodia, lays out a detailed vision for a post-industrial capitalism that addresses spiritual desire as much as physical need.

Reason TV’s Nick Gillespie talked with Mackey earlier this summer at FreedomFest in Las Vegas. To see the full video, go to reason.com. (Disclosure: Whole Foods Market is a supporter of Reason Foundation, the nonprofit that publishes this magazine.)

reason: You believe capitalism is not only the greatest wealth creator but helps poor people get rich. But you see it as constantly being misrepresented, even by its champions. Why is capitalism under attack?

John Mackey: Intellectuals have always disdained commerce. That is something that tradesmen did—people that were in a lower class. Minorities oftentimes did it, like you had the Jews in the West. And when they became wealthy and successful and rose, then they were envied, they were persecuted and their wealth confiscated, and many times they were run out of country after country. Same thing happened with the Chinese in the East. They were great businesspeople as well.

So the intellectuals have always sided with the aristocrats to maintain a society where the businesspeople were kept down. You might say that capitalism was the first time that businesspeople caught a break. Because of Adam Smith and the philosophy that came along with that, the industrial revolution began this huge upward surge of prosperity.

reason: Is it a misunderstanding of what business does? Is it envy? Is it a lack of capacity to understand that what entrepreneurs do, or what innovators do, is take a bunch of things that might not be worth much separately and then they transform them? What is the root of the antagonism toward commerce?

Mackey: It’s sort of where people stand in the social hierarchy. If you live in a more business-oriented society, like the United States has been, then you have these businesspeople, who [the intellectuals] don’t judge to be very intelligent or well-educated, having lots of money—and they begin to buy political power with it, and they rise in the social hierarchy. Whereas the really intelligent people, the intellectuals, are less important. And I don’t think they like that.

(Interview trancript continues below.)

That’s one of the main reasons the intellectuals have usually disdained commerce. They haven’t seen it [as a] dynamic, creative force, because they measure themselves against these people, and they think they’re superior, and yet in the social hierarchy they’re not seen as more important. I think that drives them crazy.

reason: A lot of the times the businesspeople are plucky upstarts—they’re innovators, they’re disruptive, and they’re fighting against the power. But once they get to a certain point of influence or power, they often start to try and rig the market or freeze the market in their favor. Why is that?

Mackey: I don’t know if it’s a psychological switch so much as that they weren’t necessarily grounded in the philosophy of capitalism. They weren’t necessarily advocates of the free market. They were just advocates of their own advancement, their own personal enrichment. And so I think oftentimes, they don’t make a distinction between when they’re entrepreneurs on the way up versus when they’ve arrived. They’re attempting to not fall, so they try to rig the game, and we have crony capitalism.

reason: We live in an age where there are an unbelievable amount of government mandates that restrict the ability of business owners and employees to really negotiate about stuff. Some are things as obvious as the minimum wage, where it says, “Under no circumstances can a business offer somebody less than this amount.” How do these affect your ability to run a business in an extremely competitive market?

Mackey: The impetus behind so many of these types of regulations in the workplace is, in a sense, to shackle business again—to get it back under the control of the intellectuals. Just like commerce: If you study the history of business, you will see that most of the time in our history, commerce was controlled by the aristocrats. The merchants were kept under their thumb. And now they’ve escaped and we have this free-market ideology that says the market should determine all these things. They’re systematically undermining that marketplace to get business back, get the genie back in the bottle.

Of course, that will stifle innovation. It’ll stifle the dynamic creative destruction of capitalism. But I don’t think they’re thinking about it that way. They’re very concerned about the motives of business, and they see it as this selfish, greedy, exploitative thing. Businesspeople can’t be trusted, markets aren’t just, they’re not fair, so we need to intervene, we need to control this situation.

Trump Making Bureaucrats Drink More

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This is hilarious. Bureaucrats are finally being treated with the disdain they’ve always deserved. And are behaving in much the way as campus snowflakes. You see, government employment shields the employees from the vagaries of the market. Unlike private-sector employees, bureaucrats don’t have to concern themselves from termination, lay-offs, pay and benefit cuts, and the like. The have a guaranteed lifelong job, with over-the-top benefits, Cadillac health-insurance plans, annual cost-of-living increases, and about eight weeks of paid time-off. Getting fired from a government job is rarer than an apparation of the Blessed Mother or an Elvis sighting. And so, government employment is very attractive to Millennials and snowflakes in general. A guaranteed, generous paycheck for life with outrageous retirement benefits for you and your surviving spouse. Without ever having to concern one’s self with the uncertainties that private-sector employees must face daily.

