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Monopolized; Life in the Age of Corporate Power, David Dayen, 2021

This book is one of the most depressing, even apocalyptic in recent memory. It is also well researched, organized, and important.
Each chapter addresses an industry segment that has fallen to monopoly: Airlines, Big Agriculture, Journalism and media, Broadband Internet, Opioid medication, Banks, Offshoring essential products, Amazon and Google, Hospitals Supply chains, Rental Housing after 2008, Prisons and Immigrant detention. The book is focused on monopolies in each of these segments. Warren Buffet is mentioned as a significant investor in monopolies in each chapter. Dayen estimates that twelve mega-billionaires like Warren Buffet effectively control the entire US economy today. What can these handful of men possibly do with the wealth they have accumulated? This is from Jeff Bezos, currently the wealthiest:

The only way I can see to deploy this much financial resource is by converting my Amazon winnings into space Travel

Tesla’s Elon Musk seems to share Bezos’ sentiment. Dayen — “Our overlords literally shoot money into space while millions around them suffer.” Here is Buffet;

We think in terms of that moat and the ability to keep its width and its impossibility of being crossed.

Dayen — “Morningstar offers an economic moat index fund of the twenty companies with the highest walls around their businesses.”

The average age of a farmer in America is fifty-eight. In Iowa, 60 percent of all farm owners are over the age of sixty-five; just 1 percent are thirty-four or younger. More than half of all Iowa farmland is rented out, and the startup costs of land, machinery, and other inputs are a huge barrier to entry. A substantial number of farm owners are elderly widows who inherited the land. As they pass on, Iowa could be transformed.

As Iowa and other agricultural states empty out and businesses close, the states turn into people less deserts. Mono culture (single crop) farming with huge chemical inputs are transforming formerly fertile land into barren deserts. Deserts can take many forms and empty farmland is only the first discussed here.

The news deserts created primarily by the dominance of Facebook and Google and by the crippling of the media business model have grave implications for democracy…it’s undeniable that corruption spreads, conspiracies are fostered, and truth is obscured where journalism is absent.

This is the curse of bigness in San Francisco, a city so teeming with money that nobody can afford to open a store to take it…But the truth is that the San Francisco Bay Area is the nation’s second-most dense…Big money has created a vicious spiral: a winner-take-all city keeps accumulating vacant lots, dead-eyed commuters drive for hours to their barely affordable homes, landords must keep rents astronomically high to cover their own astronomically high loans. The concentration of extreme wealth isn’t just bad for the losers in depressed counties and towns. It’s bad for the winners.

Urban deserts are not limited to Flint and Detroit Michigan, to Oakland California and Philadelphia and Baltimore. Try living in today’s San Francisco. Several of my son’s San Francisco old high school friends are living lives as nomads in the city, complete with vans.

In telecommunications including cellphone and broadband America is a disgrace with the highest prices and lowest quality and service anywhere in the world. At America’s founding, postal service was guaranteed to every American. FDR’s Tennessee Valley Authority (TVA) together with massive western dam projects guaranteed electrical power to every American. At one time every American was guaranteed phone service. Dayen describes Chattanooga, a big beneficiary of the TVA, and its TVA run utility the Electric Power Board (EPB) which decided to upgrade using fiber optics to improve the reliability of its electric grids. In 2007 EPB decided to offer fiber optics to every home in its service area paid for by a $219.8 million bond. Comcast sued to stop the plan alleging illegal cross-subsidy of electric rate payer funds. Comcast lost and residents of EPB’s service area have access to gigabit broadband access supporting phone and internet service. If you are not in EPB’s service area you are in the communications desert.
I live in the heart of Phoenix Arizona and have access to Centurylink’s (baby Bell) DSL “service” of 16MB sometimes at a cost of about $50 per month. I have a grandfathered T-Mobile prepaid phone that gets no signal at my home even after the T-Mobile Sprint merger. I can make phone calls from my home via Android wifi on my T-Mobile phone or via voice over IP (VOIP) through google voice.
I live five miles from Phoenix’s TV Towers but receive no over the air (OTA) signals for any major network on my TV. Using advanced rooftop antennas and signal amplifiers, I used to be able to receive 5 major networks 95 miles line-of-site to the towers on Mount Lemon near Tucson. Continued reduction in transmit power by network operators has reduced reception to 3 major networks today. Even these 3 are sensitive to weather. I tried to raise the issue of reduced OTA transmitter power over the publicly owned airwaves with newly elected Senator Mark Kelly and was blown off by staff members.
If you live in rural America chances are you have no access to broadband. Urban Americans may typically have two “options” for broadband, your baby bell or surviving phone company and one cable operator. Both will have atrocious customer service and questionable reliability and unconscionable low speeds. Somewhere in a streaming chain, maybe the local broadband supplier is able to restrict speeds or break a stream altogether. We could get better service almost anywhere in the world. Most Americans live in a communications desert.

Dayen talks about the mergers and acquisitions (M&A) banking business that came into it’s own in the 1960s. Today it is a huge industry dominated by the six too big to fail banks.

As of 2019, the six biggest banks–JP Morgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley–control $10.5 trillion in financial assets. These banks also happen to be serial transnational criminal enterprises, paying $182 billion in (inadequate) penalties for rap sheets of incomparable length. Few of the violations even relate to the financial crisis’s run-up and aftermath, though those were significant. Incidents of debt collection fraud, market rigging, money laundering, misrepresentations to clients, kickback schemes, and unlawful securities sales all occurred after the crisis.

The media has focused on stock buyback after tax reductions and record profits but gives little attention to the bigger story; mergers of corporations into ever larger and more unaccountable monopolies. The six big banks are key players in these mergers pocketing huge fees for their services. Goldman Sachs, in one merger featured in the book involving United Natural Foods Inc. (UNFI), continued to change the terms of the merger to favor themselves and even created and sold derivatives for hedge funds wanting to bet against the merger.

Mergers in the health care industry, especially hospitals has created large healthcare deserts in America. Hedge funds often buy hospitals for their real estate value and close them after gutting their operations. Millions of Americans are left with few options and long travel distances and time to seek services.

Monopolies create highly vulnerable supply chains often with sole source and offshore production. Dayen talks about an acute shortage of saline drip bags (cost $1) because production in sole source Puerto Rico was disrupted. This failure disrupted services in hospitals across the country. Covid19 protective equipment like masks, shields, gowns, etc. were simply not available for months. Then there are sole source parts like faulty batteries for the F-35 $100 million fighter jets that made them unable to escape Hurricane Michael in 2018. All current US Weapons systems are dependent on parts from China! Supply deserts are disruptive and dangerous and we are inundated in them.

Ten million American homes were lost to foreclosure as a result the 2008 financial subprime disaster. Dayen has an earlier book Chain of Title focusing on the struggle of American’s being illegal foreclosed on as a result of the massive production of fake documents purporting to support the existence of loans. Aaron Glantz in 2019 published Homewreckers, showing the macro side of how all these illegally foreclosed homes ended up in the hands of hedge funds and other bottom feeders and were removed permanently from the American supply of individually owned homes. Dayen here talks about how these new owners, without experience in real estate rentals and without any regard for the law or people converted these homes into badly or unmaintained rentals and profited from illegal fees, penalties, evictions, and extortion while the huge inventory of once livable single family homes are turned into slums. These few corporations make the Trumps and Kushners of the world look like petty thugs. Meantime, Americans looking to buy homes find limited options and soaring prices. Welcome to the housing desert.

We know how to handle monopolies. You restore the interpretation of the antitrust laws to cover the full spectrum of harms, beyond just consumer welfare. Then you break up dangerous concentrations of economic power, block mergers that would excessively consolidate markets, regulate natural monopolies as public utilities, structurally separate functions where necessary, intervene in the public interest so citizens are protected and empowered, and vigilantly examine markets to prepare for monopolies to emerge again. Maybe that sounds impossible in the abstract. But it is entirely possible under existing law that either hasn’t been enforced in decades or has been misinterpreted for decades. We have over a century of experience with both successfully preventing unnecessary concentrations and failing to do so. The mechanisms are clear; getting the political class to enforce them is the stumbling block.

Fevers, Feuds, and Diamonds, Ebola and the Ravages of History, Paul Farmer, 2020

Young Paul Farmer and Future World Bank President Kim Jim Yong in Haiti

Ebola was not simply a deadly disease; it was the manifestation of neolibereralism as an affliction, which wrecks havoc in the world’s most vulnerable societies. –Ibrahim Abdullah and Ismail Rashid, Understanding West Africa’s Ebola Epidemic: Toward a Political Economy, 2017

Charles Taylor Liberian Warlord

There can be no understanding of this medical wasteland, and its vulnerability to Ebola, without knowledge of the shared and distinct histories… Their shared history has long involved rapacious extraction and forced labor regimes. Rapacity on this scale requires and foments violence, resulting in more illness and injury…That’s (colonial rule) where control-over-care strategies originated…In the first part of the twentieth century at least, black doctors were shunted aside or formally excluded from the colonial medical services…Many West Africans still harbor memories of campaigns to isolate (and sometimes destroy) settlements afflicted by smallpox, cholera, and vector-borne diseases such as plague, malaria, and trypanosomiasis. In the course of many of these epidemics, and for a century or more, funerals and wakes were banned, travel restrictions imposed, and punitive measures (from fines to incarceration) routine. Medical care was not…After independence, tardy efforts of link disease control to care were nonetheless under way in Guinea and Sierra Leone and, to a lesser extent, Liberia. But health expenditures of any sort remained a tiny fraction of postcolonial national budgets. That fraction shrank further when their governments signed on to structural adjustment programs (austerity) — and geared up for war…Neglectful policies first written by the sanitarians of fading colonial governments have left a disastrous imprint, but other disastrous policies were advanced by development institutions claiming to represent the poor, or frail or failed states. Few of these ventriloquists were natives of West Africa…Externally imposed austerity meant that governments lost much of their scant capacity to engage in anything resembling caregiving.

Commentary on most epidemics sends history down the drain. That’s no accident. Surely the successful rebranding of European empires as “Western democracies” and the inevitable focus on “local” disasters of African politics or epidemiology stand as impressive examples of willed amnesia. This entire process of shrugging off human agency — a.k.a. history — lets external actors and forces off the hook, allowing expatriate pundits and self-dealing global bureaucrats to argue that local greed and tribal grievance are the primary cause of independent Africa’s woes, including its poor economic, political, social, and physical health. But those without shelter are of course obliged to pay closer attention to the clouds above.

…if you want to address the delivery problems, you need a social medicine incorporating staff, stuff, space, and systems. But Western Africa, like the northern Congo, has not known this sort of social medicine, because of the extractive arrangements that I’ve described in the previous four chapters; slavery, racism, colonialism, and war. Its medical and public-health systems have failed repeatedly to delivery on the promise of discovery.

Ebola, like Marburg has received scant attention from the best basic scientists and clinical researchers, and from the world’s largest research based pharmaceutical concerns, for a simple reason: there’s not much money in it.

The critical step in preventing future epidemics will be finding ways of delivering vaccines and therapies to those who need them — and who need them in part because they live in a clinical desert that was created when their predecessors were enslaved and subjugated so that people and nations in other parts of the world could amass great wealth and prosperity.

Public-health nihilism and its control-over-care variant retain their force largely among the poor living in what are now called low-income countries. These countries are, of course, the former colonies; strains of the paradigm run rampant within them, and in the field now widely known as global-health.

The postcolonial world still suffers from control-over-care logic, and from the plague. In the Indian state of Gujarat, population forty-five million, plague killed hundreds in the 1990s–with the diamond polishing city of Surat the epicenter of a major outbreak in 1994.

One of the few happy aftermaths of the Western Ebola epidemic has been the development of what appears to be be a safe and protective vaccine… We can expect the usual debates about whether further and different clinical trials are needed, and which regulatory hurdles must be cleared before it and other vaccines are licenses, and by which agencies…Ebola-nomics is sure to influence these discussions, since the disease’s victims, like those sickened by cholera and plague, are mostly poor people of color, as are their primary caregivers.

…Ebola and other public-health calamities strike most often in places from which human capital and raw materials have been extracted for centuries. From the rural reaches of Haiti and Rwanda, from the prisons of Siberia, and from the slums of urban Peru; for thirty years, I’ve been pointing out how the epidemics that people have suffered in these places have arisen because of the inequalities — political, economic, and medical –that such extraction invariably worsens.

