The Potential Problem That We Are Facing With Capitalism

[Luckyone]

In listening today to Warren asking a question of Yellen, it made me aware of a big problem the U.S. is facing today. A problem that Capitalism has created and that put us all at huge economic risk. Warren stated that Blackrock manages $9 trillion dollars in their fund and that $9 trillion dollars is more that the entire GDP of any nation other than China and the U.S. This does mean the if Blackrock for any fails for any reason, our economy will fail as well. By the same token, it also means that Blackrock itself can literally set the rules for what is done in the U.S. states. Here is an article I found that explains this a bit better.


Three Investment Banks Control More Wealth Than GDP of China – and Threaten Our Existence
January 22, 2020


It’s the inevitable product of extreme parasitical capitalism which has created activist billionaires who manipulate elections and concentrated ownership of most major corporations into massive investment firms.

The immense amounts of capital needed for the industrial and digital revolutions created unparalleled power for the big banks and financial institutions. They now own dominant positions in the industrial-military complex, fossil fuels, the media, big tech and everything else that’s important.

Huge financial services institutions have emerged as the goliaths of the sector. Sometimes called asset managers or money managers, they invest money on behalf of institutional clients like governments, pension funds, sovereign wealth funds, endowments, and very wealthy individuals.

Blackrock and Vanguard with other smaller money management firms, control 90% of the S&P 500 public companies, including fossil fuel companies, arms manufacturers and major U.S. media outlets that own ‘mainstream’ news.



When Warren asked Yellen what they would do to control the power of these companies, Yellen had no answer other than"we will look into it".

Bottom line is that when all the money power is in the hands of one (or a couple) of firms, they literally can call the shots on what it to happen to all of us. That is the problem with Capitalism at its height. Money is in the hands of a few and if they fall, we all fall and if they decide "this or that" needs to be done, there is no one that can stop them.

Do you feel comfortable being in this kind of a situation?

 

[soylentgreen]

Allow me to be slightly pedantic about this. What you are describing is not a crisis with capitalism.

Corporations of this magnitude are an example of a branch of capitalist philosophy called laissez faire capitalism.

Capitalism is a philosophy first brought up by adam smith in the 18 century. It was based on principals that effected local economies. The idea of world spanning corporates was non existent at the time.

I would also like to point out that the word capitalism was first introduced by karl marx in his book das kapital.

Laissez faire philosophy is a pyramid scheme type society. Only works if you are at the top.

 

[Luckyone]

Allow me to be slightly pedantic about this. What you are describing is not a crisis with capitalism.

Corporations of this magnitude are an example of a branch of capitalist philosophy called laissez faire capitalism.

Capitalism is a philosophy first brought up by adam smith in the 18 century. It was based on principals that effected local economies. The idea of world spanning corporates was non existent at the time.

I would also like to point out that the word capitalism was first introduced by karl marx in his book das kapital.

Laissez faire philosophy is a pyramid scheme type society. Only works if you are at the top.

Well, then perhaps I should have stated "American" Capitalism.

I have no problem with Capitalism. My problem is with extremes as all extremes are bad.

Capitalism in the 70's in the U.S. was working great as it was across the board. Not so much now with this kind of a situation where 1 company can literally do to the country whatever they want to do.

 

[Questerr]

Allow me to be slightly pedantic about this. What you are describing is not a crisis with capitalism.

Corporations of this magnitude are an example of a branch of capitalist philosophy called laissez faire capitalism.

Capitalism is a philosophy first brought up by adam smith in the 18 century. It was based on principals that effected local economies. The idea of world spanning corporates was non existent at the time.

I would also like to point out that the word capitalism was first introduced by karl marx in his book das kapital.

Laissez faire philosophy is a pyramid scheme type society. Only works if you are at the top.

The idea that Smith was unaware of the concept of world spanning corporations when the various East/West Indies Companies existed at the time is patently absurd.

But I agree with you that he was mostly talking about local economies and about free trade in general.