And they are sometimes rewarded with end-of-year bonuses.  Excuse me !  In the private sector, bonuses are generally rewarded after an exceptionally profitable year, or to an employee who has greatly exceeded sales and production expectations.  Government employees, however, are given end-of-year bonuses just for having a pulse.  

You can’t make this stuff up.  The next time some bureaucrat starts whining to you about his employment situation, tell him to trade places with Bob Cratchett, Dickens’ fictional hero to private-sector workers everywhere whose job is on the line every single day.–A/D

 

The Trump administration is causing many government bureaucrats to drink more, according to a Friday report.

Various government workers workers told Politico that the stress of working for President Donald Trump’s administration has ruined their dating lives and often caused them to turn to liquor for comfort. Dozens of these employees reported to Politico that the advent of Trump had forever changed their lives.

“My own personal coping mechanism is a lot of denial,” said one Energy Department employee. “That has caused marital stress, since [my spouse] does not appreciate or respect my state of denial. That has caused an issue, although we would not be the only couple in the United States that has struggled with the Trump effect. I’m the frog in the pot that’s boiling along.”

A State Department official also said he was concerned about how the administration was affecting him and whether he would be forever associated with the “worst” of the worst administration.

“There are days I want to leave and work for someone who respects me and appreciates my skills and expertise. I’m worried people years from now will somehow associate me with the very worst of this administration” one State Department official told Politico.

Not all government officials felt the same anxiety as their colleagues, as some Immigration and Customs Enforcement agents expressed that they felt supported for the first time in a while.

The Trump administration has seen some instability, with many people leaving or being fired.

The various departments did not return request for comment in time for publication.

Good Globalism vs. Bad Globalism

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Globalism” and “globalization,” are terms that suffer from a lack of any precise definition. The terms are used freely by a wide variety of commentators to mean both good and bad things — many of which are opposites of each other. Sometimes globalism means lowering trade barriers. Other times it means aggressive foreign policy through international organizations like NATO. Other times it means supporting a global bureaucracy like the United Nations.

This lack of precision was recently featured in The New York Times with Bret Stephens’s column “In Praise of Globalists.” Stephens however, also fails to make any serious attempt at defining globalism. He feigns an attempt to define globalism, but in the end, it turns out the column is just a means of making fun of Trump voters and rubes who don’t subscribe to Stephens’s allegedly cosmopolitan views.

Stephens tells us that globalists want to “make the world a better place,” thus implying that non-globalists don’t.  We’re informed that globalists value military alliances and free trade. But given that Stephen’s isn’t willing to define these terms or tell us how these institutions are used to make the world “a better place,” we’re still left wondering if globalism is a good thing. When international alliances are used to justify the dropping of bombs on civilians or turning Iraq into a basket-case and safe haven for al Qaeda, is that making the world a better place? When the EU uses “free trade” agreements as a means to crush entrepreneurs under the weight of a thousand taxes and regulations, is that making the world a better place?

Globalism: Conflating both Pro-Market and Anti-Market Forces

Unfortunately, this is nothing new. Globalism has long been a heavily abused term that includes everything from lowering taxes to waging elective wars. For critics on the right, globalism must be suspect because so many center-left politicians are regarded as “globalists.”  Bill Clinton, Hillary Clinton, and Barack Obama are all regarded as dyed-in-the-wool globalists who also advocate for greater government control of markets.

Simultaneously, “globalists” have also long been attacked by anti-capitalists. They see globalism as working hand-in-hand with “neoliberals” who are impoverishing the world by pushing for the spread of market forces, free trade, and support for less government intervention in daily life.

These critics of so-called neoliberalism therefore attack organizations widely perceived to be “globalist” like the World Bank, the IMF, and the World Trade Organization. Unfortunately, though, the critics attack these organizations for the wrong reasons. These globalist organizations deserve to be criticized, but not because they push some aspects of economic liberalization that are actually good. They should be criticized because they primarily act as political organizations that enhance the ability of some powerful states to intimidate and politically manipulate other, less powerful states.

This merging of free trade, military interventionism, and bureaucratic politicking under one umbrella of “globalism” ends up confusing the issue of globalism almost beyond repair.