People, Power, and Profits, Progressive Capitalism For An Age of Discontent, Joseph E. Stiglitz, 2020

Stiglitz is an optimist believing that the enormous concentration of wealth and income (23 people own 50% of the world’s total wealth) can be corrected with a more equal distribution brought about by political action. Thomas Piketty shares Stiglitz’s concern with income and wealth inequality but Piketty’s optimism is based on the study of history and how fast enormously significant and rapid changes have occurred in the past. It’s unclear what the basis for Stiglitz’s optimism is. He talks extensively about how unhappy large majorities of American citizens are, but how this can be translated into meaningful political change is unclear given how broken our current political system is.

Progressive International Elizabeth Goméz Alcorta Yanis Varoufakis Noam Chomsky

Japanese Translation

By 2018, those soaring ideas seem finally to have crashed to Earth. The 2008 financial crisis showed that capitalism wasn’t all that it was supposed to be–it seemed neither efficient nor stable. Then came a rash of statistics showing that the main beneficiaries of the growth of the last quarter century were those at the very top.

The elites had ignored the plight of too many Americans as they pushed for globalization and liberalization, including the financial markets, promising that all would benefit from these “reforms”. But the promised benefits never materialized for most citizens. Globalization hastened de industrialization, leaving behind a majority of citizens, especially the less educated, and of these, especially the men.

Financial market liberalization led to the 2008 financial crisis,the worst economic downturn since the Great Depression that began in 1929. Yet while tens of millions around the world lost their jobs, and millions of Americans lost their homes, none of the major financial executives who brought the global economy to the brink of ruin were held accountable. None served time; rather they were rewarded with mega-bonuses.

No wonder that in the aftermath of the economic failures we have described…there developed a skepticism of the elites and of the knowledge institutions from which they had supposedly derived their wisdom (Chicago School)…good academics had pointed out that globalization could actually lead to lower wages of unskilled workers…unless the government took strong counterveiling measures. They had pointed out that financial liberalization would lead to instability.

Hayek Friedman Reagan Thatcher
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…Swedes knew that a prosperous country required a high level of public expenditures, on infrastructure, education, technology, and social protection, and that the government needed revenues to sustainably finance these expenditures.

The truly greedy and shortsighted in the 1 percent have come to understand that the globalization, financialization, and other elements of the current economic rulebook are not supported by the vast majority of Americans…these super rich have thus formulated a three part strategy: deception, disenfranchisement, and disempowerment.

A misshapen economy creates misshapen individuals and a misshapen society

In economics,it will require both regulating the market and doing what the market can’t do. We will have to get over the shibboleths that markets on their own are self-regulating, efficient, stable, or fair, or that government is inevitably inefficient…we have to save capitalism from itself. We have to construct a new social contract that enable everyone in our rich country to live a decent, middle-class life.

Nor is an economy doing well if GDP goes up, but meanwhile the environment is deteriorating and resources are being depleted. A country living off the past and not investing in the future–or destroying its children’s environmental heritage–is one in which the generation is doing well at the expense of its descendants.

Finance was central to the creation of today’s economic, social, and political malaise: in the economic crisis that America endured for almost a decade as well as in the increase in inequality and the slowing of growth. Resources–including some of the most talented young people–went into finance rather than into strengthening the real economy.

The bank bailout of 2008 itself showed the power of the banks. They had caused the crisis, yet government provided massive largess to the banks and the bankers–without any sense of accountability for the crisis they had created, and with miserly help for the workers and homeowners who seemed but collateral in the financier’s war of greed.

Over the past half century, (some) economists have come to a deeper understanding of the circumstances in which some form of collective action is needed to ensure the attainment of societal objectives–and which markets by themselves fail to produce efficient or fair outcomes…in the absence of regulations, individuals will fail to take into account the cost of their pollution in their economic calculus. Market on their own produce too much pollution, inequality, and unemployment, but too little basic research.

Banks know how to take advantage of others through predatory and deceptive lending. Large banks engage in excessive risk-taking, knowing that they are too big to fail, so that if they run into a problem, they will be rescued.

There can only be trust if there is a belief that the political system is fair, and that our leaders are not just working for themselves. Nothing destroys trust so much as hypocrisy and gaps between what leaders promise and what is delivered…We had created a system where the inequalities in justice seemed as wide as those in income, wealth, and power. No wonder that so many Americans were angry.

Reset: Reclaiming the Internet for Civil Society, Ronald J. Deibert, 2020

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Deibert is professor of Political Science and founder and director of the Citizen Lab at the Monk School of Global Affairs and Public Policy, University of Toronto. He is also co-founder and a principal investigator of the OpenNet Initiative and Information Warfare Monitor projects. He was one of the founders and former VP of global policy and outreach for Psiphon.

A central theme of this book is the growth and dominance of Surveillance Capitalism by a handful of enormously rich and powerful companies and individuals.

Today it is virtually impossible to protect yourself from privacy encroachment via the Internet even using tools like Tor or end to end encryption like that found on Signal and WhatsApp. When Citizen Lab researchers cross international borders they must totally erase their Chromebooks to prevent seizure of their work. Much of Citizen Labs work is uncovering security and privacy vulnerabilities in existing Internet products such as Zoom with vulnerable camera and microphone control and the big hack of 2020. A huge problem with the Internet is its dependency on multiple layers of independently developed software deployed without adequate attention to security issues and problems. Governments may compound the security problem by requiring exploitable back doors, promoting faulty encryption that they can break, or the forced disclosure of encryption keys as a precondition for use in their jurisdictions.

Using Privacy Badger, Deibert found fifteen trackers on LinkedIn and a comparable number of trackers on the New York Times “Privacy Project” site.

As I write this book, the nerves of our World Brain are vibrating with full-on assaults on truth, science, ethics, and civility.
It’s a perfect storm–tools that enable precise details about people’s preferences and habits; Sophisticated machines that can swiftly analyze and then manipulate data as points of leverage around human emotions; unethical companies willing to do anything for a profit; and clandestine government agencies that lack public accountability but do have big budgets and a blank cheque to use social media as an experimental laboratory for their dark arts. The potential implications of this perfect storm should be profoundly unsettling for everyone concerned about democracy, the public sphere, and human rights.

Receiving special attention here is Isreali-based NSO Group and their flagship spyware Pegasus which the Saudi government used to spy on Saudi dissident and exile in Canada student Omar Abdulaziz and his friend Jamal Khashoggi. Citizen Lab had a bead on the number of Pegasus infected phones and realized that one of those phones was in Montreal. Going door to door with a short list of Saudi dissidents in Montreal, they uncovered the needle in the haystack Omar Abdulaziz and were able to confirm that his phone was infected. It is more than likely that information from this infected phone informed Saudi intelligence of Omar’s conversations with Khashoggi and may well have led to Khashoggi’s assassination by MBS.

Deibert estimates that 90% of the most active campaigners in the 2011 Arab Spring have vanished, in large part due to the use of NSO Group’s spyware.

Citizen Lab was able to infect an Iphone with Pegasus spyware in a laboratory environment and to reverse engineer Pegasus itself.

The spyware was extraordinarily sophisticated; it included exploits that took advantage of three separate flaws in Apple’s operating system that even Apple was unaware of at the time…After disclosing the vulnerabilities to Apple, which pushed out a security patch to more than one billion users, and publishing our report on targeting Mansoor, we reverse engineered Pegasus and began scanning for and monitoring NSO’s infrastructure and government client base.

Finding exploitable flaws in operating systems can be sold for as much as $1 million.

Also receiving special attention is China’s security apparatus courtesy of the Chinese government obsession with the Tibetan refugees settled in Dharamsala particularly with the Dalai Lama. Deibert representing Citizen Lab made numerous trips to Dharamsala and had a personal audience with the Dalai Lama. Citizen Lab’s history studying GhostNet goes back to 2009 when China’s large-scale electronic espionage program used to spy on individuals, organizations, and governments was discovered. The threat actors breached 1,295 computers in 103 countries over a two-year period, predominately focusing on governments in Southeast Asia. Citizen Lab’s first report on GhostNet was issued in 2009.

…recent years have brought about a disturbing descent into authoritarianism, fueled by and in turn driving income inequality in grotesque proportions and propelling the rise of a kind of transnational gangster economy. There is today a large and influential class of kleptocrats spread across the globe and supported by a professional service industry of lawyers, shell companies, accountants, and PR firms, the members of which move seamlessly between the private sector and agencies of the state…They thrive by victimizing innocent others, undermining individuals and organizations that seek to hold them to account, and using the power of the state for personal gain. There is no jurisdiction that is immune to corruption and authoritarian practices–only greater or lesser degrees of protection against them.

…In fact, the most disturbing dynamics are playing themselves out within normally liberal democratic countries. Hyper-militarized policing practices that draw on big data and AI-enabled surveillance tools are creating states on steroids…Meanwhile the constraints on abuse of power seem quaint and old-fashioned, as if constructed for a different time and context. We now have twenty-first century policing practices with nineteenth and twentieth century checks and balances.

The growing critical commentary on social media and surveillance capitalism is at a stage similar to the environmentalism of the 1960s and 1970s. The works of Shoshana Zuboff, Siva Vaidhyanathan, Bruce Schneier, and others are, in this respect, the social media equivalent of Rachel Carson’s Silent Spring, Barry Commoner’s The Closing Circle, and Paul Ehrlich’s The Population Bomb. They have dissected what’s wrong and have helped wake us up to a serious pathology, but they have yet to carve out a confident alternative way to organize ourselves.

Commenting on Europe’s GDPR and California’s Consumer Privacy Act, Deibert says “However promising, these statutes on their own are not so much prompting a fundamental behavior shift as they are further trivializing informed consent.”

Thanks to the Snowden disclosures, we now know that a flawed encryption protocol was foisted clandestinely on much of the world by the U.S., Canadian, and U.K. signals intelligence agencies, which enable them to crack the code of their adversaries communications. Critical infrastructure throughout the world depended on the integrity of the protocol. It’s unclear how many governments or criminals knew of and exploited it, or whether people were harmed in the process–but it is conceivable some malfeasance took place because of it.

Deibert takes us into a brief history of “republicanism” from the Greeks to the U.S. founding fathers, to today. “…One shorthand way to think about republican political theory is to take virtually anything that Republican Senate majority leader Mich McConnell advocates and think of the exact opposite of that position.”

Critical to the proper functioning of civil society is an educated and fully informed, enlightened citizenry. With this in mind, Deibert presents the mission statement of his own University.

The University of Toronto is dedicated to fostering an academic community in which the learning and scholarship of every member may flourish, with vigilant protection for individual human rights, and a resolute commitment to the principles of equal opportunity, equity and justice…
Within the unique university context, the most crucial of all human rights are the rights of freedom of speech, academic freedom, and freedom of research. And we affirm that these rights are meaningless unless they entail the right to raise deeply disturbing questions and provocative challenges to the cherished beliefs of society at large and of the university itself…
It is this human right to radical, critical teaching and research and which the University has a duty above all to be concerned; for there is no one else, no other institution and no other office, in our modern liberal democracy, which is the custodian of the most precious and vulnerable right of the liberated human spirit.

Herbert Marshall McLuhan (July 21, 1911 – December 31, 1980) was a Canadian philosopher, whose work is among the cornerstones of the study of media theory. He joined the University of Toronto in 1946 and taught there until his death. Harold Adams Innis (1894 – 1952) was a Canadian professor of political economy at the University of Toronto and the author of seminal works on media, communication theory, and Canadian economic history.

Ron Deibert follows in an important tradition at the University of Toronto.

The Price of Peace; Money, Democracy, and the Life of John Maynard Keynes, Kachary D. Carter, 2020

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Three Conscientious Objectors in 1915 Bertrand Russell, John Maynard Keynes, Lytton Stratchey

As a freshman at Cambridge University, Keynes was invited to join a secretive club, the Apostles, a sort of graduate seminar and dinner party where one member would present a paper. Keynes represented a new generation of Edwardians, leading a sexual revolution with Lytton Strachey, contrasting with the older Victorians like Bertrand Russell. Stratchey wrote of Keynes to Leonard Woolf in 1905, “He analyses with amazing persistence and brilliance. I never met so active a brain (I believe it’s more active than either (G.E.) Moore’s or Russell’s)…he perpetually frightens me.” Bertrand Russell wrote: “Keynes’s intellect was the sharpest and clearest that I have ever known. When I argued with him, I felt that I took my life in my hands, and I seldom emerged without feeling something of a fool.” An artistic grouping, Bloomsbury was born around 1905 at the house where Virginia (Woolf) and her sister Vanessa lived. Apostles Keynes, Leonard Woolf, Lytton Stratchey, E.M. Forster, Clive Bell and others moved to London. In 1906 Keynes took a job at the India Office where he worked on Indian currency and monetary policy.