 

[soylentgreen]

Well, then perhaps I should have stated "American" Capitalism.

I have no problem with Capitalism. My problem is with extremes as all extremes are bad.

Capitalism in the 70's in the U.S. was working great as it was across the board. Not so much now with this kind of a situation where 1 company can literally do to the country whatever they want to do.

What makes you think only america has corporations that behave that way? Or that it is just an american problem.

But yes, american politics is backing LF capitalism far more than most countries at the moment. Except places like china or russia where one big corporation governs all. And where america will head under LF capitalism.

 

[soylentgreen]

The idea that Smith was unaware of the concept of world spanning corporations when the various East/West Indies Companies existed at the time is patently absurd.

But I agree with you that he was mostly talking about local economies and about free trade in general.

Those companies were still not world expanding as todays largest corporations are. America and china may play with embargoes but coke a cola is sold everywhere.

 

[Luckyone]

What makes you think only america has corporations that behave that way? Or that it is just an american problem.

But yes, american politics is backing LF capitalism far more than most countries at the moment. Except places like china or russia where one big corporation governs all. And where america will head under LF capitalism.

I have not said that only America has corporations that behave this way. What I have said is that "right" now America has ONE corporation that controls 90% of the SPX and is big enough to control whatever they want to. In the same breath, if they go belly up, our economy will follow. Can you show me any other corporation or fund in the entire world that has the power that Blackrock has?

 

[Questerr]

Those companies were still not world expanding as todays largest corporations are. America and china may play with embargoes but coke a cola is sold everywhere.

Try and get tea in Smith’s day that didn’t come from the East India Company.

 

[Cope]

Good questions to be honest.

Now, figure out how to decouple the money that flows to the political coffers and watch as Americans take back their America. Politicians under the guise of "for the people" are nothing more than viking raiders sent here to pilfer.
Granted, some politicians get into it to do good. That is soon burnt right out of them as the money starts to flow.

 

[soylentgreen]

I have not said that only America has corporations that behave this way. What I have said is that "right" now America has ONE corporation that controls 90% of the SPX and is big enough to control whatever they want to. In the same breath, if they go belly up, our economy will follow. Can you show me any other corporation or fund in the entire world that has the power that Blackrock has?

Probably not but I can name a few that have just as profound influence. But as I said, LF capitalism is a pyramid scheme and there can only be one at the top.

Governments have had to bail out large businesses before because the consequences of not doing so would not be good for the countries economy. Both sides prop each other up. Unfortunately the political side tends to become corrupt through such practice.

 

[Luckyone]

Probably not but I can name a few that have just as profound influence. But as I said, LF capitalism is a pyramid scheme and there can only be one at the top.

Governments have had to bail out large businesses before because the consequences of not doing so would not be good for the countries economy. Both sides prop each other up. Unfortunately the political side tends to become corrupt through such practice.

You are bringing politics and bias into this conversation that has absolutely nothing to do with left or right. This is about one corporation or one man being able to decide by the economic power he has what happens to this country. You want your life to be in the hands of the whims of one person or one corporation that by nature has their own economics as the goal?

 

[Craig234]

Allow me to be slightly pedantic about this. What you are describing is not a crisis with capitalism.

Corporations of this magnitude are an example of a branch of capitalist philosophy called laissez faire capitalism.

Capitalism is a philosophy first brought up by adam smith in the 18 century. It was based on principals that effected local economies. The idea of world spanning corporates was non existent at the time.

I would also like to point out that the word capitalism was first introduced by karl marx in his book das kapital.

Laissez faire philosophy is a pyramid scheme type society. Only works if you are at the top.

I'm not sure why you are denying it's a problem with 'capitalism'. This is why I suggest two terms, "Democratic Capitalism" which we mostly don't have, and "Plutocratic capitalism" which you call Laissez-Faire Capitalism, which as my name suggests, lead to the plutocratic problems in the OP.

While corporations did used to be very small - in size and scope - and highly regulated things that had to serve a public interest or be ended by the government, the first real corporation I know of was Queen Elizabeth's East India company which was quite global, and the trigger for our revolutionary war (and 'tea party').

