Newsletter
(Number 5)
April 2, 2001 Grenoble, France
Francis McCollum Feeley


The Readers’ Corner:

 From Gabriel Kolko:
  Greetings.... This  book, The Political Economy of Social Inequalities: Consequences for Health and Quality of Life, edited by Vicente Navarro, should be very useful to scholars associated with the Grenoble Research Center. It is overpriced but nonetheless very good coverage. [See atelier no.10, article no.5] Also, the Intl. Herald Trib., [March 13, p. 12] had a fascinating piece on Dumas and France's beautiful people. Hope all goes well. [See atelier no.3, article no.10]

 From Sushil Mittal:
  I am happy to see that the center has not allowed itself to be taken over by method-driven research, which largely ignores both the victims and the perpetrators of corporate injustices. Excessive theorizing practices of applying "gray on gray" should be left to pedantic pontificators preaching to their precious followers. For the rest of us, the brilliant colors of descriptive reality, in all of its diversity, make the best recipe for intellectual life. More knowledge of Reality, and not of Theory- this is what will inspire the best research.
 
 

"The rich are not like you and I," wrote F. Scott Fitzgerald in The Roaring Twenties: Protected by their wealth, they rely less on the goodwill of others; they are careless and pay little or no attention to the consequences of their actions.
 
 

These past several weeks, the American media have given an uncommon amount of space to the super-rich: "the presidential pardon of Marc Rich," "the tax reform debate," "the estate tax reform scandal"..., to name only a few of the recent headlines.

 It is occasionally instructive to hear directly the voices of the ruling class, without the mediation of their political servants, kowtowing to familiar popular beliefs and clichés.

At the beginning of the Gilded Age --Mark Twain’s ironic title for the corrupt post-Civil War period of U.S. history, which saw great sums of private wealth accumulated during the rapid industrial expansion before the turn of the century-- a young Andrew Carnegie appeared momentarily awestruck by the wealth he had suddenly acquired in Pittsburgh. He had become a millionaire before the age of 30, by selling iron rails to the booming railroad industry. Reflecting momentarily on his own alienation, he confided in a close friend:

                                           To continue much longer with most of my thoughts
                                           wholly upon the way to make more money in the
                                           shortest time must degrade me beyond hope of
                                           permanent recovery.

Carnegie nevertheless persevered the degradation and went on to accumulate additional fortunes in steel production, before brutally crushing the famous Homestead Strike in 1892.

Carnegie’s fleeting self-doubts, however, were not shared by his contemporary, Jay Gould, the railroad tycoon and infamous gold speculator who was perhaps less hypocirtical than Carnegie in expressing his contempt for working people: "Working class!", exclaimed Gould in 1886 (the year that the Haymarket Riot in Chicago led to the permanent dissolution of the Knights of  Labor national trade union):

                                               What working class? Why, I could hire half
                                                the workers in America to kill the other half!

By then Gould had already acquired a fortune from illegal speculation on the gold market. As a regular drinking buddy of the President of the United States, Ulysses S. Grant, he gained inside information on the government’s intention to halt the state’s  sale of gold in September 1869. This prior knowledge allowed him to purchase huge quantities of gold at the low government price just before the new state policy was made public. He thus was able to drive up the price of gold during this brief period of artificial scarcity, which he had a hand in creating. Before his death in 1892, Gould went on to amass several more private fortunes totaling some 100 million dollars.[For a graphic descriptive definition of little money, big money and capital, readers are invited to visit atelier no.0, article no.1 : Definitions and Descriptions of Economic Terms.]
 

"Plus ça change, plus c’est la même chose".

Today, the Bush Dynasty appears to be feathering its nest in a similar operation of unabashed opportunism, using public office to gain enormous private wealth. According to Charles Lewis, executive director of the Center for Public Integrity, a nonprofit public interest group based in Washington, D.C., "George Bush is getting money from private interests that have business before the government [interests], while his son is president. George W. Bush could, some day, benefit financially from his own administration's decisions, through his father's investments. "The Carlyle Group Corporation is as deeply wired into the current administration as they can possibly be," said Lewis. The average American doesn't know that."

The Carlyle Group is a $12 billion private-equity company, based in Washington, D.C. and has gathered a roster of former top-level government officials, including former British Prime Minister, John Major, and many illustrious personalities from the Bush and Reagan administrations, into a money-making machine. Former president Bush generally receives $80,000 to $100,000 for a speech. He is now being allowed to put money he earns giving speeches for Carlyle into its investment funds. He sits on no corporate boards other than Carlyle's. From Carlyle's point of view, the involvement of Mr. Baker and the former president is invaluable: "It punches up the brand awareness for us globally," said Daniel D'Aniello, a Carlyle managing director.

                                               We are greatly assisted by Baker and Bush.
                                               It shows that we are associated with people
                                               of the highest ethical standards.
 

With $12 billion from investors, Carlyle claims to be the largest U.S. private-equity fund and makes money by investing in undervalued companies and reselling at a profit.

The California State Pension Fund invested $305 million with Carlyle, and the Texas Teachers Pension Fund - whose board was appointed when George W. Bush was governor - gave Carlyle $100 million to invest in November. Carlyle also works as a financial adviser to the Saudi government. During the presidential campaign last year, former President George Bush took time off from his son's race to call on Crown Prince Abdullah of Saudi Arabia at a luxurious desert compound outside Riyadh to talk about American-Saudi business affairs.

