The 7 “Blind” men and the US Elephant – 4 The Economist

The fourth “blind” man is Professor of Economics, Jeffrey D. Sachs, the pioneer of what Naomi Klein called Shock Therapy — a free market fundamentalism of privatization, deregulation, and cutting of government subsidies, met with debt relief and foreign aid — better known in the developing world as the infamous Washington Consensus.

In his New York Times listed book, The Price of Civilization: Reawakening American Virtue and Prosperity, published in 2011, he laments that US political power has been usurped by four powerful corporate interest groups, whom he labels a “corporatocracy,” that has mired the country in a feedback loop: “Corporate wealth translates into political power through campaign financing, corporate lobbying and the revolving door of jobs between government and industry; and political power translates into further wealth through tax cuts, deregulation and sweetheart contracts between government and industry. Wealth begets power, and power begets wealth.”

The most notorious of these corporate lobbies is identified by Sachs as the military-industrial complex – a term first coined by Eisenhower in his farewell speech on January 17, 1961, when he warned that “the linkage of the military and private industry created a political power so pervasive that America has been condemned to militarisation, useless wars and fiscal waste on a scale of many tens of trillions of dollars since then.”

The second corporate lobby, according to Sachs, is the Wall Street–Washington complex, which consists of politically powerful Wall Street firms, notably Goldman Sachs, JPMorgan Chase, Citigroup, Morgan Stanley, and a handful of other financial firms. Sachs describes how these US banks gradually managed to wrest control of the financial system from the government: “The close ties of finance and Washington paved the way for the 2008 financial crisis and the mega-bailouts that followed, through reckless deregulation followed by an almost complete lack of oversight by government. Wall Street firms have provided the top economic policymakers in Washington during several administrations, including the likes of Donald Regan (Merrill Lynch) under Reagan, Robert Rubin (Goldman Sachs) under Clinton, Hank Paulson (Goldman Sachs) under Bush Jr., and several Wall Street–connected senior officials under Obama (including William Daley, Larry Summers, Gene Sperling, and Jack Lew).”

He defines the third corporate lobby as the Big Oil-transport-military complex, which he explains has put the US on the trajectory of heavy oil-imports dependence and ever-deepening military entrapment in the Middle East: “Since the days of John D. Rockefeller and the Standard Oil Trust a century ago, Big Oil has loomed large in American politics and foreign policy. Big Oil teamed up with the automobile industry to steer America away from mass transit and toward gas-guzzling vehicles driving on a nationally financed highway system. Big Oil has consistently and successfully fought the intrusion of competition from non-oil energy sources, including nuclear, wind, and solar power.”

Sachs also highlights Big Oil’s counter-intuitive reliance on the Pentagon: “America defends the sea-lanes to the Persian Gulf, in effect ensuring a $100 billion-plus annual subsidy for a fuel that is otherwise dangerous for national security. And Big Oil has played a notorious role in the fight to keep climate change off the U.S. agenda. ExxonMobil, Koch Industries, and others in the sector have underwritten a generation of anti-scientific propaganda to confuse the American people.”

The fourth of the great industry-government tie-ups has been the health care industry, America’s single largest industry today, absorbing no less than 17 percent of GDP. According to Sachs, what began as government partnering with business to refund costs has morphed into a lobby with little systematic oversight and control: “Pharmaceutical firms set sky-high prices protected by patent rights; Medicare, Medicaid, and private insurers reimburse doctors and hospitals on a cost-plus basis; and the American Medical Association restricts the supply of new doctors through the control of placements at American medical schools. The result of this pseudo-market system is sky-high costs, large profits for the private health care sector and no political will to reform.”

Sachs is equally scathing of the government for turning “the levers of power over to the corporate lobbies.” Sachs explains how “[a] healthy economy is a mixed economy, in which government and the marketplace both play their role. Yet the federal government has neglected its role for three decades.”

_________________________________________________________

This entry was posted in Uncategorized. Bookmark the permalink.