But there is still hope for the term.

Historically, Globalism Is the Ideology of Peace and Freedom

Historically, it is important to remember that globalism is intimately connected to liberalism, the ideology of freedom and free trade.

It is not a coincidence that one of the nineteenth century’s most effective proponents of liberalism was Richard Cobden, who fought tirelessly against both trade barriers and against aggressive foreign policy. Cobden can be credited with waging an effective ideological war against the mercantilism of his day which was characterized by nationalist ideas in which both economic success and military security were zero sum games that required highly interventionist government institutions.

Cobden’s program, instead, was one of peace and free trade, which was then rightly regarded as a program of internationalism. Thomas Woords notes:

Although Cobden’s program would doubtless be stigmatized in our day as “isolationism,” free economic intercourse and cultural exchange with the world can hardly be described as isolation. In his day, in fact, Cobden was appropriately dubbed the “International Man.” And that, indeed, is what he was. Peace, free trade, and nonintervention — these ideas, Cobden believed, were not simply the ideological commitments of one particular party, but rather the necessary ingredients for the progress and flourishing of civilization.

We might say Richard Cobden was one of the first true European globalists. Cobden was further supported by the great French free-trader and anti-socialist Frédéric Bastiat who relentlessly called for the free flow of of goods while denouncing efforts by government institutions to “mold mankind” or impose regimentation on the population.

Thus, the liberals of the nineteenth century who supported greater freedom of movement in both workers and goods, and non-interventionist foreign policy, might be perplexed were they to see what passes for “globalism” today.

We are often told, even by pro-market globalists, that we need international organizations like the WTO to “ensure” that free trade prevails. This has always been a less-than-convincing claim. As Carmen Dorobăț has shown, there is not any actual evidence that the WTO really lowers trade barriers. Freedom in trade has grown more outside the WTO framework than within it.  All that is necessary to reap the benefits of free trade is to unilaterally remove barriers to trade. 

The European Commission meanwhile might facilitate trade within its trade bloc, but it acts as an enormous impediment to truly free and global trade.

Even worse is the foreign policy of the new globalists who support an endless number of wars and military interventions on “humanitarian” grounds. Enormous military bureaucracies like NATO, amazingly, are considered to be “globalist” organizations as well.

Political Globalism vs. Economic Globalism 

If we wish to end this confusion, though, we need to separate political globalism from economic globalism.

When we do this, we find that economic globalism is a force for enormous good in the world, but political globalism is primarily a tool for increasing the power of states.

As to economic globalism, we can see that again and again that the free flow of goods and services, unimpeded by states, improves international relations and increases standards of living.  Where governments have increasingly joined the “globalized” economy, extreme poverty declines while health and well being increases.  Latin American states that have embraced trade and freer economies, for example, have experienced growth. Those states that stick to the regimented economies of old continue to stagnate.  These benefits, however, can be — and have been — achieved by decentralized, unilateral moves toward free trade and deregulated economies. No international bureaucracy is necessary.

This is economic globalization: opening up the benefits of global trade, entrepreneurship, and investment to a larger and larger share of humanity.

Meanwhile, political globalization is an impediment to these benefits: Political globalists at the World Health Organization, for example, spend their days releasing reports on how people shouldn’t eat meat and how we might regulate such behavior in the future. Political globalists hatch new schemes to drive up the cost of living for poor people in the name of preventing climate change. Meanwhile, the World Bank issues edicts on how to “modernize”economies by increasing tax revenues — and thus state power — while imposing new regulations.

It’s essential to make these distinctions. Economic globalism brings wealth. Political globalism brings poverty.

Economic globalism is about getting government out the way. It’s about laissez-faire, being hands, off, and promoting the freedom to innovate, trade, and associate freely with others.

Political globalism, on the other hand, is about control, rules, central planning, and coercion.

Some careless observers may lump all this together and declare “globalism” to be a wonderful thing. But when we pay a little more attention to the details, things aren’t quite so clear. —by Ryan McMaken, Ludwig von Mises Institute

Capitalism Gets No Respect and No Thanks (von Mises)

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It’s so true. In today’s world a pedophile gets more respect than a capitalist. Everything we have, including the money to support government at every level, is made possible by capitalism. Government cannot create wealth; it can only redistribute it or destroy it. Every dime the government has has been generated by the private ( i.e. capitalist) sector. So if you’re getting food stamps, or welfare in any other form, you have capitalism to thank for it.

