The Face of Capitalism (Part Two)

(This is the second segment in a three part series. The first segment traced the economic system of capitalism to its birth during the administration of President George Washington and through the winding course of US history.)

The 2012 Republican presidential nominee, Mitt Romney, projects the face of capitalism. As such, his face has become a lightning rod. It's not personal. It's strictly business...

What is it that ordinary citizens rather like about Mitt Romney’s face, the smiling face of capitalism? What is it that we do not like about his face, when it frowns, or the smile seems more unfriendly, or contrived? It depends on how we value certain matters of importance, how we set and follow our priorities.

Based on ample historical precedent, the sometimes questionable business practices behind the face of capitalism may be assumed. But will that same face still seem so very desirable behind a mahogany desk as the chief executive officer of the land?

The US brand of capitalism is particularly unique, the individual path to success extraordinarily difficult to navigate. Although America is a land of opportunity, there is masked peril seemingly behind every rock. One must be a maestro on several dimensional planes. It is not enough merely to master a particular business niche or technological innovation. History is replete with examples of brilliant inventors who were business failures. More is required. One must adopt the changing form of a chameleon: “Who do you want me to be?”

Today the face of capitalism uses a variety of economic tools at its disposal. First and foremost, the face takes advantage of a system where there is one set of rules for the moneyed class, and another set of rules for those who are not moneyed. With the playing field tilted, fairness and equal protection, the kind the constitution is supposed to guarantee, are put into serious question. Is that what Thomas Jefferson seemed to be complaining about way back when?

Financial gain is privatized, while loss is socialized.  Reward is doled out to individuals privately.  But risk is spread out socially among the masses. The corruptive influence of money naturally extends to its influence over lawmakers.

Let’s return to the example of candidate Romney. The goal of his successful company was to buy stakes in undervalued companies and then in his own words “harvest them at a significant profit” years later. American jobs were eliminated en masse and outsourced to foreign shores.

Certainly this is legal – and beneficial. And it hardly breaks new ground. The idea that a country should outsource a particular service or commodity to another country which does the job cheaper and better traces to Scottish economist, Adam Smith, and his iconic book, The Wealth of Nations, published in 1776. This is how business efficiencies are created, and out-of-whack balances restored.

The face of capitalism takes rightful advantage of the law of contracts, the US legal system and its global military strength, to earn individual profit and then protect it from plundering. But then the face uses the US tax code which has been favorably tweaked by the unnatural alliance (of politics and corporations to enthrone privilege) to shelter its fully ingested meal from taxation.

Some is placed in Swiss bank accounts, some in places like the Cayman Islands, neither within the reach of American law. Through use of generation skipping trusts, the face avoids gift and estate taxation altogether as it passes the money safely down through the generations, controlling wealth from beyond the grave. The digestion process is complete. With a full belly, the face can now settle in for a good long nap on the couch.

The face of capitalism recently released its 2011 tax return, which reflected $20 million in “unearned income on investments” with a taxable rate of about 14%. This is a lower effective rate than an ordinary citizen earning a pedestrian salary of $50,000 per year. Does the face pay a fair share? Or is it just effectively writing off 47% of ordinary Americans as dependents?  Theodore Roosevelt, a Republican in another time, would have recognized a textbook case in successful dishonesty and undertaken appropriate remedial measures.  But T.R. no longer commands Republicans.

Since at least the time of President Reagan, the face has argued that lower taxes on high individual wage earners is “fair” as a driver of additional investment and job creation. But the facts as revealed in the monthly employment numbers consistently fail to support the argument. The one important factor which these so called pro-business policies do bear out decisively is a growing disparity in wealth between the rich and poor. Society’s unrest naturally follows.

(The third and final segment ventures from the shared success of Henry Ford with his assembly line worker to the dark side of outsourcing and the Walmart model of individual economic dependency for displaced American labor.)

-Michael D'Angelo