Salutory Sabotage and the Job Creators
July 22, 2013 § 2 Comments
There is a great story on the front page of yesterday’s Times that perfectly describes the absurdity of the fairy tale that John Boehner and his GOP cohorts keep repeating: That we must free corporate businesses from regulation and any tax increase because they are the Job Creators. The Times story, a marvelous piece of investigative reporting, describes how Goldman Sachs and some other Wall Street privateers are, and have been, skimming millions of dollars worth of profits from the marketing of aluminum; profits that add to the cost of every can of soda or beer and every new car purchased in America. Here is a link: Aluminum
Here’s how they do it: They own a complex of warehouses in the Detroit area. Millions of tons of aluminum are stored in those warehouses. Rent is charged by the day. The London Metal Exchange, the agency that regulates the marketing of commodity metals, sets minimum limits on the amount of aluminum that must be moved out of a warehouse each day, presumably to prevent the kind of scheme described in the story. To comply with this rule, and to collect more rent, employees of the warehouse owners, each day, move many tons of aluminum from one of their warehouses to another.
The end result is to delay by many months the shipment of aluminum to ultimate consumers: mostly soda and beer companies and car manufacturers . During those delays, Goldman Sachs and their fellow pirates, collect millions of dollars of rent and those costs are passed along as increases in the world price of aluminum and the cost of every can of beer and soda and every car purchased on America.
According to sources cited by the reporter who wrote this story, this aluminum scheme is working so gloriously that there is another, even more ambitious racket being planned: A proposal that the Feds allow some Wall Street bankers to control 80% of the copper available for sale on the commodity market.
The ruthless greed of these guys makes the Mob’s plan to control Las Vegas a few decades ago look like amateur hour.
Oh, one more thing: The London Metal Exchange; the agency in charge of regulating these activities: It is funded by a percentage of fees paid to the marketers, like the warehouse owners. So, the more money the warehouse owners make, the fatter is the budget for the LME. Neat!
Thorstein Veblen described this phenomenon almost ninety years ago in a book, “Absentee Ownership and Business Enterprise: The Case of America”. After describing how industrial managers, who were labeled by Veblen as “Captains of Industry”, evolved from managing actual production of goods to financiers, Veblen wrote, “And when the Captain of Industry then made the passage from industrial adventurer to corporation financier it became the ordinary care of his office as Captain to keep a restraining hand on employment and output, and so administer a salutary running margin of sabotage on production, at the cost of the underlying population.” (emphasis added)
These are the “job creators” we are supposed to protect from aggravation lest they stop creating jobs. And these are the “job creators” we have to bail out when their greed and recklessness spins them into the ditch and threatens to capsize our economy.
On a completely different note: I was watching the interview of Ted Cruz this morning on the This Week show. Is it just me or does he really favor Joe McCarthy? I swear he looks like him. Maybe there is some genetic linkage? No, can’t be.