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Vorocracy: 2: Conflict of Interest

→ Vorocracy 1: Why Did BushCo Invade Iraq?

Creating A Demand For Your Product

Or course the first thing you must do if you're seeking to sell a lot of your product is to create a demand for it. And if you're in the business of war what better way to do that than to invade some non-threatening country, bomb peoples' homes, decimate their villages, take away their livelihoods, ruin their environment, destroy their infrastructure, kill off their children, torture their parents, trash their cultural artifacts, trample their sacred spaces, plunder their resources, etc etc etc...all to the hurrahs and hosannahs of the cretinous yahoos at home cheering on the stormtrooping hometeam. Cheney's RictusYou have now created a booming business for your death products, with plenty of new and guaranteed customers both at home and abroad, for as far into the future as you can see. You can almost see the drool flowing out of Cheney's rictus when he says (hopefully) that this will be a "war that won't end in our lifetimes."

But war profiteering isn't just about destruction. It's also about construction. What Raytheon and General Dynamics destroy, Bechtel and Haliburton rebuild — with investment companies like The Carlyle Group and the Saudi Binladin Group reaping profits from them all. It's a veritable money machine, with death and misery going in one end and mountains of cash coming out the other — all courtesy of taxpayers like you.

Indeed, the war invasion of Iraq is a $300,000,000,000+ (and ever growing) transfer of wealth from taxpayers to war profiteers. It is reverse Robin-Hoodism run rampant.

If one wants to understand the invasion of Iraq one needs to first read the Project for the New American Century's [PNAC] report Rebuilding America's Defenses. Then one needs to look at the incestuous relationships between the corporations poised to reap enormous profit from the destabilization of Iraq, and the revolving door that exists between them, the current administration, and numerous right-wing think tanks.

And it's not just Iraq. Iraq is only the beginning of their Blofeldian plan. The plan is to extend this strategy to the entire world. (Qv: Contained within the PNAC's notorious blueprint for world domination (mentioned above) the phrase 'US global leadership' recurs with great frequency. This is simply their euphemism for world domination.)

Conflicts Of Interest, the GDP, Neoliberalism, and the Permanent War Economy

There's a great old Fleischer Popeye cartoon entitled The Paneless Window Washer in which Bluto, a professional window cleaner, soils windows in order to drum up some business. Neoliberalism in Action

The Gross Domestic Product [GDP] is like a rating economists use to get a snapshot evaluation of the economic health of countries. The logic of the GDP assesses the ultimate value of anything and everything in terms of "wealth creation." By the logic that sanctifies the GDP as the economic equivalent of fundamentalist Biblical Truth, anything that increases the GDP is necessarily deemed positive. Thus, for example, a factory that pollutes is good because its production increases the GDP; when taxpayers pay to clean up the pollution that's also good because this boosts the GDP too. (This viewpoint makes comprehensible the premise behind a bumper sticker on a BMW I once saw in a parking lot at Yale University: "Environmentalists Are Wrecking Our Economy." Cf: Eg: BushCo's refusal to sign Kyoto.) Thus death, war, natural calamities, illness, etc. are, from an economic point of view, all good because they boost the economy and generate profit — it gets money flowing and "creates" "wealth". Human misery can be very very profitable.

This disconnect between standards by which to evaluate quality of life versus wealth creation is a serious problem for living under corporate capitalism. Corporate capitalism's need to convert all of life to numbers on a ledger is, perhaps, the greatest unspoken phenomenological reason behind the unpleasant state of the world today — the reduction of all of existence, all of reality, to quantifiable economic units; to "know the price of everything and the value of nothing." (Such a disconnect is rectified with the Genuine Progress Indicator [GPI], a much more realistic and accurate economic indicator that is fortunately making some inroads.)

Susan George says in her remarkable book The Lugano Report:

In such a system [ie: economic growth = economic well-being], a forest razed and sold for logs, sawn timber, charcoal, furniture, and so on is counted only on the positive side of the ledger. The destruction of the natural capital represented by that forest and the 'services' it provides, such as its capacity to absorb CO2, to stablise, the soil, to shelter species diversity, are nowhere to be found.

Air, water and soil are counted as free, or nearly free, goods; their scarcity value is not recognised or calculated. Depletion of fish stocks, topsoil, minerals, the ozone shield, wildlife species, rare plants, and so on is either regarded as income or compensated by subsidies to the very producers intent on further depletion (such as agribusiness and natural resource companies).

Like Bluto dirtying windows so that he can profit from cleaning them, our entire economy is structured on a conflict-of-interest known as the broken window fallacy. Simply put, a little boy breaking a window engenders economic benefits for everyone in town due the need to replace the window. Modern corporate capitalism is the institutionalized economic establishment of this schizophrenic ethos, one that perversely constitutes the social good by creating an insoluble ontological fracture between the economic and social spheres of society. This fracture began, of course, before modern times: even Aristotle warned about the consequences of divorcing economic motivations ("money-making") from their concrete social relationships ("householding proper") in his Politics. But such a divorce was consecrated in modern times by a practically offhanded statement of a Supreme Court justice that magically elevated corporations to the status of personhood, thus permitting corporations to function (by proxy) as actors in America's "democratic" system, endowed with the same rights as human beings. This led to essentially institutionalizing greed as society's operating principle by handing corporations the reins of political power. And so, as a historical consequence of this, we now live in a system of global gangster capitalism, complete with its own evangelically held utopian notions regarding what is fundamentally a schizophrenic approach to "wealth creation": with the insoluble divorce between the economic and social spheres of society, "wealth" can be "created" by taking advantage of conflicts of interest that find profit from deleterious social effects, and which necessarily result in the benefitting of the few at the cost of the many.

