Your Black Scholar: Economic Equality and The Myth of “Free Markets”

F*** Joe the Plumber: Economic Equality and The Myth of “Free Markets”
By: Tre Baker
dangerousNEGRO.com

Now I’m no expert economist, so like Levar Burton used to say on Reading Rainbow, “You don’t have to take my word for it…” However, there are some commentators in the media, who claim to be experts, telling outright lies. Maybe it’s intentional or maybe they’re just
ignorant, but let me tell you what I think about so-called “free” markets.

The point of this article is to make you aware of the tactics that are being used to distract people from the fight for economic, political, and social equality for all human beings. As soon as the government steps in to do something, you get these self-proclaimed capitalists bitching and raising hell. Now this is not in defense of the bailout, which is an example of when the government goes too far, but it’s more in reference to “Joe the Plumber.” He’s upset because after he buys his business and starts making over a quarter-million dollars a year, he’s going to have to pay more taxes. Poor f’ing Joe. Even when the government taxes half his money, he’ll still be making over 3 times more than the average working American. So while the media is distracting you by worrying about Joe the Rich Plumber, you need to be worrying about the countless other people (plumbers included) barely making it paycheck to paycheck. F*#& Joe the Plumber and McCain’s tricky ass for distracting people from the real issues.

I believe the natural result of free markets and uninhibited, individualistic capitalism in the current context is perfect inequality, in other words, one ring to rule them all. Like the saying goes, “It takes money to make money.” Therefore, the more money you have, the more you can invest, and the more money you can make. Think about the inventor that has a great idea but no start-up capital and no friends and family to finance her until she can attract more capital. Think about the recent graduate that can’t get a mortgage because they have too many student loans to pay off. Meanwhile we’re in the worst financial crisis in many of our lifetimes and people like Warren Buffet are just getting richer by buying distressed assets at historically low prices. McCain might as well say, “My friends, the rich get richer and to hell with all you poor bastards.”

The more money you have, the more money you have to invest in buying or creating businesses/assets that generate even more money for you and create more wealth. When your pockets are deep, like Microsoft, you can afford to overpay for some of these assets (e.g. Facebook) just to keep other people out of the game (e.g. Yahoo). You can buy up the best companies, the best real estate, and the highest performing assets. In a purely free market there are no regulations against monopolies, so the only way to stop this cycle is to kill the people doing it.

Innovation, ingenuity, and entrepreneurship will only take you so far because the fat cats with the big wallets will always attempt to claim most of the value generated by your creativity. In corporate strategy theory there’s something called Porter’s Five Forces. Three of them are Buyer Power, Supplier Power, and Barriers to Entry. Basically, the bigger the buyer or supplier, the more power they have usually due to economies of scale or being one of the only providers of a product or service. (There are cases of dis-economies of scale, when being bigger actually hurts a company, but those are usually temporary anomalies in supply-constrained markets). For example, Wal-mart can offer you low prices because they’re so huge and they buy such large quantities that they get large bulk discounts…that’s Buyer Power. So if you’re a start up company trying to sell your products, eventually you’re going to run into one of these behemoths that will squeeze your margins and claim most of the value from your product or service unless you’re content staying small and limiting growth. Barriers to entry are just what they sound like. It’s a measure of how hard it is to start a business. A graphic design company has low barriers to entry. Any kid with a computer and Photoshop can start one. A car company however, has high barriers because it takes a lot of upfront investment to start one. If you ain’t got it, you ain’t gettin’ in, but if you’re rich, the world is your oyster.

Let’s not even get started on venture capitalist or private equity firms that are masters at claiming value. I’m not saying any of this is necessarily bad because the big companies and the private equity players do create significant value as well, not just claim it. Without them many companies wouldn’t even have a chance to get started. I’m just saying that eventually more and more money will end up in fewer and fewer hands because the best venture capitalists raise the most money, charge the highest fees, and do the most deals, and the biggest companies have insatiable appetites for continued growth for growth’s sake, asset grabbing, and centralizing power (and compensation) towards the top of the org. chart. I’m over-simlifying things here, but you get the main point.

In a completely free market, there is also freedom from government. This means there is no government interference and there are no corporate taxes because taxes stifle growth and negatively affect investment returns, while the goal of a soulless company is to maximize returns or so-called economic “value.” Obviously this is an extreme case, but it illustrates that there is a role for government in the economy, and you should be skeptical any time some finance guy or economists starts raising hell when the government interferes in business and the economy talking about letting the market work itself out. The market has no compassion for the economically disadvantaged.

While they have you worrying about Joe the $250,000/year Plumber, you should be worrying about how it is possible for one man to have 50 billion dollars while Joe the college graduate is still paying off his loans 15 years later, or Joe the teacher can barely make ends meet even though he’s instrumental to improving the future of our society by educating the next generation. Our current priorities ensure the eventual displacement of our country as a so-called Super Power.