In 1914, as WWI started, an obscure genius known to some in government from his India Office days, John Maynard Keynes, was summoned to London by Treasury and the Bank of England. Witnessing banker’s pursuit of their own narrow concerns during a bank run crisis, where Bankers focused on their own short-term pecuniary profit, abandoning all thought of “the honour of our old traditions or future good name”, Keynes concluded that political oversight of the bankers was needed. Keynes conceived a solution which Treasury and Parliament blessed that foreign bills could be redeemed for gold but domestic needs including those of the banks would be met with a new alternative paper currency. The plan worked and the run was stopped.

Keynes was invited to Paris for the WWI treaty of peace negotiations. Disturbed by the Allied demand for massive reparations that were unrealistic , Keynes proposed that Germany be allowed to issue bonds guaranteed against default by the Allied governments. Keynes was not privy to the negotiations drawing new borders and breaking up the Ottoman Empire so doesn’t appear aware of the division of oil reserves among the Allies. When Wilson rejected Keynes “Grand Scheme”, Keynes resigned from the peace negotiations and penned maybe his most influential work in 1919, “The Economic Consequences of the Peace” which Carter describes as:

…provincial, shortsighted, vicious, and in many respects deeply unfair polemic. It is also a masterpiece and very likely the most influential work Keynes ever put his name to—a furious tirade against the autocracy, war, and weak politicians. It is at once a howl of rage directed against the most powerful men in the world and an ominous prophecy of the violence that would again sweep the continent in the years to come.

Keynes wrote:

The resulting international system created at Versailles was extremely fragile and would only function if workers believed in it, and workers would not believe in it unless it worked. Break the collective faith in a better tomorrow, and workers will walk off the job, riot in protest, or worse.

The principle of accumulation based on inequality was a vital part of the pre-war order of Society and of progress as we then understood it. This principle depended on unstable psychological conditions, which it may be impossible to recreate. It was not natural for a population, of whom so few enjoyed the comforts of life, to accumulate so hugely. The war has disclosed the possibility of consumption to all and the vanity of abstinence to many.

Bolshevism in Russia was already known to all as an alternative to La Belle Epoque. All over Europe, but particularly in Germany conditions were ripe for the rise of a strongman. Without jobs, food, a sense of purpose, and confidence in a better tomorrow, Europe was already on the path to another war.

Keynes formalized his political theory of economics with three lectures in 1926 “The General Theory of Employment, Interest and Money“,”The End of Laissez-Faire“, and “A Short View of Russia“. Overlooked in Britain even though Bloomsbury loved them, they formed the core of a unique, practical political theory that the United States would apply on a vast scale during the great depression and WWII.

In 1930, Keynes published “A Treatise on Money” an assault on the ability of central bank interest rates to affect investment. Keynes suggested that the state spend money on public works since domestic investment was the problem. This direct assault on laissez-faire caused Austrian Friedrich von Hayek to pen two part indictment of the book. Milton Friedman later claimed von Hayek encourage a do nothing policy that did harm by recommending that “you just have to let the bottom drop out of the world.” Keynes himself responded to von Hayek; “one of the most frightful muddles I have ever read.”

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Franklin D. Roosevelt in his inaugural address in 1933 said

Primarily this is because the rulers of the exchange of mankind’s goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men…They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish…The money changers have fled from their high seats in the temple of our civilization. We may now restore the temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.

In his first 100 days FDR created the FDIC, the SEC, the TVA, and the Agricultural Adjustment Administration.
Felix Frankfurter, a friend of Keynes and appointee to the US Supreme Court in 1939, delivered a letter from Keynes to FDR and arranged meetings for Keynes in 1934 with key administration players not totally on board with Keynesian ideas. One player Keynes met was John Kenneth Galbraith who was running the office of price administration. Galbraith described the meeting as the Pope visiting the lowly village priest. Keynes largely found himself preaching to the choir.
FDR met Keynes and thought him politically naive about the President’s relationship with Wall Street. FDR believed a banking industry hostile to his reforms was driving up interest rates on government debt by sitting out Treasury bill auctions. “There is a practical limit to what the Government can borrow– especially because the banks are offering passive resistance in most of the large centers,” Keynes did make progress with Fed Chairman Eccles who understood the need to keep interest rates low to help the government spend its way out of the Depression.

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In 1936 Keynes published his most important work “The General Theory of Employment, Interest and Money“, a work that Carter calls the most important work in economics in 160 years, to be compared with the monuments of Aristotle, Thomas Hobbes, Edmund Burke, and Karl Marx.

It is a theory of democracy and power, of psychology and historical change, a love letter to the power of ideas. The book is dangerous because it demonstrates the necessity of power. It is a liberation book because it re-framed the central problem at the heart of modern economics as the alleviation of inequality, pivoting away from the demands of production and the incentives facing the rich and powerful that had occupied economists for centuries. It is a frustrating book because it is written in novel abstractions, argued in convoluted sentences and dense equations. And it it a work of genius because it proves a simple truth that, once offered, seems obvious: Prosperity is not hard-wired into human beings; it must be orchestrated and sustained by political leadership.

Keynes said of the genius of Sir Issac Newton:

Newton could hold a problem in his mind for hours and days and weeks until it surrendered to him its secret. Then being a supreme mathematical technician he could dress it up, how you will, for purposes of exposition, but it was his intuition which was preeminently extraordinary…The proofs, for what they are worth, were, as I have said, dressed up afterwards–they were not the instrument of discovery.

Explaining his own method in The General Theory Keynes says:

The object of our analysis is, not to provide a machine, or method of blind manipulation, which will furnish an infallible answer, but to provide ourselves with an organized and orderly way of thinking out particular problems…Too large a proportion of recent “mathematical” economics are mere concoctions, as imprecise as the initial assumptions they rest on, which allow the author to lose sight of the complexities and inter-dependencies of the real world in a maze of pretensions and unhelpful symbols.

The term macroeconomics hadn’t even been coined. Keynes not only invented modern economics, he invented the modern economist and placed him at the top of the new intellectual power structure. The book is a collaborative work done by the Cambridge “Circus” an almost cult like group with its own private language. The two most important contributors beyond Keynes were Joan Robinson and Richard Kahn. Carter says Robinson is the most important economist never to have won a Nobel prize in economics. Two of her students Amartya Sen and Joseph Stiglitz were honored with the Nobel prize. In fact she was only named full professor at Cambridge in 1965, thirty years after publication of her most significant work for which she is not credited. Carter likens Joan Robinson to Rosalind Franklin who discovered the double helix of DNA and was never recognized. Joan Robinson’s published contributions to economics continued until her death in 1983. Much of the The General Theory is incomprehensible. The book is difficult and obscure because Keynes wanted it to be. Its sheer ugliness created a small industry of interpreters. Two economists won Nobel prizes for interpreting the work.

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Keyesian economics found its first real world application during the FDR years. For Joan Robinson “The economic theory which was developed in America was a return to pre-Keynesian doctrines that smothered everything important in Keynes.” For Richard Kahn, the re-engineering of The General Theory into mathematics was a Faustian bargain–a fatal turn that would ultimately lead to Keynes being discredited.

In June 1942, Keynes was rewarded for his service with a hereditary peerage. On 7 July his title was gazetted as Baron Keynes, of Tilton, in the County of Sussex.

Maynard’s wife Lydia was a principal ballet dancer with Ballets Russes under Diaghilev and partnered with Nijinsky

Lydia partnered by Vaslav Nijinsky
There is a youtube video of Lydia dancing with George Balanchine in 1929.

Bretton Woods agreement 1944-1972 Lydia was 5’0″ Maynard was 6’7″

In 1944 Keynes attended the Bretton Woods conference in New Hampshire to hammer out a new international economic system. The Mount Washington Hotel overlooked the Ammonoosuc River where Keynes’s wife Lydia bathed nude each morning.
Keynes called for a new Supernational Bank to regulate the global money supply, currency, and trade flows. This international central bank would issue “Supernational Bank money (SBM) to national central banks like the Federal Reserve, the Bank of England, and their other counterparts throughout the world. These national central banks would borrow SBM from the Supernational Bank as a matter of course as they conducted their ordinary monetary policy operations.
The Supernational Bank would allow nations to grapple with domestic problems without resorting to deflation. Nations would never have to worry about running out of money in an emergency, because the Supernational Bank would always be there to provide money on reasonable terms. No government would have to intentionally create unemployment to resolve a currency or trade problem. Under the old system, when loans became unavailable for any reason–war, banking instability, bad monetary policy, a stock market bubble, or a simple disinterest in foreign lending–the only way a country running a trade deficit to fix its situation would be to force down the price of its goods in foreign markets. Ultimately it would resort to deflation and mass unemployment to do so. Keynes argued the surplus nations were not injured by countries that ran deficits. While the deficit country ran up large financial debts, the surplus country enjoyed fat export trade that employed its workers and raised the standard of living.
What the world also needed was an international authority that could punish countries for running a persistent trade deficit or a persistent trade surplus. Keynes proposed an International Clearing Union (ICU). Each participating central bank would open an account with the ICU. International trade payments would be made through those accounts, using a new international currency called Bancor that the ICU would create at will. When a country ran a persistent deficit or a persistent surplus, the ICU would require it to revalue its currency to bring the system back toward balance. The revaluations would be up or down to a limit of 5%.

Unfortunately for Keynes’s vision, Harry Dexter White, the US representative of the FDR administration arrived at Bretton Woods with a plan already formulated and the US had the clout to get its way. Keynes’s plan had been rejected before the conference even began. Instead all nations that joined the Bretton Woods project would agree to make their currencies convertible into dollars at a fixed exchange rate. The dollar only would be convertible into gold at a price later fixed at $35 per ounce. An International Monetary Fund (IMF) would be established to provide emergency loans in a crisis. A World Bank would be created to assist with post war reconstruction.

Instead of an international regulatory apparatus, Keynes got a gold standard with a bailout fund. White spend much of his time at the conference trying to secure USSR participation. He failed and the USSR never ratified the Bretton Woods agreement. Britain was broke and Keynes could do nothing about the outcome of the conference. Keynes died on Easter Sunday 1946.

The backlash against FDR’s New Deal and War powers was led by the bankers, wall street, and the corporate American elite. Undermining Keynesian economics combined the McCarthy era Communist scare accusations, the rise of the Ayn Rand inspired libertarian movement emphasizing unfettered individual freedom (freedom from government interference), and the resurgence of laissez-faire (market fundamentalism) economics centered at the Chicago School with von Mises and von Hayek and the London School of Economics.
Chicago School graduate Paul Samuelson wrote the textbook Economics: An Introductory Analysis, first published in 1948 that became the principal introduction to economics for generations of American students including this reader. While incorporating some Keynesian ideas, Samuelson was careful to couch these ideas in the long tradition of market fundamental economics. Some labeled Samuelson a neo-Keynesian .

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In 1958 Galbraith published his sensational The Affluent Society where the economics of scarcity had been replaced by an economy of abundance able to meet the needs of everyone with advertising used to encourage further consumption. Galbraith noted that great inequality still existed in America. The book had an immediate and wide spread impact on economic discussion which Carter calls similar to the impact of Thomas Piketty’s Capital in the Twenty-First Century, a history of inequality of income and wealth in France, Britain, and America. Galbraith was perhaps the best known member of the JFK brain trust. Expecting a cabinet appointment, Galbraith was instead named ambassador to India, then under Nehru and the Congress party. Galbraith was a vocal opponent of US involvement in Vietnam so likely JFK wanted to isolate him to quiet his opposition.

In 1972, Nixon shocked the world announcing the end of the post war Bretton Wood system. The gold standard was abandoned and massive monetary and fiscal stimulus programs were launched with low interest rates and business tax cuts. A 10% import tariff would be imposed and price controls put into place. Carter doesn’t discuss it but the US had moved from a trade creditor nation to a trade deficit nation by the late 1960’s. Strongest of the Creditors were Germany and Japan. Sometime about 1971, a young London School of Economics educated Paul Volcker penned a three page secret memo to his boss Henry Kissinger suggesting that foreign nations should be encouraged to have the United States recycle their surpluses through Wall Street. Yanis Varoufakis claims to have seen this secret memo, but the reality is that approximately 70% of all foreign trade surpluses, including China, are now recycled by the United States. Thus a new industry, financialization, which today dominates the US economy was created.

Volcker was named Fed Chairman by Jimmy Carter in 1979. He promptly raised interest rates to an unprecedented peak of 20%. Volcker had turned the Federal Reserve into the primary instrument of US economic policy to fight inflation. Further creative uses of the Fed would be used in the 2008 banking crisis.