Capitalism, it turns out, is the ultimate form of social justice.   But, you’ll never hear this from the lame-stream media, or even the most ardent conservative/libertarian politicians. Nor will you hear it in any of the hallowed halls of academia. Should anyone dare challenge the prevailing campus ideology, they risk ostracism, threats to persons and property, loss of employment, administrative disciplinary action, or even bodily harm.

In any corner of the world, you’ll find few, if any, open supporters of capitalism or free enterprise.  It’s just too risky to your life and livelihood.

We all owe a debt of the gratitude to the late economist/philosopher, Ludwig von Mises (29 September 1881 – 10 October 1973).  Von Mises, along with Carl Menger and Friedrich Hayek, is one of the founding fathers of the Austrian School of Economics. Mises wrote and lectured extensively on behalf of classical liberalism. He is best known for his work on praxeology, a study of human choice and action.

His masterpiece,  Human Action, is considered the very best economics text by lovers of liberty everywhere.  His crowning achievement was his induction into the Artful Dilettante Hall of Fame in 2016.  He was among the original inductees.

Capitalism Gets No Respect and No Thanks (von Mises)

TOM PEREZ’ IDEA OF REFORMING THE DNC

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Today, the Chairman of the Democratic National Committee, Tom Perez, admitted that reforming the Democratic Party was going to be far more difficult than he had imagined.

I was so excited. I immediately and naively assumed that his idea of reforming the Democrat Party was purging the party of all the marxist kooks, hardcore violent leftists like Black Lives Matter and Antifa, anti-Free Speech college professors and administrators, disavowing the whole hateful “white privilege” mindset and condemning everyone who professes it on campuses and elsewhere, the Islamists, and embracing free-market capitalism as the greatest wealth-producing machine in the history of mankind.

I thought he meant purging the Obamas, the Clintons, Pelosi, Chucky Schumer, Dicky Durbin, George Soros, Rahm Emanuel, Pocahontas, Bory Cooker, the Cuomos, Jerry Brown, Donna Brazile, and all their parasitic suck-ups in the media—-CNN, PMSNBC, and CBS.

I thought Perez meant seriously draining The Swamp. No, instead, he just talked about a bunch of meaningless, trivial bulls**t like building up the grassroots, coordinating our efforts even more to bleed the indigent, increasing our community organizing to predatory levels, putting more people than ever on public assistance, destroying the private economy so that more people suffer and become dependent on the government, forcing transgenderism on every child, making sure every caucasian is encouraged to commit suicide because of the crimes of his forebears, and allowing every deadbeat from every s**thole country free admission to the country with free education, free groceries, free rent, free electricity, free toilet paper, and on and on.

This is Democrat Party Tom Perez wants, in order to assume absolute power over a hapless, woefully disarmed and ignorant citizenry. Remember Perez–the Tree of Liberty must be watered from time to time with the Blood of Tyrants and Patriots.—-Thomas Jefferson. One should never underestimate the power of liberty to inspire the aggrieved to take up arms.

A VERY STABLE GENIUS

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A VERY STABLE GENIUS

President Trump is quick to tout his intelligence, his wealth, and his accomplishments. Today, he called himself a “very stable genius.” At least half of America thinks he’s an obnoxious blowhard, even crazy. I think there is a method to his madness.

Millions of American kids have been brainwashed by the public education system and modern culture to believe that their intelligence and accomplishments, like those of their parents, are a function of “privilege.” Something to be ashamed of or feel guilty about.  Diligence and motivation have nothing at all to do with success. Students are now being tested across the country to determine their “privilege awareness.”

President Trump is taking on Political Correctness in subtle ways most social justice warriors are too blinded by hatred to consider. By openly and vocally expressing his pride in his own self-driven merits, President Trump is trying to send a strong message to today’s youth—Don’t be ashamed of your virtues. Virtue is the fruit of rational thought. Diligence and motivation are virtues. Do we want our kids to fail because some of their peers are failures? Are they to be ashamed of their accomplishments because others have none? Are they supposed to go through life with half their brains tied behind their backs because others are intellectually challenged?