You saw how the conservatives jumped on Obama for talking about “spreading the wealth.” Because of our bad history with Socialist and Communist countries we incorrectly assume that most forms of socialism or wealth redistribution are bad. Meanwhile, most of us are the recipients of wealth redistribution in some form or another (e.g. public schools, libraries, roads, parks, public and private scholarships, grants, subsidized loans, progressive taxes, etc). Let me tell you a secret…”socialist” is not a bad word. If you think redistribution of wealth is bad, you haven’t thought about the alternatives and the American Dream will remain just that….a dream for the masses of people. If inequality is a by-product of individualistic, uninhibited capitalism, then without any redistributive or socialistic policies the end state is all the money/resources in the hands of one person or a small group of people. There’s another word for this…slavery.

I actually am a big supporter of capitalism and free markets because they motivate people to create, invent, and potentially advance technologically to a point where we can eliminate poverty and satisfy the basic needs of everyone, but our society is too primitive to achieve a truly free market right now. The main flaw with the current state of capitalism is that we do not know how to accurately place a value on public goods and certain other externalities.

An externality is something that indirectly affects any party not involved in an economic decision. For example, pollution is a negative externality that benefits a few people, but hurts everyone. On the other hand there are positive externalities associated with public education that benefit society as a whole, but would not be possible if it was left up to private individuals or institutions. These positive and negative externalities are hard for our primitive brains to value. Hell, we can’t even value real assets correctly, which is why housing prices were allowed to run up and cause this disaster we’re in right now. If we could value these tangible and less tangible things correctly, we would understand that there is an actual value to wealth re-distribution because the probability of revolution and political, social, and economic meltdown increases as a function of several variables, the most important of which are inequality and the faith people have in society to protect citizens and property rights. Once people lose faith in government/society or lose hope for a better future or a reason for living, explosive situations arise. Think about the major revolutions in modern history, and try to find one that wasn’t caused by inequality or perceived inequality. Even if the chance of revolution is small, if you multiply it by the value of the destruction it could cause, the current value of a future revolution is still significant. Joe the Plumber won’t care about taxes when his business is burned to the ground because of riots. Money is only valuable in people’s minds based on the society and the government that supports its value.

A good example currently being played out is the value of climate change and the debate on the price of carbon. Governments are attempting to “tax” carbon based on the belief that it causes global warming, which could cause a disaster in the future. If the polar ice-caps melt, or we cause another Ice Age, then we will wish we had spent a little more money protecting the environment. It is not fair to our children for us to borrow against their future by recklessly destroying the environment now.

This same reasoning should be used to combat inequality and oppression. White people in America borrowed against future generations for 400 years by taking advantage of free labor. THERE IS NO SUCH THING AS A FREE LUNCH. You cannot force people to work for 400 years and expect the debt to go away. It is not fair to white people today because they did not make the decision, but they’re going to have to pay for it one way or another. And it’s not going to happen by making white folks feel guilty or forcing them to be PC and inhibiting honest discussion. It will even happen if Black people remain ignorant and clueless regarding the debt they’re owed. They will pay whether the Reparations Movement succeeds or not. Either the masses of Black people cause so much destruction to themselves that they bring down the rest of society, or they wake up and start attacking their oppressors directly via civil disobedience or outright violent aggression. You can’t continue to allow oppressed people to suffer and think it’s not going to spill over into your streets. Just like you can’t keep emitting carbon dioxide into the atmosphere and think it won’t come back to haunt us all. I suggest you fork over that pay check before either of these things happens to all of us, our children, or our grandchildren. Like Dr.King Said:

“We must all learn to live together as brothers or we will all perish together as fools. We are tied together in the single garment of destiny, caught in an inescapable network of mutuality. And whatever affects one directly affects all indirectly.”

Unfortunately, our government is inefficient, so we need to come up with another way to combat inequality and protect the politically, socially, and economically vulnerable in our society. Maybe instead of leaving it to government and higher taxes to take care of those that can’t take care of themselves or give people a little boost in hard times, we should leave it up to social enterprises and have mandatory philathropy “taxes” that go directy to companies/ organizations that provide direct benefit to the people. Consider the taxes an investment in revolution prevention. Social enterprises can be for-profit or non-profit companies that are self-sustaining and provide social (and sometimes financial) benefits. These organizations would have to compete on standardized platforms for business just like regular companies. The government would just be responsible for oversight and prosecuting fraudulent behavior by these organizations. I haven’t really researched this concept much yet, so feel free to make comments telling my why this won’t work.

Your Black Scholar: Exclusive Interview With Dr. Cornel West

Interview with Princeton Professor and acclaimed scholar, Dr. Cornel West, by Tolu Olorunda.

He is, perhaps, the most well-known public scholar the universe has to offer. Alongside that, Dr. Cornel West has also been celebrated as, America's leading public intellectual. Judging from his scholarly work, dedication, perseverance, intellectual curiosity and diligence, one can certainly confirm the role he plays as a distinct leader of his peers. Dr. West has continuously proved to be a multi-generational force for good. Through the publication of books, Hip-Hop albums and television specials aimed at young adults, Dr. Cornel West has impacted and transformed a whole generation of love-starved and directionless people. His wit notwithstanding, Dr. West's ability to interpret the harsh conditions of the financially-disempowered is parallel to none. I had the distinguished pleasure of engaging in dialogue with this esteemed scholar on a wide swath of issues affecting our daily lives. I spoke with him on issues including, the presidential campaign of Sen. Obama, Gen. Colin Powell’s endorsement, the role of progressives in an Obama administration, "Hope on a Tightrope," Hip-Hop, the next generation of Black public intellectuals, and much more:

Thanks for joining us. What has Dr. West been up to lately?