The final nails in the coffin of New Deal economic mechanisms occurred under Bill Clinton taking the advise of Bob Rubin and Larry Summers. The Glass-Steagall act was repealed allowed the merger of banks with wall street to create too big to manage financial monsters. Then Clinton declared that there was no need to regulate Wall Street created derivatives that were at the heart of the 20008 sub prime mortgage crisis. Carter points out that the credit default swap (CDS) was the most explosive of these new derivatives. The CDS was a form of insurance whereby a default of an insured derivative would pay the holder. There was no requirement that the entity taking out the insurance actually owned the derivative insured.

The Obama administration was economically scammed by Tim Geithner and Larry Summers. The big banks were bailed out, Glass-Steagall was not reinstated, no banker was prosecuted for their illegal activities. And, according to Carter, 9.3 million lost their homes with government doing virtually nothing to preserve home ownership. A $75 billion plan designed to save 4 million homes never happened. The money was allocated but never spent. The family loss of homes contributed greatly to the increase in unemployment during this time.
Democratic Representative Dennis Cardoza of California in 2011 exclaimed:

For the life of me, I can’t figure out why a community organizer who says he cares about families, who says he cares about communities, has turned his back on one of the biggest problems in America.

Keynes believed that an enlightened management of the economy to produce widespread prosperity and job security would alleviate the problems of unrest that lead to revolutions either communist or fascist. Today the world has the highest level of inequality ever measured.

In 2008, Joseph Stiglitz calculated that if the $48 trillion global economy were simply divided among every one of its inhabitants, a family of four world receive $28,000, high enough to end poverty in every country. Carter calculated that the 2018 economy of $85.8 trillion economy and 7.5 billion people would yield an income of $45,000 for each family of four. “The economic problem of humanity is no longer a problem of production but of distribution–inequality.

Keynes was a conscientious objector dedicated to the elimination of the causes of war. Yet the history of the US after WWII was one of almost continuous real armed conflict and a continuous succession of virtual wars: the cold war til 1992, the war on drugs, and the war on terror after 9/11, The later two were not wars against state actors but against amorphous largely hidden force scattered globally. State actors found themselves invariably drawn into all these virtual wars often with terrible consequences. In real shooting wars with armies, Korea was fought to a draw; Vietnam was lost at a cost of more than 1 million lives; Afghanistan and Iraq never end; Syria and Libya appear to be without resolution. In foreign policy, the US, starting in 1953 and continuing to this day, assist in the overthrow of governments in country after country. The US today is the world’s greatest threat to stability and peace.

As Piketty documents, we are living in a period of unprecedented inequality of income and wealth. Carter concludes, the US government has remained, with the exception of Bill Clinton, stubbornly Keynesian but Keynesian principals are applied only during ever escalating economic crises. Applying Keynesian solutions in government policy sporadically and blind to people’s suffering serves only to rescue the oligarchs from their own incompetence and crimes. This malignant phenomenon has been named “Corporate Socialism“. The failures of the 2008 banking crisis highlighted the bankruptcy of Market Fundamentalist views of the world. Without extensive, enlightened, humane state management, unfettered capitalism is capable of generating enormous instability and suffering that only the state can correct. As an optimist foresees, the global economy, properly managed by the state, is capable of reducing income and wealth inequality and improve the lives and quality of life of everyone on earth, and eliminate war.

A bit of trivia; Keynes was 6’7″, Galbraith was 6’9″ and Volcker was 6’7″.

Capital and Ideology, Thomas Piketty, 2020
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A continuation of Piketty’s earlier 2014 work extending his previous analysis starting from 1500 to the present and adding France, India, China, Germany, Spain. the Nordic countries, Russia and Eastern Europe, the Petro-Monarchies, etc.
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Today, the postcommunist societies of Russia, China, and to a certain extent Eastern Europe…have become hypercapitalism’s staunchest allies. This is a direct consequence of the disaster of Socialism and Marxism and the consequence of all egalitarian internationalist ambitions. So great was the communist disaster that it overshadowed even the damage done by the ideologies of slavery, colonialism, and racialism and obscured the ties between those ideologies and the ideology of ownership and hypercapitalism–no mean feat.

Furthermore, social democrats never really reconsidered the issue of just ownership after the collapse of communism. The postwar social-democratic compromise was built in haste, and issues such as progressive taxation, temporary ownership, circulation of ownership (for example, by means of a universal capital grant financed by a progressive tax on property and inheritances), power sharing in firms (via co-management or self management), democratic budgeting and public ownership were never explored as fully or systematically as they might have been.

It (modern property law) originated…with Christian doctrine, which sought over many centuries to secure the property rights of the Church as both a religious and a property-owning organization.

…the concentration of private property, which was already extremely high in 1800-1810, only slightly lower than on the eve of the (French) Revolution, steadily increased throughout the nineteenth century and up to the eve of World War I…The case of Paris is especially noteworthy; there, the wealthiest 1 percent owned nearly 50 percent of all property in 1800-1810 and more than 65 percent on the eve of World War I.

As for achieving real equality, however, the great promise of the (French) Revolution went unfulfilled…And when a progressive income tax was finally adoption on July 15, 1914, it was not to finance schools or public services but to pay for war with Germany.

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When slavery was abolished in the 19th Century, the discussion in slave owning nations concerned compensation for the owner’s of slaves, never about compensation for the slaves.

It is easy to see that in a society where slaves represented virtually the entire work force, their market value could reach astronomical levels, potentially as high as seven or eight years of annual production…Recall that France saddled Haiti with a debt equivalent to three years of Haitian nation income in 1825 yet remained convinced that it was making sacrifices compared to what slaves in Saint-Dominique actually yielded in profit.

In 1860, the market value of (US) slaves (4 million in number) exceeded 250 percent of the annual income of the southern states and came close to 100 percent of the annual income of all the states. If compensation had been paid, it would have been saddled with interest and principal payments for decades.

The secession of the southern states and the resulting Civil War ended these discussions and US slave owners were never compensated for their loss of property as a result of the war and the emancipation proclamation.

Piketty follows the transformation, starting around 1500, of society from Ternary (Clergy, Nobility, Third estate–the workers) to Ownership societies with a centralized state. This transformation was accompanied by the rapid development of arms, warships, and navigation, needed to support the endless wars among the new nation states. This technological development of war tools enabled the co development of slavery and colonialism. Even the Ottoman and Chinese Empires were no match for the modern war machine. Gunboat diplomacy reigned supreme into the twentieth century. An extreme example are the two opium wars of Britain against China in the mid nineteenth century. Not only did China have to allow the sale of opium in China, but China was saddled with massive reparations for the costs of the wars.

Japanese Depiction of Perry’s black ships
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Japan reacted to the American (Admiral Perry), French and British visit by warship in the mid nineteenth century with the Meiji reformation, whereby Japan acquired and built its own advanced arms and warships and became a colonial power in its own right.

In the period 1880-1914, the United Kingdom and France earned so much from their investments in the rest of the world (roughly 5 percent additional national income for France and more than 8 percent for the United Kingdom) that they could allow themselves to run persistent structural trade deficits (an average of 1-2 percent of national income for both countries) while continuing to accumulate claims on the rest of the world at an accelerated pace. In other words, the rest of the world labored to increase consumption and standard of living of the colonial powers, even as it became increasingly indebted to those powers.

On Colonial state tax revenues in the eighteenth century:

…both countries (England and France) were taking in 600-900 tons of silver in 1700, 800-1100 tons in the 1750’s, and 1600-1900 tons in the 1780’s, leaving all other European powers far behind. Importantly, Ottoman tax receipts remained virtually unchanged from 1500 to 1780; barely 150-200 tons. After 1750, it was not only France and England that had a far greater tax capacity than the Ottoman Empire; so did Austria, Prussia, Spain, and Holland.

…the development of the modern state involved two great leaps forward. The first unfolded between 1500 and 1800 in the leading states of Europe, which were able to increase their tax revenues from barely 1-2 percent of national income to about 6-8 percent. This process was accompanied by the development of ownership societies at home and colonial empires abroad. The second leap forward came in the period 1930-1980, when the rich countries as a group went from tax revenues of 8-10 percent of national income on the eve of World War I to revenues of 30-50 percent of national income in the 1980s. This transformation was accompanied by a broad process of economic development and historic improvement in living conditions and gave rise to various forms of social-democratic society…It proved difficult to extend the second leap forward to poorer countries in the late twentieth and early twenty-first centuries…

If we include all military conflicts across the continent in each period, we find that European countries were at war 95 percent in the sixteenth centry, 94 percent in the seventeenth century, and still 78 percent in the eighteenth century (compared to 40 percent in the nineteenth century and 54 percent in the twentieth century). The period 1500-1800 was one of incessant rivalry among Europe’s military powers, and this is what fueled the development of unprecedented fiscal capacity as well as numerous technological innovations, particularly in the areas of artillery and warships.

By the end of the American Revolutionary and Napoleonic Wars (1792-1815), British public debt had soared to more than 200 percent of national income, the debt was so high that one-third of the taxes paid by British taxpayers between 1815 and 1914 (mainly by people of middle and low income) was devoted to repayment of the debt and interest (profiting the wealthy who had lent the government money to pay for the wars)…It also might have been preferable to tax the wealthy rather than allow them to become still wealthier by buying government bonds…with political power in the hands of the wealthy, the choice was made to spend money on the military and to finance it with public debt, and this helped to secure European domination over the rest of the world.

…these protectionist and mercantilist measures, imposed on the the rest of the world at gunpoint, played a significant role in achieving British and European industrial domination. According to available estimates, the Chinese and Indian share of global manufacturing output, which was still 53 percent in 1800, had fallen to 5 percent by 1900.

The colonial ideology that seeks to liberate and civilize nations in spite of themselves generally leads to disaster, no matter what the color of the colonizer’s skin (Japan).

The success of Japan’s proprietarian and industrial transition shows that the mechanisms at work have nothing whatsoever to do with Christian culture or Eueopean civilization…the Japanese experiences shows that proactive policies, especially regarding public infrastructure and investments in education, can overcome very strong and longstanding status inequalities in a matter of decades…we will see that the reduction of social inequality in Japan was further assisted by an ambitious program of agrarian reform in the period 1945-1950 as well as by highly progressive taxation of top incomes and large estates.

The fall of ownership society in the period 1914-1945 can be analyzed as a consequence of three challenges; the challenge of inequality with European ownership societies, which led to the emergence first of counterdiscourses and then of communist and social-democratic counter-regimes in the late nineteenth and first half of the twentieth centuries; the challenge of inequality among countries, which led to critiques of the colonial order and the rise of increasingly powerful independence movements in the same period; and finally a nationalist and identitarian challenge, which heightened competition among the European powers and eventually led to their self-destruction through war and genocide in the period 1914-1945.

The period from 1726-1914 saw low inflation and complete stability in the value of the pound sterling and the French gold franc. World War I put an end to monetary stability and the suspension of convertibility of their currencies into silver or gold.

…from 1914 to 1950 inflation averaged 13 percent a year in France (equivalent to a hundred fold increase in the price level) and 17 percent in Germany (a three hundredfold price increase).

…ownership societies that seemed so prosperous and solid on the eve of World War I collapsed between 1914-and 1945. The collapse was so complete that nominally capitalist countries actually turned into social democracies between 1950 and 1980 through a mixture of policies including nationalizations, public education, health and pension reforms, and progressive taxation of the highest incomes and largest fortunes. Despite undeniable success, however, these social-democratic societies began to run into trouble in the 1980’s. Specifically, they proved unable to cope with rampant inequality that began to develop more of less everywhere around that time.

Why did social democratic societies fail after 1980?

Ronald Reagan (R) and Margaret Thatcher wave after their arrival in Camp David, 22 december 1984, before their meeting. (Photo credit should read ARCHIVES UPI/AFP/Getty Images)

In the first place, attempts to institute new forms of power sharing and social ownership of firms remained confined to a small number of countries (especially German and Sweden). This avenue of reform was never explored fully as it might have been, even though it offered one of the most promising responses to the challenge of transcending private property and capitalism. Second, social democracy did not have a good answer to one pressing question; how to provide equal access to education and knowledge, particularly higher education. Finally, we will look at social-democratic thinking about taxation, especially progressive taxation of wealth. Social democracy did not succeed in building new transnational federal forms of shared sovereignty or social and fiscal justice. Today’s globalized economy is one in which regulation in all its forms has been undermined by free trade and free circulation of capital, instituted by agreements to which social democrats consented or even instigated. In any case, they had no alternative to offer. The resulting heightened international competition has gravely endangered the social contract (and consent to taxation) on which the social-democratic states of the twentieth century were built.

The French and British never embraced corporate power sharing and social ownership preferring nationalization of private companies:

Then in 1986-1988 the Gaullist and liberal parties returned to power in a new context of privatization and deregulation under Thatcher and Reagan, while at the the same time the Communist bloc was slowly crumbling. This led to the privatization of most of the companies that had been nationalized between 1945-1982.

