Who Controls America?

The financial oligarchy exercises incredible political influence on Washington decision-makers by dominating ex-officio appointed bodies that in reality shape the foreign and domestic policies of the United States but fall outside the constitutional structure. This pattern of supra-governmental bodies setting national policies makes a mockery of the principle of the sovereignty of the people.

By Prof. Arthur Kane Scott

A bitter divide exists over the distribution of economic resources. Roughly two percent of the world population controls nearly 80 percent of the resources, and only 20 percent remain for the other 98 percent of the global population. In 1992, 64 percent of the working US population reported a gross adjusted annual income of less than $30,000.

Who are the two percenters? They are composed of the industrial elite who came to power between the Civil War and World War I, including, among others, Armour & Swift (meat and packaging) Flieschmann (bread), Pulitzer (media), Heinz (food), Manville (asbestos), Eastman (film), Duke (tobacco), Firestone (rubber), Pabst (beer), Chrysler (autos), Morgan (finance), Rockefeller (petroleum), Ford (autos), Vanderbilt (railroads), and DuPont (chemicals). Today the managerial elite from Fortune 500 companies have joined their ranks. Multi-national corporations have enormous global reach, as represented by Lee Iacocca of Chrysler, Bill Gates of Microsoft, and Intel chairman Andrew Grove, Time Magazine’s 1997 “Man of the Year.”

Executive salaries in America have soared into tens of millions in the 1980s and 1990s. For example, E. Richard Jones, a Safeway executive in 1996, had a base salary of $731,000, but his stock options placed his total executive package at $16.07 million. Rises in executive largess, however, come at the expense of both white and blue-collar jobs. The Adjusted gross annual salary for 64 percent of the population in 1992 was only $29,500. Acquisitions and mergers caused downsizing, plant closings, and further layoffs. Families can no longer maintain a reasonable lifestyle with only one paycheck — hence the necessity of working wives and mothers.

Not only do the two percenters control the economy, but more seriously, they manipulate the culture through their ownership of the mass media: Television and movie productions, newspapers and magazines, radio and music, museums and arts, foundations and institutions of higher learning. Major corporate players in the information business include General Electric/NBC, Westinghouse/CBS, Disney/ABC, and Rupert Murdoch/Fox. Time Warner/AOL controls a $25-$30 billion industry that ranges from magazines, books, and movies. Time’s purchase of Turner Communications with its CNN affiliates transformed it into a media colossus.
Media concentration by three or four giants augurs poorly for the future of investigative reporting, and it raises serious doubts about news integrity as well as mass conditioning and manipulation. The Board of Directors of these media conglomerates come from the same circle of companies that influence government policy makers. They are recruited from ITT, IBM, Philip Morris, Dow Chemical, J.P. Morgan, Rand, Carnegie Corp., AT&T, Chase Manhattan, Citibank, ALCOA, Bulova, and Metropolitan Insurance. Government too, has a major stake in influencing the news, which probably explains why Bill Casey, the CIA Director under President Reagan, served on the boards of the NY Times, LA Times, NBC, and CBS.

Media and its Corrupting Power

The media implicitly mirrors the interests and power of corporate America. News reporting reflects biases that favor management over labor, large corporations over small entrepreneurs, the rich over the middle class and the poor, whites over peoples of color, male over female, militarism over disarmament, profit over ecology, class over equality.

This perspective explains why the media rarely pursues controversial topics such as why there are 40 million poor in the land of milk and honey, or why 14,000 workers die each year from occupational hazards, or another 100,000 workers die prematurely.

White-collar crimes abound but remain inexplicably glossed over, whereas street crimes are investigated and reported ad nauseam. Personalities and celebrities dominate the front page, and this preoccupation with their foibles and misdeeds keeps Americans distracted from the structural inequities in taxes, health insurance, educational opportunity, jobs, and the environment.

Americans are subject to a constant barrage of images and sounds that promote escape into materialism and consumerism, keeping the citizenry mired in debt and the corporation wealthy. As media critic Mark Crispen described it, “The true cause of the enormous ills that now dismay many Americans — the universal sleaze and dumbing down, the floodtide of corporate propaganda, the terminal insanity of American politics — has risen not from any grand decline in national character … but from the inevitable toxic influence of those few corporations that have monopolized the culture.”

Sports represent another powerful media attention-getting distraction. Professional sports, a multi-billion dollar entertainment industry, reinforce the underlying values that fuel the economic system: achievement, power, individualism, winning, sacrifice, money, and discipline. This accent on winning creeps into every aspect of life from Infancy, surreptitiously preparing American youth to be future warriors of global Americana.