Chicago gangsters like Al Capone and Curly Humphreys instinctively understood this kind of capitalism. They embraced the awesome profit-potential of conflict-of-interest to their advantage. To quote Gus Russo in his fascinating history The Outfit: The Role of Chicago's Underworld in the Shaping of Modern America:

The essential elements of a labor racket consisted of terrorizing small businesses into needing protection (euphemistically called a trade association), for which they paid a percentage of their gross income. Simultaneously, as perfected by Humphreys, the racketeer represented the workers (a union in name only) in their grievances against their employers and their trade associations. It was perhaps the most laughably obvious conflict-of-interest arrangement that ever existed.

Throughout the book Russo details the many ways The Outfit profitted from insider information and conflicts-of-interest. As you read further and further into the book you realize that the only difference between these underworld gangsters and what they call the "upperworld" gangsters (ie, "legitimate businessmen" aka "robber barons") is the size of their crimes.

(Speaking of "insider information", every so often Capital requires some high-profile sacrificial victim to prove that the system "works", that it can actually police itself to prevent abuses. But Wall Street is nothing but an institutionalized high-stakes casino run entirely on insider information. For a simple — though not very well known — illustration of this do some research on the trading of United and American Airlines stocks shortly before the 911 show. Wouldn't you think that any tremendously anamolous trading on these stocks shortly before airplanes from these companies crashed into buildings would provide some clues as to the culprits behind it? No, probably not — that's doubtless why investigations into the matter were quickly dropped.)

One of the primary ways money is tranferred from the public into businessmens' pockets is through privatizing public services and resources. The neoliberal zeal for privatization is, ultimately, due to the cosmic profits that unbridled conflicts-of-interest can generate for the greedy and unscrupulous by simply handing over public services and resources directly to the private sector (can you say "Enron"?), which, more often than not, means that it's handed over to friends of well-placed policy makers (can you say "Ken Lay"?). Here pedagogist Henry Giroux, in his excoriating tirade The Terror of Neoliberalism, lambasts the notion of privatization:

Under neoliberalism everything either is for sale or is plundered for profit.
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Within the discourse of neoliberalism, the notion of the public good is devalued and, where possible, eliminated as part of a wider rationale for a handful of private interests to control as much of social life as possible in order to maximize their personal profit. Public services such as health care, child care, public assistance, education, and transportation are now subject to the rules of the market. Construing the public good as a private good and the needs of the corporate and private sector as the only source of investment, neoliberal ideology produces, legitimates, and exacerbates the existence of persistent poverty, inadequate health care, racial apartheid in the inner cities, and growing inequalities between rich and poor.

There are enormous profits to be made by making the world an increasingly unpleasant place. For an example of privatization profiting from a social conflict-of-interest — one made possible precisely by exploiting the divorce between the economic and social spheres — here is an excerpt from a recent article about the increasing privatization of the prison industry:

"The drug war has been the main cause of profits for private prisons," said University of North Florida criminologist Michael Hallett. "We've gotten so extreme in overusing incarceration that we have for-profit industries with an interest in high crime rates."

It's thus only natural that once a sector depends on profits from certain channels it has a vested interest in seeing those channels continue. (Not to mention what the growth of a privatized prison industry portends for the average American citizen, especially given the loss of social safety nets, loss of jobs & job security, etc. Can you say "Gulags for Profit"?)

(As a side note, speaking of conflict-of-interest and the drug war, the drug war has been a tremendous success. Certainly not for the countless families ruined by it, but for both the security and enforcement industries that have come to be addicted to the windfalls of cash it generates through unconstitutional property seizures and tax-payer largesse, not to mention the greatly expanded police powers and cross-department cooperation it has engendered. The Drug War has been a vital tool in furthering and solidifying America's police-statehood.)

This is what is fundamentally at the root of the zealous and fanatical theology of "free marketism," known today as neoliberalism. ("...neoliberalism is an ideology and politics buoyed by the spirit of a market fundamentalism that subordinates the art of democratic politics to the rapacious laws of a market economy that expands its reach to include all aspects of social life within the dictates and values of a market-driven society." —Henry Giroux.) And like junkies looking for the next fix, business is addicted to influxes of money. It's only natural: a businessman wants to keep his business going.

And if you're in the business of war then peace is a threat to the survival of your industry. Thus like private prisons and other security agencies that benefit from high crime rates, so do many industries (and their executives) benefit from war: peace is disastrous for them. Modern capitalism is addicted to a permanent war economy. Susan George puts it succinctly: "The most efficient way to increase GNP [Gross National Product] rapidly is probably to wage war."

This points out the crux of the problem for those seeking lasting peace. Corporate Capitalists, wedded to profit, are, of course, loathe to simply relinquish their money-making machines in the interests of humanity. Removing the profit motive from war will not end war as one of our species' tragic realities; but for those who seek peace, removing the profit motive from waging war is a vital step in humanity's social evolution, for doing so will remove war's most painfully misanthropic and absurd modern rationale.

But of course war profiteers are not going to cooperate with policies that mean their industries will be rendered defunct and their fortunes dried-up. World War II is an excellent example of this.

Vorocracy 3: Investing in Fascism → coming soon