…from 1917 to 1991, new thinking about private property was blocked by the bipolar opposition of Soviet Communism and American capitalism. One was either for unlimited state ownership or for full private shareholder ownership….The fall of the Soviet Union inaugurated a new period of unlimited faith in private property from which we have not yet completely emerged but which is beginning to show serious signs of exhaustion.

On the massive inequality that developed in the United States from about 1980:

The bottom 50 percent of the income distribution claimed about 20 percent of national income from 1960 to 1980, but that share has been divided in half, falling to just 12 percent in 2010-2015. The top centile’s share has moved in the opposite direction, from barely 11 percent to more than 20 percent…the share of total income going to the bottom 50 percent in Europe remains significantly larger than the share going to the top centile.

To sum up: in the light of the history of the past two centuries, educational equality played a more important sole in economic development than the sacrilization of inequality, property, and stability. More generally, history demonstrated the recurrent risk of an “inequality trap” which many societies have faced throughout the ages. Elite discourse tends to overvalue stability, and especially the perpetuation of existing property rights, whereas development often requires a redefinition of property relations and opening up of opportunities to new groups.

On the failures of progressive taxation:

First, parties of the left failed to foster the kind of international cooperation needed to protect and extend progressive taxation; indeed at times they contributed to the fiscal competition that has proved devastating to the very idea of fiscal justice. Second, thinking about just taxation too often neglected the idea of a progressive wealth tax, despite its importance for any ambitious attempt to transcend private capitalism, particularly if used to finance a universal capital endowment and promote greater circulation of wealth.

…we now know that the top centile’s share of total wealth can fall from 70 percent to 20 percent without impeding growth (quite the contrary, as Western European experience in the twentieth century shows). We know from experience with Germanic and Nordic versions of co-management that employee and shareholder representatives can each control half the voting rights in a firm and that such power sharing can improve overall economic performance.

On tax havens:

…this minimum estimate implies that the financial assets tucked away in tax havens are roughly equal to the total amount of all financial assets legal owned by Russian households inside Russia (roughly one year of national income). In other words, off shore property has become at least as important in macroeconomic terms as legal financial property…In a sense, illegality has become the norm.

…by exploiting data made public by the Bank for International Settlements (BIS) and the Swiss National Bank (SNB) on countries where assets are held, one can estimate each country’s approximate share of offshore assets held in tax havens relative to the total (lawful and unlawful) assets held by residents of each country. The results are as follows; “only” 4 percent for the United States, 10 percent for Europe, 22 percent for Latin America, 30 percent for Africa, 50 percent for Russia, and 57 percent for the petroleum monarchies.

On China:

China thus appears to have settled on a mixed-economy property structure: the country is no longer communist since nearly 70 percent of all property is now private, but it is not completely capitalist either because public property still accounts for a little more than 30 percent of the total–a minority share but still substantial. Because the Chinese government, led by the CCP, owns a third of all there is to own in the country, its scope for economic intervention is large: it can decide where to invest, create jobs, and launch regional development programs.

If we compare China to the other Asian giant, India, it is clear that since the early 1980s China has been both more efficient in terms of growth and more egualitarian in terms of income distribution (or, rather, less inegalitarian, in the sense that concentration of income has increased less dramatically than in India)…one reason for this difference is that China has been able to invest more in public infrastructure, education, and health care. China achieved a much higher level of tax revenue than India, where basic health-care and educational services remain notoriously underfinanced. China has nearly matched Western levels of taxation, taking in roughly 30 percent of national income in taxes (and roughly 40 percent if one includes profits from public firms and sale of public lands).

On the dangers posed by the central banks:

After the bankruptcy of Lehman Brothers in September 2008 and the ensuing financial panic, things changed completely…The world’s major central banks devised increasingly complex money-creation schemes collectively described by the enigmatic term “quantitative easing” (QE). In concrete terms, QE involves lending to the banking sectors for longer and longer periods (three months, six months, or even a year rather than a few days or weeks) and buying bonds issued by private firms and governments with even longer duration (of several years) and in much greater quantities than before. The Federal Reserve was the first to react In September 2008 its balance sheet increased from the equivalent of 5 percent of GDP to 15 percent; in other words the Fed created money equivalent to 10 percent of US GDP in a few weeks time. This proactive stance would continue in subsequent years; the Fed’s balance sheet had risen to 25 percent of GDP by the end of 2014…In Europe the reaction was slower. The ECB and other European authorities took longer to understand that massive intervention by the central bank was the only way to stabilize financial markets and reduce the “spread” between the interest rates of the various European countries. Since then, the ECB purchases of public and private bonds have accelerated, however, and the ECB’s balance sheet stood at 40 percent of Eurozone GDP at the end of 2018…By avoiding cascading bank failures and acting as “lender of last resort”, the Fed and ECB did not repeat the errors that the central banks committed in the interwar years, when orthodox “liquidationist” thinking (based on the idea that bad banks must be allowed to fail so that the economy can restart) helped push the world over the edge of the the abyss…What makes central banks so powerful is their ability to act extremely rapidly.

Piketty does not discuss the New Deal US Federal Deposit Insurance Corporation FDIC program which allows the federal government to instantly take over failing banks, reorganize them with new management, and reopen them after a single weekend, assuring depositors that their savings are insured and immediately available. Obama and his treasury secretary Tim Geithner refused to allow the Shiela Bair led FDIC to break up and reorganize the failing banks during the 2008 crisis. This would have been the available and desired solution to the failures.

…the danger is that these monetary policies, by avoiding the worst gave the impression that no broader structural change in social, fiscal, or economic policy was necessary. Nevertheless, the fact is that central banks are not equipped to solve all the world’s problems or to serve as the ultimate regulator of the capitalist system…To combat excessive financial deregulation, rising inequality, and climate change, other public institutions are necessary; laws, taxes, and treaties drafted by parliaments relying on collective deliberation and democratic procedures.

In the abstract, there is nothing to stop central banks from enlarging their balance sheets by a factor of ten or even more…From a strickly technical standpoint, the Fed or ECB could create dollars or euros worth 600 percent of GDP and attempt to buy all the private wealth of the United States or Western Europe…central banks and their boards of governors are no better equipped to administer all of a country’s property than were the Soviet Union’s central planners.

…the Bank of Japan and Swiss National Bank both have balance sheets in excess of 100 percent of GDP…It is nevertheless impossible to rule out that similar things will someday happen to the Eurozone or the United States. Financial globalization has assumed such proportions that it may lead those responsible for setting monetary policy step by step toward decisions that would have been unthinkable only a few years before.

Many citizens have quite understandably begun to ask why such sums were created to bail out financial institutions, with little apparent effect in jump-starting the European economy, and why it shouldn’t be possible to mobilize similar resource to help struggling workers, develop public infrastructure, or finance large investments in renewable sources of energy. Indeed it would be by no means absurd for European governments to borrow at current low interest rates to finance useful investments, on two conditions; first, such investments should be decided democratically, in parliament with open debate, and not by a Governing Council meeting behind closed doors; and second, it would be dangerous to lend credence to the notion that every problem can be resolved by printing money and taking on debt. The principal instrument for mobilizing resources to undertake common political projects was and remains taxation, democratically decided and levied on the base of each taxpayer’s economic resources and ability to pay, in total transparency.

And yet the Democratic presidents who followed Reagan, Bill Clinton (1992-2000) and Barack Obama (2008-2016) never made any real attempt to revise the narrative or reverse the policies of the 1980s. In particular, in regard to the reduction of the progressive income tax (whose top marginal rate fell to an average of 39 percent from 1980 to 2018, half its level in the period 1932-1980) and the de-indexing of the federal minimum wage (which led to a clear loss of purchasing power since 1980), the Clinton and Obama administrations basically validated and perpetuated the basic thrust of policy under Reagan…But it may also be that acceptance of the new fiscal and social agenda was partly due to the transformation of the Democratic electorate and to a political and strategic choice to rely more heavily on the party’s new and highly educated supporters, who may have found the turn toward less redistributive policies personally advantageous.

In particular, higher-income voters voted more heavily for Tony Blair’s New Labour in the period 1997-2005 than they had voted for Labour previously. That may seem logical given that New Labour also attracted more and more votes among college-educated people and its fiscal policies were relatively favorable to high earners. Just as the Clinton (1992-2000) and Obama (2008-2016) administrations had validated and perpetuated the Reagan reforms of the 1980s, New Labour governments in the period 1997-2010 largely validated and perpetuated the fiscal reforms of the Thatcher era.

I have tried to highlight the significant dangers posed by the rise of socioeconomic inequality since 1980. In a period marked by internationalization of trade and rapid expansion of higher education, social-democratic parties failed to adapt quickly enough, and the left-right cleavage that had made possible the mid-twentieth-century reduction of inequality gradually fell apart. The conservative revolution of the 1980s, the collapse of Soviet communism, and the development of neo-proprietarian ideology vastly increased the concentration of income and wealth in the first two decades of the twenty first century. For want of a constructive egalitarian and universal political outlet, these tensions have fostered the kinds of nationalist identity cleavages that we see today in practically every part of the world…When people are told that there is no credible alternative to the socioeconomic organization and class inequality that exists today, it is not surprising that they invest their hopes in defending their borders and identities instead.

In the broadest terms, the tax system of the just society would rest on three principal progressive taxes: a progressive annual tax on property, a progressive tax on inheritances, and a progressive tax on income. As indicated here, the annual property tax and the inheritance tax would together yield about 5 percent of national income, all of which would be used to finance capital endowments. The progressive income tax, would yield about 45 percent of national income, which would be used to finance all other public expenditures, including the basic income and, above all, the welfare state (which would cover health, education, pensions, and so on).

The model of participatory socialism proposed here rests on two key pillars; first, social ownership and shared voting rights in firms, and second, temporary ownership and circulation of capital. These are the essential tools for transcending the current system of private ownership. By combining them, we can achieve a system of ownership that has little in common with today’s private capitalism; indeed it amounts to a a genuine transcendence of capitalism.

If every individual is to have a chance of finding decently remunerated employment, we must put an end to the hypocritical practice of investing more in elitist educational programs and institutions than in institutions that cater to the disadvantaged. The labor code and, more generally the entire legal system need to be overhauled. New systems of wage bargaining, a higher minimum wage, a fairer wage scale, and sharing of voting rights within firms between workers and shareholders can all contribute to the establishment of a just wage, a more equal distribution of economic power, and a deeper involvement of workers in shaping the strategy of their employers.

The central goal of democratic equality vouchers is to promote participatory and egalitarian democracy. Currently, the prevalence of private (political) financing significantly biases the political process. This is particularly true of the United States where campaign finance laws (always inadequate) have been set aside by recent decisions of the Supreme Court. But it is also true in emerging democracies such as India and Brazil as well as in Europe, where current laws are equally inadequate and in some cases totally scandalous.

The redefinition of the global legal framework will require abandonment of some existing treaties, most notably those concerning the free circulation of capital that came into effect in the 1980s-1990s because these stand in the way of meeting the above mentioned goals. These treaties will need to be replaced by new rules based on the principles of financial transparency, fiscal cooperation, and transnational democracy.

Finally it should be noted that this book was written before the start of the global covid19 pandemic and the global recession/depression. Undoubtedly much is about to change socially and politically in response.

Chain of Title; How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud, David Dayen, 2016

Amid the suffering of the 1930’s, communities banded together to fight foreclosures…Sustained action led to several foreclosure moratorium throughout the Midwest…To stop foreclosures, the Home Owner’s Loan Corporation (HOLC) bought defaulted mortgages from financial institutions at a discount and sold them back to homeowners. Beginning in 1933, HOLC acquire one million mortgages–one out of five in the country at that time. Eighty percent of HOLC clients saved their homes when they might have lost them…HOLC gave borrowers a twenty year mortgage with a fixed interest rate allowing them to gradually pay off the principal over the life of the loan…

Thus the New Deal gave birth to the modern mortgage industry.

No such governmental efforts were made during the subprime mortgage crisis of 2008. While campaigning, Obama favored cramdowns, where judges in bankruptcy can modify the terms of the mortgage, but Obama’s economic team opposed cramdowns and 10 senate Democrats voted against its use. HAMP, Obama’s loan modification program appealed to the banks primarily for the additional fees HAMP might generate. In this book, banks usually accepted HAMP applications at the same time they moved forward with foreclosure. Treasury claims (with no evidence) that 5 million loans were modified by HAMP (and other programs). This book estimates that 6 million homes were lost to foreclosure. A later book, Homewreckers puts the number of homes lost to foreclosure at 10 million. Homewreckers presents the macro view as millions of homes were sold by the banks with Obama government assistance to vulture funds. Most of these home remain off the market, empty, without repairs.