Where would mankind be if it weren’t for the productive—the brain-i-acs, the hard-working, the creative, the entrepreneurs, the competent, who seek only an honest return for their efforts and the freedom to pursue their goals? In today’s America and elsewhere, competence is an unforgiveable offense subject to merciless derision by cultural marxists in our public schools, colleges and universities, and the media. If it weren’t for the competent, we’d all be hunter/gatherers living in stone-cold, fetid hovels.

There is work to be done, things to be invented, medical and scientific breakthroughs to be made. Are we to entrust our future to those who won’t get out of bed, crack a book, or fill out a job application? To be sure, there are millions of poor and destitute, through no fault of their own, deserving of our help and compassion. We must find a way to differentiate between those who cannot work and those who will not work. Our current welfare system has failed to do this.

That said, we must never criticize or subject to systemic condemnation the hardworking, the ambitious, and the intellectually gifted. After all, our future is in their hands. They must be encouraged to reach for the stars and play every game like it’s the seventh game of the World Series. Indeed, all of our children must be inspired to succeed to the extent of their abilities, and taught that failure is only a step away from their fondest dreams.

President Trump is right to take on this toxic mindset and warped value-system.

Assessing President Trump’s First Year in Office

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As 2017 draws to a close, I am moved to summarize and comment on President Trump’s first year in office.

His election was nothing short of an historic phenomenon and he has exceeded my wildest expectations. There are articles out there that list his top 81 accomplishments, but they include things like learning to play the accordion and walking on water. I’ll stick to my short list.

1- my favorite. Withdrawing from the Paris Climate Accords. Climate change is a corrupt, money-making hoax. Not that the climate doesn’t change; it’s been changing since the Big Bang, sometimes radically. For ninety-nine percent of the time since the earth was formed, it has been uninhabitable to all but simple amoeba, and only to mammals since the dinosaurs exited because of a giant meteorite. (Now that’s climate change !) Nothing George Soros or Barack Obama in their infinite wisdom could have done a G/D thing about. Humans and their genetic predecessors have only been around for just a couple million years and change. Yet, they survived the Ice Age and the Biblical Flood without the help of a single bureaucrat or elite coastal liberal.

It is estimated that dropping out of the Paris Accords will save the American taxpayer $23 trillion dollars, money that would enrich only a bunch of crooked bankers and high-level bureaucrats.

President Trump has rightfully thrown them under a bus. If President Trump wants to help the environment, he should turn off all the electricity, heat, and hot water in every government building.

2 – the historic tax-cut and jobs bill. Like then-VP Joe Biden said of Obamacare, “This is a big effing deal.” Indeed. Liberals howl that it’s a tax cut for the rich. Who does all the hiring in this country? When’s the last time a poor person hired anyone? Corporate tax cuts benefit all of us. Corporations don’t pay taxes, they only collect them. Their tax bills are passed on to the consumer in the form of higher prices and lower payrolls.

Conversely, lower corporate taxes will result in lower prices across-the-board for goods and services, higher pay for existing employees, and the leeway for employers to take on new hires. Instead of blindly attacking the legislation, peel away the layers of the onion and learn some basic economics. As Dr. Michael Hurd says, “There’s no such thing as a bad tax cut.”

3 – and last but not least, President Trump has, at long last, declared war on political correctness. While I don’t agree with every Twitter or off-hand remark or even his policy statements, unlike your typical Trump haters, I rationally take it one day, one Tweet, one act at a time. For example, I think the Wall is a dumb idea, but getting us out of the Trans-Pacific Partnership was genius.

In general, he has exposed liberal/marxist hypocrisy like no other. Much as they profess to, they don’t support the working class, and they don’t support the First Amendment, specifically Freedom of Speech. The First Amendment was specifically designed to protect controversial speech, including hate speech. Michelle O is welcomed with open arms on every campus, but if Melania Trump were to be invited, she’d be greeted with howls of protest, and probably violence.

Campus Snowflakes demand so-called “safe spaces.” Fact is, the First Amendment makes the whole country a safe space—safe to say whatever you like, whenever you like. If you don’t like a movie, you walk out; if you don’t agree with the opinions of a scheduled speaker, you don’t attend. Do you smash your radio because you don’t like Rush Limbaugh? No, you change the channel. Do you smash your television set because you hate FoxNews? No, you don’t tune in. There’s a civil, unintrusive way of expressing our preferences.

