Jeremy Grantham’s latest letter isn’t too market-oriented, which makes it perfect for some weekend reading.
The gist: Dwight D. Eisenhower warned us about the military-industrial complex, and the dangers of misplaced power.
Eisenhower was right, says Grantham, except it’s not the military industry that exerts too much power on Government. It’s the entire corporate apparatus.
The bottom line, though, is that the military, by virtue of unexpected circumstance, is not the problem foreseen by Ike, and thank heavens for that. Unfortunately, the political-economic power problem has mutated away from the military, although it has left important vestiges there, toward a broader problem: the undue inﬂuence of corporate America on the government, and hence the laws, taxes, and social policies of the country. This has occurred to such a degree that there seems little real independence in Congress, with most Congressmen answering ﬁ rst to the desire to be reelected and the consequent need to obtain funding from, shall we say, sponsors, and the need to avoid making powerful enemies. “Well, Senator, we have $10 million here, which can either be used to point out how wise and desirable you are for your sensible vote on the upcoming energy bill or, alternately, can be used to point out how un- American and anti-job you are. Your call.”
He then calls out specific industries. First is energy (Grantham believes in peak oil):
The ﬁnancial resources of the carbon-based energy companies are particularly terrifying, and their effective management of propaganda goes back decades. They established and funded “independent” think tanks and even non-proﬁt organisations that have mysteriously always come out in favour of policies favourable to maintaining or increasing the proﬁts of their ﬁ nancial supporters.
The campaign was well-organised and has been terrifyingly effective. And the results speak for themselves: which other developed country has so little gas tax? Not one. And better yet, which other country now accepts the myth that good red-blooded Americans will never stand for such a tax? That is the real art. It has created an environment in which we cannot aspire to the social responsibility – and a higher gas tax is simply that – of, say, the Italians (the most agreeable people on the planet, in my opinion, but not noted for making tough political decisions). Which other developed country has had no improvement in fuel efﬁciency because it has reinvested the considerable technological advances in heavier SUVs, with no real need for most other than the nurturing of their macho instincts? Not one.
And then of course the financial industry:
The ﬁnancial industry, with its incestuous relationships with government agencies, runs a close second to the energy industry. In the last 10 years or so, their machine, led by the famously failed economic consultant Alan Greenspan – one of the few businessmen ever to be laughed out of business – seemed perhaps the most effective. It lacks, though, the multi-decadal attitude-changing propaganda of the oil industry.
Still, in ﬁnance they had the “regulators,” deregulating up a storm, to the enormous proﬁt of their industry. Even with the biggest-ever ﬁnancial ﬁasco, entirely brought on by the collective incompetence they produced (“they” being the ﬁ nancial regulators and the ﬁnancial industry leaders working together in some strange, would-be symbiotic relationship), reform is still difﬁ cult. Even with everyone hating them, the ﬁ nancial industry comes out smelling like a rose with less competition, proﬁ ts higher than ever, and not just too big to fail, but bigger still.
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