Lisa and Michael Researching fraudulent documents

This book features three Floridian victims of the great foreclosure banking fraud; Lisa Epstein, a nurse, Michael Redman, selling cars on the internet, and Lynn Szymoniak, a lawyer. They each discovered that their foreclosure cases were filled with fraudulent documents showing the wrong dates, the wrong plaintiffs, wrong amounts owed, wrong fees. They quickly uncovered a whole industry created to support mortgage securitization and its array of derivatives moving so fast that producing legally required documents would only be done after the fact, such as a need to foreclose on a single mortgage. Original documentation was usually destroyed by the originators. The Mortgage Electronic Registration System (MERS) was substituted for keeping track of securitized loans and they were never up to the task. County Recorders around the country are the keepers of the official legal filings for all mortgage documents and the mortgage industry went into overdrive to try to file postdated assignments, etc. regarding particular mortgages. The resulting chaos of documents creates broken chain of titles for millions of properties, meaning that no title company can insure the title and the property cannot be sold or transferred. There is no way to guarantee that a title or note claimant will not emerge in the future.

The three victims discovered the widespread practice of robo-signing, where unqualified people were signing massive numbers of documents (thousands a day) without examination and these signatures were often notarized at different times and locations and sometimes with expired on not yet valid notary licenses. A single person might sign as VP for many different banks and institutions. Some signers were dead or in prison at the time of signing.

One service company DocX created after the fact documents for banks. Lynn uncovered a document filed in Florida with BOGUS ASSIGNEE whose address is xxxxxxx. Whether intended as a joke or someone failed to replace the name is unknown but BOGUS ASSIGNEE documents started showing up in other states in official public records.

Michael received an anonymous document:

DocX printed a catalog for foreclosure mills and mortgage servicers , with an online order form called GetNet for missing documents. Curing a defective mortgage would cost you $12.95. Lost note affidavits and allonges were also $12.95. Creating a “missing intervening assignment?” $35.00. “Re-creating the entire collateral file”–that means the note, mortgage, securitization agreement, everything? It’s yours for the low,low price of $95.00.

The documents needed were often produced in foreign countries, some even in Panama.

Lynn Szymoniak

From 2009-2011 documenting the massive bank fraud, creating a grass roots movement with blogs, and chat rooms, in addition to fighting their own foreclosure cases became a full time occupation for all three featured activists. The robo-signing for a time got some national attention. In 2011, CBS’s 60 minutes came to Lynn’s house to film a segment. On April 3,2011 60 minutes aired two segments; one the interview with Lynn and a second on children of foreclosed homes living in Orlando vans and motels. 60 minutes received a award for the story. For a brief time some banks called a moratorium on foreclosure activity. The three believed that criminal indictments were imminent. In the Obama administration with Eric Holder as AG, none of this would happen on a national level.

Michael searched Illinois public records and found the Obama satisfactions of mortgage on their condo signed in 2005 by Chase robo-signer Marshe Caine. Michael posted this on his blog and hits soured after a Dutch blog linked to it. The next day Michael found a second robo-signed Obama document. Michael wrote on his blog; “Feel free to call or email me to discuss this further, Mr. President.” Three weeks later Bank of America resumed foreclosures.

On Feb 9, 2012, state and federal regulators announced the National Mortgage Settlement with the five largest mortgage servicers: Bank of America, JP Morgan Chase, Citigroup, Wells Fargo, and GMAC. Victims of the fraud would receive $2,000. Noone at the bank’s personnel would be fired or go to jail. The only silver lining; Lynn was awarded $18 million for her whistle blower case. After expenses and legal fees, she netted $5.5 million. Foreclosures would move forward at even more accelerated rates with Florida’s “rocket-docket” executing summary decisions in just 20 seconds per case. Public records may never be free of all the fraudulent Recorded documents.

Crooked banks rely on isolation and shame. The Isolation renders the prospect of individual homeowners fighting big banks impossible; the shame makes no level of misconduct from Wall Street as critical as missing a mortgage payment. The foreclosure fighters created community spaces to disarm isolation and shame, giving struggling homeowners a voice and a chance. Without the foreclosure fraud movement there is no Occupy Wall Street; there is no Elizabeth Warren wind of the Democratic Party; this is no student debt movement, or low-wage worker movement, or movement to transfer money to credit unions and community banks. Lisa and Michael and Lynn, and all the bloggers and lawyers and activists who put their heart into this issue, raised public consciousness so that mega-banks have lost just a hint of their aura of invincibility.

For more on Obama’s administration see Scamming the President.

The First Cell; and the Human Costs of Pursuing Cancer to the Last, Azra Raza, 2019

Dr. Azra Raza and Dr. Harvey Priesler

This book is intended as a wake up call for all of us that may have assumed cancer research was making progress. The articulate Dr. Raza has spent her career helplessly watching patient after patient die with only fifty year old therapies available (slash, poison, burn), including her own husband Harvey, himself a specialist in the very cancer that killed him. The book combines introducing us to some of her special and unique patients with a description of the complexity of cancer that is impenetrable reading for us laymen, to a plea for rebooting the entire field of cancer research and treatment. It is best to present the very articulate argument for rebooting our approach in Dr. Raza’s own words.

Over the twelve-year period from 2002 to 2014, seventy-two new anti cancer drugs gained FDA approval; they prolonged survival by 2.1 months. Of eighty-six cancer therapies for solid tumors approved between 2006 and 2017, the median gain in overall survival was 2.45 months…A study published in the British Medical Journal showed that thirty-nine of sixty-eight cancer drugs approved by the European regulators between 2009 and 2013 showed no improvement in survival or quality of life over existing treatment, placebo, or in combination with other agents.

Identifying predictive markers that allow for individualizing therapy by matching drugs to patients remains the treasured yet elusive holy grail of oncology… More than 90 percent of trials ongoing around the county make almost zero attempt to save tumor samples for post hoc examination to identify predictive biomarkers…Who is pushing this short-term agenda driven by the singular goal of getting a drug approved with alacrity as long as it meets the bar of improving survival by mere weeks in a few patients?

A pioneering and revolutionary paper was published in 1976 by Peter Nowell. His clairvoyance about cancer being an evolving entity has been largely ignored. From “The Clonal Evolution of Tumor Cell Populations”:
Peter Nowell

Tumor cell populations are apparently more genetically unstable than normal cells, perhaps from activation of specific gene loci in the neoplasm, continued presence of carcinogen, or even nutritional deficiencies within the tumor. The acquired genetic instability and associated selection process, most readily recognized cytogenetically, results in advanced human malignancies being highly individual karyotypically and biologically. Hence, each patient’s cancer may require individual specific therapy, and even may be thwarted by emergence of a genetically variant subline resistant to the treatment. More research should be direct toward understanding and controlling the evolutionary process in tumors before it reached the late stage usually seen in clinical cancer.

…in 2009, Gina Kolata reported in her New York Times column the jaw-dropping statistics that despite the infusion of more than $100 billion into cancer research, death rates for cancer had dropped by only 5 percent between 1950 and 2005 when adjusted for size and age of the the population. The war on cancer was not going well.

A review of where the research funds go reveals the inherent biases perpetuated by the peer-review process as detailed by Clifton Leaf in his eye-opening book, The Truth in Small Doses: Why We’re losing the War on Cancer and How to Win It. Enormous sums of money from the government continue to fund the same institutions and universities over and over…The saddest part is that upon serious examination of what is published, 70 percent of the basic research is not reproducible and 95 percent of clinical trials are unmitigated disasters.

A recent study titled, “Death or Debt? National Estimates of Financial Toxicity in Persons with Newly-Diagnosed Cancer,” published in the October 2018 issue of the American Journal of Medicine, tabulated the chilling economic burden borne by patients with newly diagnosed cancer. Using the Health and Retirement Study Data, this longitudinal study identified 9.5 million estimated new cases of cancer between 1998 and 2012 in the United States. Two years from diagnosis, 42.5 percent of individuals had depleted their entire life’s assets, and 38.2 percent incurred longer-term insolvency, cancer costs being highest during treatment and in the final months of life. The most vulnerable groups were those with worsening cancer, older age, females, retired individuals, and those suffering from comorbidities like diabetes, hypertension, lung and heart diseases, belonging of a lower socioeconomic group, or on Medicaid.

The unfortunate reality is that not a single marker for response is examined in the majority of clinical trials being conducted even today. Why? Because this is how the system has evolved. The pharmaceutical industry sponsoring the trials is only interested in reaching a statistical end point to get their agent approved. The companies have usually invested almost a billion dollars already to bring an agent to the point of a phase 3 trial. It would add a staggering amount of money to their stretched budgets to perform such detailed biomarker analysis. I suggest saving all the money being squandered on testing the agents in pretherapy, preclinical models of cell lines, and mouse models and instead investing the resources in biomarker analysis. Some bold changes are needed at every level. To harness rapidly evolving fields like imaging, nanotechnology, proteomics, immunology, artificial intelligence, and bioinformatics, and focus them on serving the cause of cancer patient, we must insist on collaboration between government institutions (NCI, FDA, CDC, DOD), American Society of Clinical Oncology, American Society of Hematology, funding agencies, academia, philanthropy, and industry.

Contrast the putative scientific gold standard of a reproducible animal model with the known fact that every patient’s cancer is a unique disease, and within each patient, cancer cells that settle in different sites are unique. When a malignant cell divides in two, it can produce daughter cells with the same or radically different characteristics because during the process of DNA replication, fresh copying errors constantly occur. Even if two cancer cells have identical genetics, much like identical twins, their behavior can differ depending on genes expressed or silenced according to the demands of a thousand variables, such as the microenvironment where they land, the blood supply available to them, and the local reaction of immune cells. The resulting expansive variety of tumor cells that exist withing tumors are unique within unique sites of the body. Multiply this complexity further by adding the host’s immune response to each new clone and you get a confounding, perplexing, impenetrable situation in perpetual flux.

So what is the solution? The first step is to descend from our high horses and humbly admit that cancer is far too complex a problem to be solved with the simplistic preclinical testing platforms we have devised to develop therapies. Little has happened in the past fifty years, and little will happen in another fifty if we insist on the same old same old. The only way to deal with the cancer problem in the fastest, cheapest, and, above all, most universally applicable and compassionate way is to shift our focus away from exclusively developing treatments for end-stage disease, and concentrate on diagnosing cancer at its inception and developing the science to prevent its further expansion. From chasing after the last cell to identifying the footprints of the first.

The heyday of reductionism, looking for one culprit gene at a time and searching for the one magic bullet, is over. The era of big data, cloud computing, artificial intelligence, and wearable sensors has arrived. The study of cancer is evolving into a data-driven, quantitative science. Merging information obtained from liquid biopsies (RNA, DNA, proteomics, exosome studies, CTC), with histopathology, radiologic, and scanning techniques, aided by rapid machine learning, image reconstruction, intelligent software, and microfluidics can–and will–revolutionize the way we diagnose and prevent rather than treat cancer in the future. The ideal strategy will emerge from harnessing cutting-edge technology for a multidisciplinary systems biology approach through a consilience of scientists with expertise in molecular genetics, imaging, chemistry, physics, engineering, mathematics, and computer science.

Research is also ongoing in all these areas funded by the National Institute of Health, but the investment remains paltry compared to funding provided for studies conducted on cell lines and animal models. Through redirection of intellectual and financial resources from the same old grant proposals to grant incentives for early detection using actual human samples, and by posing exciting challenges to competitive scientists, progress will be accelerated dramatically. The piece that is missing from the equation is an admission of failure of current strategies and a willingness to take a 180-degree turn to start all over again.

Antonio Fojo of the NCI extrapolating the implications of one trial:

“In the lung cancer trial, overall survival improved by just 1.2 months on average. The cost of an extra 1.2 months of survival? About $80,000. If we allow a survival advantage of 1.2 months to be worth $80,000, and by extrapolation survival of one year to be valued at $800,000, we would need $440 billion annually–an amount nearly 100 times budget of the National Cancer Institute–to extend by one year the life of the 550,000 Americans who die of cancer annually. And no one would be cured.“

This is how complex cancer is. It is pure arrogance to think the problem can be solved by a few molecular biologists if they put their minds to it. Cancer is a perfidious, treacherous, evolving, shifting, moving target, far too impenetrable to be deconstructed systematically, far too dense to lend itself in all its plurality to recapitulation in lab dishes or animals.