Replacing the bat with a semi-automatic rifle only involves a sleight of hand in which the Drill Instructor replaces the coach. But even in sports, race, gender, and class differences are evident. Polo, yachting, and horseracing activities mainly patronized by the rich for obvious reasons, whereas baseball, basketball, and football were historically considered poor or working class activities.

The 1980s changed the status of professional athletes as their salaries soared, transforming them into a new class of millionaires. Fan disaffection from baseball developed over their strikes and because of the money gap separating them from the players. Tennis, golf, skiing, and scuba diving fall within the middle and upper middle-class range. Paradoxically, though black players dominate basketball, there are few black coaches and no black owners. The absence or lack of black managers and owners sends out the message that no matter how talented black athletes may be, they still lack the know-how and the resources crucial to ownership, and that they will always remain on the string of WASP America.

Unfortunately, sports hype instills among inner city youth the false belief that the only way for them out of the ghetto lies through professional sports. The sadly overlooked reality is that the number of positions available is only 3,000 to 5,000. But the press seldom discusses the issue of opportunity. Instead, they tantalize the youth with stories of triumph, glamour, and wealth. As a result, inner city kids spend more time cultivating athletic rather than academic skills. When their “hoop dreams” shatter, they have no fallback position, no employable skills, disillusionment sets in and for some — crime becomes the only game in town.

Business and Political Influence

The financial oligarchy exercises incredible political influence on Washington decision-makers by dominating ex-officio appointed bodies that in reality shape the foreign and domestic policies of the United States but fall outside the constitutional structure. This pattern of supra-governmental bodies setting national policies makes a mockery of the principle of the sovereignty of the people.

One such corporate body is the Council on Foreign Relations (CFR). It was founded after World War I by grants from Rockefeller, Ford, and Carnegie. Its mission was to develop global policies that benefited what President Calvin Coolidge described as “the chief business of America — is business.” The Council was composed of 25 major corporations, including, among others, Morgan Guaranty Trust, Chase Manhattan, Citibank, and IBM.

Some of the Council’s self-serving accomplishments included creation of the United Nations, the World Bank, the International Monetary Fund, NAFTA, and GATT. In the early 1970s the Council created the Trilateral Commission as a spin-off, to look at how international development was affecting business in Western Europe, America, and Japan.

What’s mind-boggling about the CFR and the Tri-Lateral Commission (TC) is that it involves only about 3,000 individuals, but these individuals have extraordinary impact on policy decision. The CFR and TC were intimately involved in Johnson’s decision to escalate the Vietnam War, and their belief that the Soviet Union was a much greater threat than it actually was, led Reagan to ante up the armament race, nearly bankrupting the nation.

Another curiosity is that nearly all cabinet appointments have served on either the CFR or TC or both. Warren Christopher, Secretary of State under Clinton, served on both the CFR council and TC commission. His successor, Madeleine Albright, was on the CFR.

Finally, the National Security Council members who advise the president on foreign affairs are CFR and TC members. At one time, David Rockefeller, chair of Chase Manhattan, headed both bodies.

Such concentration of power in the hands of wealth contributes to the political apathy and cynicism rampant among the people. The political system denies the people meaningful dialogue and participation.

War / Wall Street Debacle

The Iraq War dramatically weakened the American economy for most except for the 2 percenters, Wall Street, large corporations, giant Banks, and the military-industrial complex with its armament minions and their K street lobbyists. Bush sweetened the pot for the 2 percenters by giving them handsome tax breaks in 2001/03 on the grounds that it is the “rich who drive the economy.”

Despite Bush’s largess to rich, Wall Street was a ticking “greedy” time bomb ready to implode over arcane investments including derivatives, hedge funds, complex bundling of securities, rampant inside training, despite guru Alan Greenspan’s assertion as  Fed Chief that the “economy was fundamentally sound”.

Greenspan simply refused to reign in the overheated $8 trillion “housing bubble”.  Its dramatic collapse in 2008 translated into an $110,000.00 loss for the average American family as measured by losses in home values as great as the 1930’s, putting families in “underwater” situations, owing more on their homes than they were worth. 

It was estimated that more 11.3 million homes representing 24 % of all residential homes will be underwater by 2010.  In the first quarter alone, there were nearly a million foreclosures forcing many homeowners to walk away driven in part by their belief that Wall Street, especially Banks, had stuck it too often to Main Street.