The Former President Bush is sent as an ambassador of sorts but not for his government. In the same way, the former president’s secretary of state, James Baker 3d, has not retired and was recently sent by the Carlyle Group to meet with wealthy business people at the elegant Lanesborough Hotel in London to explain the Florida vote count.

Traveling with the fanfare of dignitaries, Mr. Bush and Mr. Baker were using their extensive government contacts to further their business interests as representatives of the Carlyle Group. [For a more complete portrait of these latter-day Robber Barons, see atelier no.4, article nos.4, 6 & 7.]
 

One of the boldest attempts in recent American history to rob the public domain is seen in the Republican Party’s strategy to repeal the Estate Tax. According to a recent article on the Op/Ed page of the IHT(17 February) written by William Gates, Sr. (father of one of the richest men in the world): "The debate over whether to repeal the estate tax is fundamentally a debate about what sort of country Americans want to leave to future generations." In reality, Gates reminded readers,

                                           the estate tax affects only the wealthiest 2 percent
                                           of Americans. Poverty, on the other hand, afflicts
                                           one out of six American children.

"Repeal," Gates pointed out to readers, "would hand the heirs of America's most affluent a $294 billion tax cut over the next decade. In 1997, almost half the estate tax was paid by just 2,400 estates."

 In addition, repeal of the estate tax, according to Gates, would have a ripple effect throughout the U.S. economy, reducing not just federal but also state revenues, and "decimating the charitable sector" by removing the tax-reduction incentives for philanthropy. The long-term costs of estate tax repeal would expand after the first ten years, and "balloon to a $750 billion loss in the second [ten year period]."

 In 1999, the estate tax brought in a revenue of about $28 billion --equal to the entire federal expenditure for housing and urban development. Federal revenues lost through estate-tax repeal would have to be made up by increasing taxes on others or by cuts in Social Security, Medicare, environmental protection or other government programs important to America's well being.

 Repeal of  the estate-tax would also cost individual states a total of 5.5 billion dollars per year in state revenues. California alone would loose 937 million dollars the first year, and Washington State 87 million dollars. "It would be unconscionable," concluded Gates, "to give the wealthy a massive tax break at a time when crucial programs assisting children and seniors are on the chopping block."

The other side of this issue was expressed recently in a paid advertisement, in the IHT (March 2, page 7),  by multi-millionaire D.P. Marchessini of London, published an empassioned defense for repealing the estate tax. In a public letter addressed to Mr Warren Buffet and Co. (i.e. all those who oppose estate tax reforms in America, including Mr. Gates), Mr Marchessini wrote:
 

                                                  If I am allowed to inherit my father’s brains
                                               and my mother’s looks, what logical reason
                                               is there that I should not also inherit their money. ...
                                                  Should we have ... an inheritance tax on brains? ...
                                               Should we perhaps also put a tax on looks, or on
                                               athletic ability...?
                                                   It is difficult to imagine anything more outrageous or
                                               more hypocritical than a group of men, whose own
                                               wealth is obscene, trying to dictate how much money
                                               other people should be allowed to have. Is that how
                                               you want people to remember you?

Such candid outbursts by the oligarchs, without the usual mediation of professional managers and spin doctors, speak volumes to the usually invisible forces and often vapid thought behind policy making. It is they, after all, who select the senators, the congressmen, the governors, the presidents through financial support of their candidates. The  unvarnished truth out of the mouths of this social class is seldom publicized and, when it is, notice should be taken, as their words represent a possible harbinger of fundamental change in policy. [Readers are invited to visit atelier no.12 for more discussion on the disconcertingly superficial thought behind social policy decisions.]

According to one social science theory, a comparison between the consciousness of capitalists and of workers reveals that working people are more aware of how the political-economic system actually operates than are capitalists. On the other hand, capitalists are more knowledgeable of who workers actually are than are workers aware of capitalists, and often of who they themselves actually are. In part, this seeming paradox is explained by the fact that capitalists believe they are simply gambling their money on investments --many of them think that it is their money that is making them profits-- while working people understand very well that it is their work that is making society function, creating the profits for capitalists and, as well, the pre-conditions that lead to their own periodic unemployment. By contrast, workers are less knowledgeable of the personally ruthless --but often extravagant and sometimes voluptuous-- behaviors in capitalist class circles, because the complexities of their life styles are so foreign to working people, and the activities of the ruling class are seldom publicized, except in pale fantisies created for broadcast through mass culture outlets. As a result, the capitalists as a rule understand workers better than workers understand captitalists, and often better than workers understand themselves. Why? Because the lives of working people have been so severely reduced and regimented by repetitious routines that they find themselves easily predictable from above. [For more on this interpretation of social class relations and consciousness, readers are invited to read Bertell Ollman’s original research on the historical significance of Marx’s social analysis in Alienation: Marx’s Conception of Man in Capitalist Society.]
 

It can be sometimes instructive to listen to the ruling class argue among themselves, throwing gold dust, as it were, into each other’s eyes. The current debate over tax reforms and capitalist priviledge in America offers such a spectacle. We see the hermetic windows of America’s multimillionaires and billionaires thrown widely open, their heads thrust out yelling at one another. Are there now in the making new forms of social control designed to restore the capitalist social order? [For more information on another "one-of-the-richest-men-in-the-world," parsimonious multi-billionaire Warren Buffet -his investments, his opinions, and his friends- readers are invited to visit atelier no.11, article no.9.]
 

 

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