Homewreckers; How a Gang of Wall Street Kingpins, Hedge Fund Magnates, Crooked Banks, and Vulture Capitalists Suckered Millions Out of Their Homes and Demolished the American Dream, Aaron Glantz, 2019

Steve Mnuchin, Poster Child of the Homewreckers

10 million Americans lost their homes as a result of the Financial Crisis of 2007-2008. By 2010 more than 10% of Americans were unemployed. The Financial Crisis left 45 more million Americans below the poverty line. This book focuses on a handful of predators whose actions would not have been possible without the full cooperation and assistance of the Federal government and the Obama administration. Most of those houses became rentals owned by a handful of huge LLC limited partnerships. The new owners of all these houses are holding them waiting for real estate prices to recover sufficiently to satisfy their greedy requirements to profit from a disaster. These houses are not available to individual home buyers which is artificially driving the prices of homes higher. Charts (not shown in this book) illustrate the changes.

The financial crisis of 2007-2008 was the direct result of a Federal government failure of regulation of the banking industry and the confusion of FDIC banking with Wall Street style speculation. Three critical changes were required to assure it didn’t happen again: 1) Reestablish the Glass-Steagall Act to again separate FDIC regulated banking from Wall Street Speculation. This act was passed in 1933 and repealed in 1999 under Clinton. 2) Severely Regulate or outlaw financial derivatives, created by the Commodity Futures Modernization Act of 2000 signed into law by Clinton. 3) Break up the big banks and separate their FDIC insured portions from their Wall Street operations. Since all banks were insolvent by 2008, the FDIC had full authority to take over all banks, remove all management, and do whatever was necessary to restore sound banking practice. See also Sheila Bair’s book. The Obama administration did none of these things. These three changes were necessary and possible but re regulation would have required even more changes before banking could return to its rightful boring self. The blame for what happened to those 10 million American families who lost their homes couldn’t be clearer. Clinton broke banking and Obama didn’t fix it even though he could have. Now this book;

Through all of this, the administration of Barack Obama, like George W. Bush’s before him, did very little to stem the tide of foreclosures. …Congress passed a massive bank bailout that did little to help individual borrowers. The terms of the deals the federal government brokered afterward, like the sale of IndyMac to Steve Mnuchin’s group of hedge fund managers, encouraged foreclosures.
Then, as foreclosures spiraled out of control and the number of vacant and foreclosed homes mounted, the federal government did almost nothing to prevent communities from collapsing entirely…The Neighborhood Stabilization Program, extended grants to hard-hit communities to provide “emergency assistance to stabilize communities with high rates of abandoned and foreclosed homes.” …A typical NSP grant went to Riverside, California, where fourteen thousand homes were lost to foreclosure… The city…received just $6.5 million–barely enough to buy fifty homes (not even 1 percent of Riverside’s foreclosures).

The Barracks

The Depression era HOLC, by contrast, acquired nearly two hundred thousand properties through foreclosure. 90 percent of those home were sold to families. The Obama Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, simply bundled foreclosed houses into blocks sized between 500 and 10,000 homes at a time to be sold to the Federally subsidized (bailed out) banks and eventually to vulture LLCs. The banks had no intention of finding individual buyers and issuing mortgages so all these homes so they unloaded then in bulk to the vulture LLCs. No attempt was made to determine if the buyers were qualified to manage these properties. There were no promises by buyers to maintain the properties, keep rents affordable, or engage with the community. The home were simply dumped by the government and the banks. And house prices kept dropping through 2012. Las Vegas, Phoenix, Spokane, Riverside and San Bernadino County saw prices drop more than 50 percent. By late 2011 the fire sale was on. The book features Tom Barrack whose source of money to make the home purchases is murky but involves the Cayman Islands and strong suspicions of money laundering and tax evasion. It all ends with Delaware (Biden) LLCs and ultimately to Barrack’s parent company, Colony Capital LLC. Colony eventually amassed an empire of 31,000 houses, rivaling the size of Blackstone’s house empire. Chase lent Colony $1.1 Billion for 7,563 homes. This giant bundle created a derivative that was carved up into tranches and sold on the bond market. But the two LLC predatory vulture groups featured in this book taken together total about 60,000 houses which represent about .6 percent of the 10 million houses lost. Where are the rest of those 10 million houses?

The book outlines the takeover of two failed banks, BankUnited of Florida, and IndyMac of California. Both deals were very costly for the government and resulted in private equity LLC ownership by wealth seeking individuals without a shred of empathy for who was hurt by their actions. The preditors see themselves as simply taking advantage of market opportunities presented by the federal government.

Attention is also given to the unloading of OneWest bank to a who’s who of investors for $1.6 billion. The deal left the government on the hook for any losses incurred in dumping the bank’s mortgages. When the new owners stripped and sold the bank, their return was $5 billion tripling their investment in less than 5 years. The investors included George Soros, John Thain, John Paulson, J.C. Flowers, and others.

Sandy Jolley Reverse Mortgage Whistle blower

Drawing special attention here is the reverse mortgage for the elderly, pioneered during the Reagan years but kept small by government rules. By 2006, the cap was raised to 275,000. Even the government was selling them and packaging its own fully guaranteed reverse mortgages into mortgage backed securities, sold and sliced by the same speculators that brought down the whole system. Most troubling, subprime specialists like IndyMac started selling reverse mortgages using “boiler room” sales tactics and preying on seniors lacking the mental capacity to understand the contracts they signed. Glantz features one deal involving an elderley wife with Alzheimer’s and a dying husband unable to understand the reverse mortgage he was agreeing to. When the husband died, the daughter Sandy Jolley moved back home to care for her mother and fight off foreclosure. In any system with a functioning justice system, the reverse mortgage contracts would have been vacated, the home restored, and damages assessed. None of this happened but Jolley kept fighting, assembling a large group of similarly displaced homeowners and becoming a federal whistle blower. Twelve years after her parent’s reverse mortgage was signed, the case was settled in 2017 with a typical slap on the wrist award and no admission of wrongdoing. Sandy Jolley’s whistle blower’s reward was $978,000.

Too big to fail ($50 billion plus in assets enshrined under Dodd-Frank now raised to $250 billion) Chase bank acquired Bear Sterns and Washington Mutual Bank in 2008. Wells Fargo acquired Wachovia Bank in 2008. Bank of America acquired Merrill Lynch in 2008. All banks accelerated their foreclosure and bundled them for sale to vulture capital LLCs as the easiest way to get the houses off their books, and the Obama government was guaranteeing any losses incurred. All banks greatly decreased their mortgage business and offered mortgages only to customers with high income and impeccable credit. From 2014 to 2016 Chase issued six thousand mortgages under the FHA program (usually used by first time buyers). During this same period Chase loaned Tom Barrack’s Colony $3.3 billion as it created six mortgage backed securities covering 23,000 homes. For first time home buyers an entire generation has had no reasonably priced starter homes and no way to buy the few that were out there. Yet the Federal Reserve held interest rates at near zero throughout the period. Practically, this has meant FDIC deposits are practically free for banks and cheap money was available for speculation and vulture purposes.
The Vulture LLCs that acquired all these houses, bundled them into large groups and securitized them using the same vehicles journalists were calling weapons of mass destruction in 2008. The bundles were diced into trenches to receive different ratings by the same agencies like Moodies who contributed to the 2008 collapse. Typically 80 percent of the bundles received AAA ratings. Glantz researched a tiny Los Angeles Home which listed a mysterious LLC as owner and a lien for $500 million (later refinanced for $900 million).

When housing prices reach a suitably high level, no doubt the LLCs will start selling their huge collections of houses but for the time being they can continue to collect ever increasing rents while spending a minimum on maintenance. Expect these houses to be in awful shape when they eventually reenter the housing market as single family homes.

An article in RCLCO real estate advisors in 2016 found that the seven largest LLCs owned and rented out a total of 170,000 single family houses. A chart in this article shows that single family rental units now comprise 35 percent of total rentals. If there are 43 million renters, then 15 million would be renting single family units. The 10 million foreclosed homes must represent a very sizable portion of these rentals. The article puts the increase in occupied single family rentals during the period 2005-2014 at 3.8 million (probably under estimated) while the increase in single family ownership increased by just a tiny 482,000. It appears the government does little to actually track statistically what happened to foreclosed houses or to track what the deals assuring that banks or LLCs wouldn’t lose money from foreclosures actually cost the government. Mother Jones in 2009 put the financial crisis federal bailout cost at a staggering $14.4 trillion. At present, we seem to have no accurate way to determine what happened to the bulk of those 10 million foreclosed houses. The $14 trillion figure also appears in Ron Suskind’s 2011 Book.

Many of the vultures moved to the Trump administration and the administration’s big tax reduction giveaway showered particular largess on corporations and LLCs.

Kochland; The Secret History of Koch Industries and Corporate Power in America, Christopher Leonard, 2019

The Fred C. Koch Family
Fred C. Koch died Nov 17, 1967 Mary R. Koch died December 21, 1990 Charles Koch died Aug 23,2019.

Charles Koch

In a 1974 speech (Charles) Koch attacked the entire narrative behind the New Deal (based on Keynesian Economics), claiming that Roosevelt’s legislation was not, in fact, in response to a lack of federal-level regulation. Koch said that when the New Deal was passed, the economy was already “polluted by massive governmental manipulations of the money supply.”…The business community needed to wage a long-term campaign that would change the way Americans thought about the markets and the role of government (Hayek, Mises, Friedman). Koch said that the campaign should have four elements; 1) Education; 2) Media outreach; 3) Litigation; and 4) Political Influence.

David and Charles Koch

Based on his long term vision, Koch founded the Cato Institute, contributed to the Heritage Foundation and other right wing think tanks; rebuilt the law and economics departments of George Mason University near Washington in the image of the Chicago school, and created the Mercatus Center another free market think tank. This center offered free seminars to more than 4,000 federal judges from all 50 states. Koch was central to the creation of ALEC, the American Legislative Exchange Council, which writes right wing laws and pressures state legislatures to pass them. Koch is behind the Americans for Prosperity lobby that was central to defeat of the Obama era cap and trade legislation in 2010, the only serious effort by congress to limit carbon emissions. In the 2010 midterm election, the Republicans gained control of the house and senate, in large part due to the emergence of tea party candidates and Koch’s Americans for Prosperity efforts.

David and Charles Koch

Koch Industries was to benefit enormously from Federal Action, particularly from the Clean Air Act of 1970. Refineries already operating in 1970 (Koch had two) were “grandfathered” in to the era of clean air regulation. The unintended consequence of this legislation was to halt the construction of new refineries, assuring that no new competition would enter the business. Existing refinery owners immediately started gaming the act; for example companies could be exempted if curbing pollution would be unreasonably expensive. This assured that new technologies would never be implemented in the existing refineries. The EPA was to enforce the New Source Review program which prohibited new refineries from entering the game. The last refinery built in the US was completed in 1977. The EPA needed to rely on state regulators to enforce the New Source Review and these state regulators were simply outgunned and overwhelmed by the giant refinery corporations. Koch’s two refineries were able to increase their capacity more than ten fold and were able to introduce new outputs and products at will. Much of this expansion was achieved without first obtaining permits that would have limited pollution from the plants. Koch refused to invest in suggested new pollution control measures.

Pine Bend Refinery Rosemount, Minnesota

In mid 1996 a sour water stripper that limits the amount of ammonia that was pumped into the wastewater treatment plant ceased operating properly. Repairing the stripper would require shutting down the refiner which Koch refused to do. Instead Koch flushed the ammonia rich waste into large detention pools on the far end of the refinery. When these filled they began spraying the contaminated water onto the surrounding wetlands and fields. In January 1997, Heather Faragher, The only employee trained in waste water management at Koch’s refinery but without the authority make changes at the refinery, told the Minnesota Pollution Control Agency, which was responsible for enforcing federal EPA standards, everything that Koch had been doing at the refinery. in 1998 the MPCA fined Koch $6.9 million for pollution. Federal criminal charges in 1999 resulted in a criminal fine of $6 million, $2 million to the County Park system. Koch also agreed to pay the EPA a $3.5 million fine. Similar events happened at Koch’s Texas refinery, causing Charles Koch to initiate a new program to assure that Koch was in compliance with all state and federal regulations (100% compliance, 100% of the time). He hired a group of regulatory compliance attorneys locating them at company headquarters in Wichita Kansas with the authority to force all company divisions to comply with regulations and with the authority to shut facilities down if necessary. He was driven to this measure to avoid future big fines, to protect Koch’s now tarnished reputation, and to prevent state and federal officials from inspecting and investigating his operations. Privacy and secrecy are Charles Koch’s highest priorities.