The home mortgage debacle was compounded by a terrible spike in unemployment. In 2010, unemployment hovered around 10-12% with manufacturing areas particularly being hammered. Economists have indicated that the true unemployment rate is closer to 15% as many people are either unemployed, underemployed or have become discouraged and have dropped out of the employment market altogether. 

Detroit alone has a whopping 30-50% unemployment rate becoming a ghost of its former self.  Today, it seeks to downsize from a city of a million to a city half that size through a process of urban redevelopment. 

Detroit’s collapse is largely connected with the fall of General Motors which historically had been the corporate “weather bell” for America, the cliché being “as GM went so went the economy’.  By 2008, GM and Chrysler together received Federal “bailouts” of 40 billion dollars through TARP (Troubled Asset Relief Fund) despite the unheeded objections of Main Street. 

These funds called for management reorganization, fuel economy cars, closing of unprofitable dealerships/models, and better quality/marketing against Japanese/Korean brands that had become dominant in the American marketplace.  Though there was strong opposition to the bailouts, by early 2010 Chrysler/GM paid back their loans and seemed to be on the road to recovery

The High unemployment and auto bailouts however, were only symptomatic of the financial crisis which was in fact triggered by the laissez-faire practices of Wall Street and the Feds; it started with the Reagan administration and accelerated under Clinton/Bush. The deregulation of Banking/Wall Street became policy with neither the Federal Reserve nor Securities Exchange Commission exercising any effective control.  Instead, regulators have been cozying up with Wall Street. 

Milton Friedman School of Economics, Chicago School, with its emphasis on profits/privatization/free market dominated public policy and played into the hands of wheelers and dealers who came to the fore in a casino game called Wall Street. 

The market bust began with Bear Sterns collapse in 2008.  Bear Sterns was the fifth largest US Investment Bank, which, following 9/11, bet too heavily on manufacturing and mortgage-backed securities.  Its unraveling signaled a dramatic Wall Street meltdown and a financial crisis that threatened global economy.  As Bear Sterns profitable mortgage hedge fund collapsed, its bankruptcy sent shock waves across global financial markets including Fannie Mae and Freddie Mac, Lehman Brothers and AIG.

On October 6, 2008, Wall Street stocks collapsed 21%, and that time was called “Black Week”, leading Henry Paulson, Secretary of Treasury, formerly of Goldman Sacks, to propose the $700 billion TARP to salvage Wall Street and the global economy by purchasing distressed assets and pouring capital into hurting banks alleged “to be too big to fail”.

Although Wall Street welcomed the bailout, “Main Street” was incensed, seeing in it as another example of “Federal Welfare” for the rich in which the greedy excesses of Wall Street would be passed on to American taxpayers — and Wall Street poker players would escape from being held accountable for their excesses. 

The Bush government scrambled to salvage the economy:  Initially, Paulson planned to purchase toxic assets from the Banking establishment but this strategy proved inadequate, being compounded by the collapse of another Wall Street giant, Lehman Brothers, in the fall of 2008. 

To stop the Wall Street bleeding, Ben Bernanke, succeeding Alan Greenspan as Fed Chief, pressured Bank of America to absorb Merrill Lynch, another Wall Street icon wobbling on the edge of bankruptcy.  Many feared that Merrill’s collapse would herald the unraveling of the global economy.  Both Lynch/Lehman got caught like Bear Sterns with huge exposures in unsecured mortgages. 

To weather the storm, Paulson simply opened the coffers of taxpayer money in bailouts to banks and other threatened industries without negotiating any terms regarding management, reform of the system, transparency, and payback timelines.  Adding insult to injury, Wall Street firms continued to pay their managers humongous salaries, for instance AIG paid out $218,000,000 in bonuses. 

Such callous Wall Street behavior incensed the American public who saw their middle class life go up in smoke including marginalized retirement programs, double digit layoffs and worst of all, loss of homes. Banks, mortgage brokers, agents and the general optimism about the upward trend of the housing market had allowed almost everyone to purchase, even when their credit scores did not warrant loans.

Ironically, however, the greed of Wall Street came home to roost in Bernie Madoff’s 50 billion dollar ponzi “heist” that shocked the 2 percenters as it was they who were fleeced by one of their own.

The rip-off was worse than the ENRON debacle! Madoff showed just how deep the madness of materialism had penetrated the American psyche throwing the country into an unethical storm in which money, power, control and position were the dominant values threatening in the process democratic values of fairness, transparency and truthfulness.

The challenge confronting America under Barack Obama consists of revitalizing the political, socio-economic process and restoring government to the people.

Arthur Kane Scott is Professor of Humanities and Cultural Studies at Dominican University of California and Fellow of American Institute of International Studies.


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