You're also right that Adam Smith who is so worshipped by plutocrats, actually spoke against the abuses of people we see today, against plutocracy.

I wouldn't say a pyramid scheme exactly, but if anything it's worse, and you're right built into the system is exploiting most people by a few at the top. It's a good system in moderation with strong oversight by the public.

 

[Craig234]

You are bringing politics and bias into this conversation that has absolutely nothing to do with left or right. This is about one corporation or one man being able to decide by the economic power he has what happens to this country. You want your life to be in the hands of the whims of one person or one corporation that by nature has their own economics as the goal?

You're right, but as onerous as 'the whims of one person or corporation' sounds, the problem is worse, it is systemic guaranteed exploitation and corruption, where no one person or corporation is able to choose more fairness even if they wanted to because 'competition' would let others take advantage and replace them. This is why we need *"Democratic Capitalism"* so people have some power. That's the biggest issue for the world.

 

[Antiwar]

American capitalism started with the theft of the land from the natives, increased with chattel slavery, increased with the expansion (of theft) west, increased with the Industrial Revolution, increased and continues to increase with militarism.

The financial sector has always played a key role in all of this.

Environmental issues and nuclear war are existential threats.

 

[soylentgreen]

You are bringing politics and bias into this conversation that has absolutely nothing to do with left or right. This is about one corporation or one man being able to decide by the economic power he has what happens to this country. You want your life to be in the hands of the whims of one person or one corporation that by nature has their own economics as the goal?

I am not sure that trying to create a super villain running the whole show is a good way to go.
The element of politics cannot be taken out of this. Capitalism needs to be regulated and governments are the best way of achieving that. Especially when those governments have some idea of how socialism works, unlike many americans who are even unaware of the difference between capitalism and what is described in the OP.

 

[Excast]

It's nice to see we learned pretty much no lesson from the financial collapse of 2008.

 

[soylentgreen]

I'm not sure why you are denying it's a problem with 'capitalism'. This is why I suggest two terms, "Democratic Capitalism" which we mostly don't have, and "Plutocratic capitalism" which you call Laissez-Faire Capitalism, which as my name suggests, lead to the plutocratic problems in the OP.

While corporations did used to be very small - in size and scope - and highly regulated things that had to serve a public interest or be ended by the government, the first real corporation I know of was Queen Elizabeth's East India company which was quite global, and the trigger for our revolutionary war (and 'tea party').

You're also right that Adam Smith who is so worshipped by plutocrats, actually spoke against the abuses of people we see today, against plutocracy.

I wouldn't say a pyramid scheme exactly, but if anything it's worse, and you're right built into the system is exploiting most people by a few at the top. It's a good system in moderation with strong oversight by the public.

Capitalism per se is a not a democratic institution. It is based around the right of the individual to economically prosper rather than seek prosperity through class action. Which means it works well under a democratic governing system that allows for individual to create class actions.

It is not just plutocrats that worship adam smith. Many americans confuse his capitalist theory with the american corporate business model of today.

 

[Craig234]

Capitalism per se is a not a democratic institution. It is based around the right of the individual to economically prosper rather than seek prosperity through class action. Which means it works well under a democratic governing system that allows for individual to create class actions.

Except what we have today is a version of capitalism, which I call 'plutocratic capitalism', in which powerful interests undermine and disempower the democratic power of the people, to protect themselves being able to act against the public interest. This demands bringing back democracy, and what I call 'Democratic Capitalism' where the public interest does have the power to rein in companies more than it does now.

 

[Craig234]

It's nice to see we learned pretty much no lesson from the financial collapse of 2008.

Want the real lesson? The net effect of the Great Recession was to redistribute trillions of dollars to the rich, so the 'lesson' for the rich, is it was a great event. Why would they feel any other way?