A big disappointment in this 600 page book is the failure to address the extent to which Koch benefits financially from direct government subsidies. The topic receives one short mention with no figures of the scale of corporate welfare or crony capitalism enjoyed by Koch. Charles Koch often speaks about his opposition to government subsidies but there is no evidence in this book that Koch has ever turned down a single subsidy. The book does mention that fracking was developed largely due to government subsidies and Koch indirectly benefited as fracking increased the production of oil and natural gas so that the US is now energy independent. One would dearly love to know the extent to which Koch’s remarkable success was due to direct government subsidies.

The fossil fuel industry has always depended on trading, the buying of crude oil, natural gas, etc. and on selling refined or manufactured products. Historically this trade has not been done using established commodity markets. Koch established a separate trading division located in Houston. Charles Koch insisted that his traders have the best available information including the best weather forecasts. Koch invested heavily in computers and developed elaborate models of the relevant markets. Central to the success of Koch trading was the availability of inside industry information which can be used freely and legally in Koch’s markets. Market volatility is what drives profits in trading and Koch’s traders became expert in exploiting volatility. In the cold winter of 2000, one trader placed large bets on the volatility of natural gas prices and earned Koch $75 million. The trader’s base salary was $60,000 and he earned $4 million in a bonus. Koch keeps a close leash on its traders and knows on a day to day basis company exposure to its trader’s bets. Unlike banks, wall street firms and insurance companies, Koch has never experienced unexpected losses from a rogue trader. In 2000, as Clinton was leaving office, his administration passed the Commodity Futures Modernization Act, leaving the market for derivatives unregulated and in the dark. Thus Clinton set the stage for the 2008 subprime mortgage crisis. This book explores how fossil fuel industry traders quickly learned and adapted to this new age of unregulated financialization. We think of Wall Street, the banks, and the insurance companies, but the fossil fuel industry reaped enormous profits from exotic and dark trades.

How Koch Became an Oil Speculator Powerhouse

Companies like Enron and Koch all engaged in illegal trading activity, best exemplified by California’s electric utility deregulation fiasco that started in 2000. ALEC was instrumental in getting the disastrous neoliberal bill passed in 1998. The New Deal Era public utilities system for electrical power was replaced by a radical new system. The existing utilities retained their geographic monopolies with set maximum electric rates, but they were stripped of their generators. Power generation was privatized and the utilities were required to buy power on a daily basis. An emergency state agency was created to buy electricity when the markets failed. A massive daily trading system emerged. The new system was quickly overrun by unusually hot weather. The scale of Koch’s illegal trading activities in California electric power were dwarfed by the scale of Enron and other huge energy companies and largely escaped being tarnished further by its illegal trading. Charles Koch’s 100% compliance order somehow did not include the trading division. Enron’s fraud and illegal activities forced it out of business in 2007.

California Electricity Crisis of 2000-2001

Charles Koch was a keen student of the latest management theories. Early in his career, he adopted the teaching of Edward Deming who revolutionized Japanese manufacturing practices after WWII. His typical management hire was a young graduate of a midwestern university often with an engineering degree and often someone raised on a farm with midwestern work habits. Charles Koch believed he could educate the young graduates to his philosophy and new hires spent hours in seminars and training. The new hire would then be assigned a job and his performance closely watched. If he was successful, he would then be reassigned to another position that might be totally alien to the experience and training of the employee. They might find themselves moved from a refinery to a trading desk where a whole new set of skills is required. If successful there, the employee might be moved to another position, maybe in fertilizer or pipelines or most anything. If the employee does not succeed in their new assignment they are terminated from Koch. Its a bit like the father that throws his child in the deep water to see if they sink or swim. In spite of this style of management, employees at Koch, if they succeed, seem extremely loyal to Charles Koch and enjoy long careers. In 1969, two years after Charles Koch became CEO, Laurence J. Peter published a book describing what became known as the Peter Principal. Organizations continue to promote their workers until they reach a point where they are no longer able to successfully perform the functions required by their position. This book makes no mention of the Peter Principal but Charles Koch, whether he knew the principal or not, seemed to embrace it and used advancement within Koch to test and challenge his employees until they break at which point they are removed.

In 1987, an investigative report published in the Arizona Republic charged that the oil companies were stealing oil from native American reservation oil fields. Several US Senators got interested and the largest oil companies told them to look at Koch. The Senators got an FBI agent assigned to investigate and he started observing Koch trucks and gaugers as they pumped oil from the field tanks to their trucks, measuring the amount of oil taken using gauge sticks inserted into the field tanks before and after the pumping. The drivers would record the amount of oil taken and leave a ticket at the site. This ticket determined what Koch owed for the oil taken. When the truck was emptied at its destination an accurate measure of the oil taken could be obtained. The work of the guagers is only approximate and Koch trained the drivers never to be short, i.e. never to have the oil actually delivered be less then the ticket left at the site. To be short meant an immediate termination. The drivers were never instructed to steal oil, they were instructed never to deliver less oil than Koch was obligated to pay for. The obvious and only was to assure that they were not short was to always be long. The Senate passed the investigation to the Justice Department which made Koch hand over its records for three years. In each of these years Koch received an average of 400,000 Barrels of oil per year worth about $10 million that they didn’t pay for. The Justice Dept. didn’t want to charge individual drivers but thought it would be difficult to charge the top executives for the theft. The case did go to trial and was settled for an undisclosed amount. There was bad publicity for Koch but no lasting consequence. This is just another example of Koch pushing beyond the limits of legal and normally understood ethical behavior.

Additional Details on Oil Theft from Christopher Leonard

Two sections of the book deal with Koch treatment of unions, first the union at the Minnesota refinery, and second the Georgia Pacific division unions. The stories are different but similar. Koch refuses to negotiate, changes the work rules, slowly squeezes wages, moves union pensions to 401K s and interferes with health care programs. It is pretty miserable to work a union job at Koch but the alternatives are worse. Charles Koch’s toughness is illustrated by his reaction to a union strike at the Pine Bend refinery in Minnesota, which in 1970 was still a strong union state. Charles Koch hired a Texas oilman whose hero was George Patton to run the refinery. When the workers voted to go on strike, he hired enough non union workers to keep the refinery running and flew them on site by helicopter. The skeletal crew lived on site with their boss. When the teamsters refused to cross the picket line, Koch negotiated a deal whereby Koch drivers would replace the teamsters for the drive through the picket line, load the truck, and return it to the teamster driver. When the strike extended, Koch built a separate road entrance bypassing the picket line and convinced the teamsters to drive their trucks through the new entrance. For specialized maintenance requiring workers from other unions, Koch eventually convinced them to make repairs in spite of the strike. In this way the refinery union was slowly isolated and weakened. They eventually settled on Koch’s original terms, but after losing more than a year of wages.

Georgia Pacific’s plants and warehouses were subjected to modern software systems designed to increase worker productivity. This increased productivity was accompanied by a corresponding increase in injuries, some of them fatal. These injuries would result in OSHA investigations and modest fines, but any government interventions were anathema in Koch’s culture. While trying their best to prevent injuries, the numbers stayed stubbornly high. Stressed employees will make mistakes and the only solution is to decrease the pressure. On the contrary Koch would fire employees that were considered too cautious and careful because that meant they worked slower. Had the OSHA fines been in the millions, I have no doubt Koch would have figured things out to reduce or eliminate injuries.

Koch created a Value Creation Group but this got subdivided and one of the subdivisions was Koch Agriculture. Koch had virtually no experience in agribusiness volatility. In 1997 Koch saw an opportunity to buy century old Purina Mills headquartered in nearby St. Louis. The problem with private equity acquisitions is that is drew Koch into businesses where it had no expertise. They agreed to pay $670 million for a company worth $109 million. Koch borrowed $570 million and put up $100 million of its own money for the purchase. Koch tried to impose the Koch culture on a company with its own very different and well established culture with the result that key employees left the company in droves. Due diligence failed to uncover massive contracts between Purina and hog feedlots which required Purina to produce piglets that the feedlots were under contract to buy and grow using Purina food. When the hog market imploded, the feedlots defaulted on their contracts (that Koch didn’t know existed) and Purina was forced into bankruptcy. Purina and the creditors lawyers believed the Koch corporate veil that was supposed to protect the holding company, was flawed, and Koch was forced to settle by putting up another $60 million in cash to get rid of Purina. Charles Koch fired everyone associated with this disaster and closed the entire acquisitions division.

Koch began a complete reorganization of the business in 1999. Over the years Koch had acquired a wide hodgepodge of unrelated businesses. Koch unloaded many of its pipelines, sold a small chemical company and other odds and ends. At the core of the new structure, Koch Petroleum was rename Flint Hills Resources. Others were simplified and reorganized into Koch Minerals, Koch Supply & Trading, and Koch Chemical Technology Group. New leaders were appointed to run these consolidated businesses. Koch Industries became little more than a holding company protected by a legally impenetrable veil to protect it from problems in its divisions. Charles Koch also finally put to rest the 20 year long legal feud with brother Bill and could totally focus on growing Koch. Koch’s spectacular growth after 2000 was the result of operating one of the largest private equity operations in the country. Private equity finds distressed public companies that can be purchased cheap, converted from publicly traded or coop into privately held companies. Charles Koch from the beginning wanted his company to remain private, to operate in secret, and to forego dividends in favor of reinvesting profits to grow the business. He was proving that he could learn fast from past mistakes, correct them mercilessly and move on. He initiated his “10,000 percent compliance” program discussed earlier at this time to keep the government and regulators off his back. Clinton ushered in the age of financialization in 2000 and George W Bush from Texas and Dick Cheney entered the White House. Koch was set for a decade of spectacular growth.

In 2003, Farmland a depression era coop headquartered in Kansas City wanted to sell a group of liquid nitrogen fertilizer plants all located close to their midwest farm customers. The most expensive component, at 80% in the production of liquid nitrogen is natural gas and domestic natural gas was very expensive. Lower cost imported fertilizer had undermined Farmland’s market. Koch had inside information that fracking was about create a vast increase in the supply of natural gas and prices would plummet. This purchase would mean a significant reentry into agribusiness and the acquisition team didn’t know if Charles Koch was ready to forget the Purina experience but he fully backed acquisition. Natural gas prices plunged and the fertilizer plants became immediately profitable.

Also in 2003 Georgia Pacific approached Koch to see if they were interested in purchasing several struggling pulp mills in Georgia and Washington – Oregon. The mills came with several unionized warehouses for the mill’s products. When the Koch team visited Georgia Pacific’s Atlanta headquarters (51 stories tall) they saw a bloated, hyper luxurious operation. At the same time DuPont came on the market. Overall, Koch was looking at corporate takeovers worth more than $25 billion. Koch acquired both DuPont’s Invista for $4.4 billion and Georgia Pacific for $21 billion. Charles Koch had always disliked borrowing, but borrowing is the foundation of the private equity business. Find an under performing company with lots of cash flow and buy it with borrowed money. Make sure the holding company is protected from the creditors, turn the companies around and use the resulting cash flows to repay the loans. Koch was now willing to borrow seemingly unlimited money to fuel its acquisition appetites. Both DuPont and Georgia Pacific were heavily dependent on the building of new housing which was a hot market right up to the sub prime mortgage crash of 2008. Charles Koch did not panic but scaled back operations at all affected acquisitions and waited to weather the downturn storm.

June 29, 2012 (Reuters) – DuPont Co has settled a $745 million lawsuit brought by Koch Industries Inc’s Invista unit over safety and environmental problems at plants once owned by the large chemical company.

How The Kochs Are Fracking America

The crash of 2008 made fracking economically viable and the supply of natural gas exploded. Then drillers in North Dakota applied fracking to crude oil successfully for the first time. There was an area called the Eagle Ford Shale region near Corpus Christi where Koch’s second light crude refinery was located. Koch’s planners decided on a plan to build pipelines between Eagle Ford and Corpus Christi and to buy and build a ship slip to export any excess crude oil. Charles Koch embraced the plan immediately and only wanted to assure the plans were big enough. Oil from fracking start to flow in 2010 when by the end of the year 139,000 barrels a day were being produced. By 2014 production hit 1.68 million barrels a day roughly 20% of all crude oil produced in the US that year. Because the 1970 Clean Air Act effectively prevented the building of new refineries, Koch’s Corpus Christi refinery enjoyed enormous profits from the newly available light crude.

Koch Brothers War on Renewable Energy

Through this same period the Kochs focused their political attention on fighting renewal energy initiatives at the state level (ALEC), fighting any carbon restrictions at the state and federal level, and rolling back CAFE auto efficiency standards. Charles Koch and his company became much more visible as a result of these massive anti environmental efforts and he started experiencing demonstrations at his gatherings and now requires constant security protection. Gone were the days when Charles could drive his modest old station wagon from the family home to Koch headquarters.