President Trump is calling upon us to re-examine some of our long-held cherished values and assumptions. Is that so bad? Isn’t it time we reassess the prevailing values of those who went to Woodstock and never came home ? Take free money, become a community organizer, suffer no consequences. What could possibly go wrong? A community organizer is just nice term for someone who doesn’t have a real job.

Is it safe or wise to have open borders? Hardly. The crime rate among illegals far exceeds the national average. The families of the victims are stark testimony to this. Should illegals have an unlimited claim check on our national treasury? Our hard-earned tax dollars? No. For that matter, should every person in the country be entitled to open-ended welfare? Some, but it’s time we started differentiating between those who CANNOT work and those who WILL not work.

President Trump is changing our national dialogue, and challenges us to join in this discourse, without violence, without hatred, and with bipartisan civility. Labeling every caucasian a racist isn’t true, and it doesn’t reduce unemployment or the federal deficit. The purpose of our popular sovereignty is the peaceful transfer of power, the freedom to express ourselves without any threats to our persons, and the right to wear a MAGA hat in a restaurant without being hassled.

Best Wishes to all for a Blessed and Joyous Christmas Season…The Artful Dilettante

Bernie Madoff and America’s Selective Outrage

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Like seven million other Americans last week, I watched Madoff,  the ABC miniseries chronicling the life and financial crimes of the infamous Bernie Madoff.  Madoff, chairman of Madoff Investment Securities from its start-up in 1960 until his arrest on December 11, 2008, operated the largest corporate Ponzi scheme and financial fraud in U.S. history.  The film, which starred Richard Dreyfuss and Blythe Danner as Madoff and his wife Ruth, aired for four hours over two evenings.  The film had the highest viewership of its time-slot, but earned only modest reviews.  After the film, ABC aired Madoff: After the Fall, a one-hour documentary hosted by ABC’s chief investigative correspondent, Brian Ross.  I gave the whole production two-and-a-half stars; it pretty much held my interest for the duration, the acting was solid, and compared to the usual drivel on prime-time television, it was informative and engaging.

On March 12, 2009, Madoff pleaded guilty to 11 federal felonies, including securities fraud, wire fraud, mail fraud, money laundering, making false statements, perjury, theft from an employee benefit plan, and making false filings with the SEC.  He was sentenced to 150 years in prison.

In November 2009, David G. Friehling, Madoff’s accounting front-man and auditor, pleaded guilty to securities fraud, investment adviser fraud, making false filings to the SEC, and obstructing the IRS.  Friehling fully cooperated with federal prosecutors and testified at the trials of five former Madoff employees, all of whom were convicted and sentenced to between 2½ and 10 years in prison. Friehling could have been sentenced to more than 100 years in prison.  Because of his cooperation, however, he was sentenced in May 2015 to one year of home detention and one year of supervised release.

Madoff’s right-hand man and financial chief, Frank DiPascali, pleaded guilty to 10 federal charges and, like Friehling, testified for the government at the trial of five former colleagues, all of whom were convicted. DiPascali faced a sentence of up to 125 years, but died of lung cancer before he could be sentenced.

Madoff and his associates defrauded their clients over an estimated twenty-year period.  Losses were initially estimated at $65 billion.  This amount was later significantly revised downward to a range of  $10-20 billion.  A court-appointed trustee estimated the losses at $18 billion.  $7.6 billion of the losses have been recovered, but pending lawsuits only $2.6 is actually available.  More recovery is expected.

The fallout was tragically not limited to financial losses.  On the second anniversary of Madoff’s arrest, his son Mark committed suicide by hanging himself in his Manhattan apartment.

Even if one accepts the highest estimate of investor losses at $65 billion, Madoff’s fraud pales in comparison to the $2.7 trillion embezzled from the Social Security Trust Fund by the United States Government.  Unlike the Madoff case, it has all but been ignored by the media and government watchdogs and lapdogs.  Even the AARP, who pretends to be the greatest friend and protector of our senior citizens, has been silent about the matter.

In 1983, anticipating the flood of “baby-boomers” approaching retirement, Congress passed and President Reagan signed into law major Social Security reform legislation.  The legislation included a payroll tax hike ostensibly earmarked for the millions of additional baby-boomer recipients.  The increased payroll taxes created a $2.7 trillion surplus in the Social Security Trust Fund.