 

[Felis Leo]

In listening today to Warren asking a question of Yellen, it made me aware of a big problem the U.S. is facing today. A problem that Capitalism has created and that put us all at huge economic risk. Warren stated that Blackrock manages $9 trillion dollars in their fund and that $9 trillion dollars is more that the entire GDP of any nation other than China and the U.S. This does mean the if Blackrock for any fails for any reason, our economy will fail as well. By the same token, it also means that Blackrock itself can literally set the rules for what is done in the U.S. states. Here is an article I found that explains this a bit better.


Three Investment Banks Control More Wealth Than GDP of China – and Threaten Our Existence
January 22, 2020


It’s the inevitable product of extreme parasitical capitalism which has created activist billionaires who manipulate elections and concentrated ownership of most major corporations into massive investment firms.

The immense amounts of capital needed for the industrial and digital revolutions created unparalleled power for the big banks and financial institutions. They now own dominant positions in the industrial-military complex, fossil fuels, the media, big tech and everything else that’s important.

Huge financial services institutions have emerged as the goliaths of the sector. Sometimes called asset managers or money managers, they invest money on behalf of institutional clients like governments, pension funds, sovereign wealth funds, endowments, and very wealthy individuals.

Blackrock and Vanguard with other smaller money management firms, control 90% of the S&P 500 public companies, including fossil fuel companies, arms manufacturers and major U.S. media outlets that own ‘mainstream’ news.

View attachment 67324618

When Warren asked Yellen what they would do to control the power of these companies, Yellen had no answer other than"we will look into it".

Bottom line is that when all the money power is in the hands of one (or a couple) of firms, they literally can call the shots on what it to happen to all of us. That is the problem with Capitalism at its height. Money is in the hands of a few and if they fall, we all fall and if they decide "this or that" needs to be done, there is no one that can stop them.

Do you feel comfortable being in this kind of a situation?

Here is the problem, Luckyone- these firms that you mention, including Blackrock and Vanguard, but also other firms such as Fidelity, Charles Schwab, Edward Jones among others, are simply well-managed investment firms. They hold securities in trust on behalf of their clients and charge management fees. The money is not theirs, but simply assets under management that their clients could just as easily roll over to another investment firm at any time. And who are the majority of their investors? Multi-billionaires? Doubtful. I daresay men and women, young and old, such as myself or yourself. Millions of people, employed in both the private and public sector, with IRAs, 401(k)s, 403(b)s and 457(b) retirement plans investing in a variety of mutual funds.

And by all accounts, they have helped grow their clients money and allowed millions of Americans to grow their wealth through investment in various markets. Most people who have done their research, myself included, prefer going with these companies because of good track records and extremely low management fees as compared to individual asset managers and financial advisors. The massive investments these companies manage is because millions of individuals made the free choice to invest their often hard-earned money with them. What would the alternative be? To force these investment companies to refuse accepting more customers? To fire clients after they achieved a certain level of wealth and force them to find another company to manage their assets?

 

[Luckyone]

I am not sure that trying to create a super villain running the whole show is a good way to go.
The element of politics cannot be taken out of this. Capitalism needs to be regulated and governments are the best way of achieving that. Especially when those governments have some idea of how socialism works, unlike many americans who are even unaware of the difference between capitalism and what is described in the OP.

Money has no politics attached. Greed is universal and the desire for power is found in everyone. In fact, power in and by itself (without political affiliation) is more dangerous because then the "only" thing driving the person of the corporation is their own objectives;

By the way, I am not "creating" anything. The reality is that there is one corporation run by one man that has more economic power than any other country in the world than the U.S. and China. This one company (Blackrock) is real and its failure would be "our" failure and its decisions is something that can affect every one of us. This is not fantasy but reality and is the reason why it is actually "scary".

 

[calamity]

In listening today to Warren asking a question of Yellen, it made me aware of a big problem the U.S. is facing today. A problem that Capitalism has created and that put us all at huge economic risk. Warren stated that Blackrock manages $9 trillion dollars in their fund and that $9 trillion dollars is more that the entire GDP of any nation other than China and the U.S. This does mean the if Blackrock for any fails for any reason, our economy will fail as well. By the same token, it also means that Blackrock itself can literally set the rules for what is done in the U.S. states. Here is an article I found that explains this a bit better.


Three Investment Banks Control More Wealth Than GDP of China – and Threaten Our Existence
January 22, 2020


It’s the inevitable product of extreme parasitical capitalism which has created activist billionaires who manipulate elections and concentrated ownership of most major corporations into massive investment firms.

The immense amounts of capital needed for the industrial and digital revolutions created unparalleled power for the big banks and financial institutions. They now own dominant positions in the industrial-military complex, fossil fuels, the media, big tech and everything else that’s important.

Huge financial services institutions have emerged as the goliaths of the sector. Sometimes called asset managers or money managers, they invest money on behalf of institutional clients like governments, pension funds, sovereign wealth funds, endowments, and very wealthy individuals.

Blackrock and Vanguard with other smaller money management firms, control 90% of the S&P 500 public companies, including fossil fuel companies, arms manufacturers and major U.S. media outlets that own ‘mainstream’ news.

View attachment 67324618

When Warren asked Yellen what they would do to control the power of these companies, Yellen had no answer other than"we will look into it".

Bottom line is that when all the money power is in the hands of one (or a couple) of firms, they literally can call the shots on what it to happen to all of us. That is the problem with Capitalism at its height. Money is in the hands of a few and if they fall, we all fall and if they decide "this or that" needs to be done, there is no one that can stop them.

Do you feel comfortable being in this kind of a situation?

Yes, one reason Obama kissed banker ass after the fraud behind the housing bubble was exposed in 2010 is that without them we were doomed. The global economy is financialized. It's just a fact of life.

 

[Luckyone]

Here is the problem, Luckyone- these firms that you mention, including Blackrock and Vanguard, but also other firms such as Fidelity, Charles Schwab, Edward Jones among others, are simply well-managed investment firms. They hold securities in trust on behalf of their clients and charge management fees. The money is not theirs, but simply assets under management that their clients could just as easily roll over to another investment firm at any time. And who are the majority of their investors? Multi-billionaires? Doubtful. I daresay men and women, young and old, such as myself or yourself. Millions of people, employed in both the private and public sector, with IRAs, 401(k)s, 403(b)s and 457(b) retirement plans investing in a variety of mutual funds.

And by all accounts, they have helped grow their clients money and allowed millions of Americans to grow their wealth through investment in various markets. Most people who have done their research, myself included, prefer going with these companies because of good track records and extremely low management fees as compared to individual asset managers and financial advisors. The massive investments these companies manage is because millions of individuals made the free choice to invest their often hard-earned money with them. What would the alternative be? To force these investment companies to refuse accepting more customers? To fire clients after they achieved a certain level of wealth and force them to find another company to manage their assets?

I understand and agree with everything you said. Nonetheless, that doesn't take away the fact that Blackrock has gotten so big than any decision taken can affect all us immensely. Yes, if the management continues to do what they have done so far, it is not a problem but the fact remains that none of us (investors in the company) or the government (given there are no controls over them) can do anything about a collapse of the company or a decision by the company. By the time that the investors decide to back out and go to another company, it would be too late.

Having many companies having a measure of control is fine and what true capitalism is about. Having one company being that powerful is not okay.

 

[Allan]

Blackrock and Vanguard with other smaller money management firms, control 90% of the S&P 500 public companies, including fossil fuel companies, arms manufacturers and major U.S. media outlets that own ‘mainstream’ news.

I have investments with Vanguard and I'm not sure how you feel they 'control' public companies whose products they bundle. Take my investment (VTI) with Vanguard for example. VTI mirrors the overall market, they don't aggressively trade to manipulate stock price. The rest of their products are similarly passively traded to match whatever segment they are mirroring.

 

[Helix]

the problem with underregulated capitalism is that it eats itself. there are also problems with overregulated capitalism. it's tough to find the sweet spot.