Everything was looking rosy for the Social Security Trust Fund.  Before the ink was dry on the reform legislation, however, Congress began borrowing money from the Trust Fund to finance current programs and all our undeclared wars, preferring to borrow from the Trust Fund rather than the Chinese.  In return, Congress issued IOUs in the form of special Treasury bonds which are physically kept in a binder in a non-descript office building in Parkersburg, West Virginia–the Bureau of Public Debt.  (You just can’t make this stuff up.)  Unlike most T-bills and other debt instruments, however, the special Social Security bonds are non-negotiable, which means they’re worthless.  As one commentator noted, “The IOUs are the equivalent of a bank robber leaving a note in the vault of the amount stolen.  The note specifies the amount of money taken, but does nothing to help retrieve the funds.”  It’s just a random act of kindness on the part of the perpetrators.

By 2010, the surplus was completely looted, embezzled by Congress and the five presidents in office during this time.  Beginning in 2010, Congress had to borrow the money from foreign creditors to pay current Social Security benefits.  The money is gone and will never be repaid.  It’s called embezzlement.

Embezzlement is defined as a kind of property theft.  It occurs when a defendant, who was entrusted to manage or monitor someone else’s money or property, steals all or part of that money or property  for the defendant’s personal gain. The key is that the defendant had legal access to another’s money or property, but not legal ownership of it.  Taking the money or property for the defendant’s own gain is stealing; when combined with the fact that this stealing was also a violation of a special position of trust, you have the unique crime of embezzlement.

Depending on the amount stolen, embezzlement can be a felony or misdemeanor.  It’s safe to say that the embezzlement of $2.7 trillion would be a felony.

Unlike the crimes of Bernie Madoff, Countrywide’s Angelo Mozilo, or the Enron Gang,  the looting of the Social Security Trust Fund has been met with a deafening chorus of silence.  I don’t recall hearing about it on the evening news, there wasn’t a primetime mini-series about it, and it didn’t even merit a segment on 60 Minutes.  There have been no interviews of the victims.  The media clearly employs a double standard when it come to white-collar crime versus public corruption, and they likewise selectively employ the Mafioso code of omerta.   Why?

Corporate big business has been the proverbial whipping boy of the chattering and academic classes since the beginning of the Progressive Movement, near the end of the 19th century.  Actually, the merchant class has historically been civilization’s bogeyman; it has been held liable for mankind’s every affliction, from prickly heat to global warming.  The government’s good intentions trump every tangible life-improving contribution ever made by private inventors and entrepreneurs.  But since the intentions of such private innovators are considered self-serving, it matters not.   Embezzlement is a crime, be it in the private or public sector.  When a CEO of a large firm embezzles his clients, he is given the equivalent of a complete rectal exam by the media and respective government regulatory and law-enforcement agencies.  But when an agency or department or branch of the government is accused of similar offences, they are ignored or excused because, after all, the government is our friend and their intentions are ever noble.

The mainstream media operates as the de facto Ministry of Information and Propaganda for the U.S. government.  Sure, they take sides, in a well-choreographed, stage-managed sort of way.  Fox News supports the GOP and so-called conservatives, while the rest of them zealously support the Democrats and so-called liberals.  Fox supports the War on Terror and its attending wars and foreign adventures, while the other networks support the War on Poverty and all its failed programs.   But none of them ever questions the legitimacy of the State itself, or regularly calls the federal government on the carpet for having acted outside its constitutionally imposed limitations.

Taking on Bernie Madoff or Long-Term Capital poses little if any danger to the respective journalist or his employer.  Taking on Congress or the Administration is another matter.  You may find yourself in the unemployment lines or have your White House creds revoked.

The government’s emptying of the Social Security Trust Fund has been accurately called “the greatest fraud ever perpetrated on the American public.”  Every president and congressman who supported using the Social Security Trust Fund as a “slush fund” is culpable.  Yet, there have been no investigations, no indictments, no arrests.   And don’t hold your breath waiting for that 60 Minutes expose or calls for the appointment of a Special Prosecutor to investigate the looting of the Social Security Trust Fund.  It ain’t gonna happen and the money will never be paid back.

Sources:

“The Future of SSI: Biggest Government Fraud in History, Future Financial Status of Social Security Program,”  Josey Wales, correspondent, Before Its News.

ABCNews.com (for background on Madoff  miniseries)

Wikipedia  (for background on Madoff crimes and adjudication)