Oh, I’ve been on the moon. I did 15 events for Brother Obama in Ohio, this past weekend. I did 12, the weekend before that. I’ve been to Seattle, Alabama; teaching full time. I’m blessed though, brother.

How does it feel being a surrogate for Sen. Obama's historic presidential run?

Well, it’s a good thing, because in the end, it’s really about empowering everyday people, and he’s a major vehicle for that. He’s got some genius and inspiring people that give him a sense of possibility and hope. So, it’s a beautiful thing. But there’s always a tension there because I still got to speak my mind. So, I got my criticisms of the brother; but the most important thing to do, is a full-court press to get people out to vote, and to make sure that we contribute to this democratic awakening that’s taking place. This greed out here is running amok, man.

On the subject of greed; you've often talked about the melting of the Ice-Age. Do you feel the Democratic platform addresses poverty in a substantive fashion?

Well, it doesn’t address it as much as I would like. It opens the door, and acknowledges the fact that we need to start focusing on poor people, but it doesn’t hit the issue of poor people directly in the way that I would like. But at the same time, because it’s moving in that direction, I move with them – in order to bring pressure and power to bare, and hope that they would move with me in a substantive way. So, I’m never really satisfied with the Democratic platform – they’ve had a history of spinelessness and complicity toward injustice – but, on the other hand, because it’s so much better than McCain and the Republicans – and certainly, Brother Barack is so much better – I’m trying to get him into the White House and then deploy a vision and power on behalf of everyday people.

You know Sen. Obama personally. Has he met your standard of courage in matters concerning Muslims, the Black Community and War/Peace?

He’s met it enough for me to support him, but he hasn’t met it enough for me not to criticize him. It’s an area in between where, right now in the middle of an election, I do all that I can – putting in 16 hours a day without eating – to get him elected. But at the same time, I also know that he’s not Jesus. He’s not a Messiah or nothing. He’s a human being; a cracked vessel trying to do the best that he can.

What roles do progressives play in an Obama presidency; and what strategy do you suggest is best for success?

He’s only as strong as we are. I think that we have to be honest, diligent and candid about our focus on working and poor people. We have to talk strongly about public spending directly for education, quality jobs, health care, child care, infrastructure, bridges/roads, and home foreclosure. In that regard, we have to be willing to criticize him in order to make him stronger, and push him in a progressive direction. He’s not in a static position. He can be pushed.

Dr. West, one of your most famous blurbs is: "You can't lead people if you don't love them and you can't save people if you don't serve them." In your assessment, do you believe Sen. Obama has exhibited an encouraging amount of love and willingness for servitude?

I think so; definitely. As a presidential candidate, he’s got to be prudent. So he tends, for example, to focus on White moderates and independents. Why? Because he wants to win the election. So, in that regard, his willingness to love and serve is always under the framework of presidential politics. But I think that deep down he’s got a profound love and a sense of service. You see that, for example, in him being a community organizer instead of going to Wall Street, and some of his policies in the Illinois State house. And really, you can’t downplay the role of Sister Michelle Obama and those two precious girls [Malia and Sasha]. As Sly Stone said, it’s a family affair. When you talk about someone who is sharing a life with such a high quality person as Michelle Obama, that is very important – and it makes me feel good.

What’s your take on Colin Powell’s endorsement of Sen. Obama?

Courageous, eloquent, crucial; and I think it’s the last nail in the coffin of Republican/Conservative/Right Wing rule.

How critical is the concept of holding "President Obama" accountable; and what steps can be taken at this point to guarantee a desirable outcome?

Brother Tavis [Smiley] has been pushing this issue of accountability for a very long time, and was courageous to do it. In the end, this is not about any one person, or any one office. It’s about keeping everyone accountable. It’s about trying to gain Barack Obama access to the presidency, but keeping him accountable; because if we don’t have the kind of progressive policies that allow the empowerment of everyday people and working/poor people, we’re going to fly down the slope to chaos. Democracy cannot be sustained over a long period of time when there’s so much greed at the top, and the politics of fear is at play.

Switching gears: Your new book coming soon is, Hope on a Tightrope: Words and Wisdom. Can you briefly explain what its premise is?

It’s mainly that we are living in a moment where the American civilization is wavering, the American empire is wobbling, the culture is in decay, people are hungry and thirsty for vision, and we need some hope; but that hope is on a tight rope because we’re in a state of emergency. The first chapter of the book is: State of Emergency – a sense of urgency. Now, my view is that we were in a state of emergency many years ago – when people didn’t recognize. When you look at the dilapidated housing crisis, disgraceful school systems, unavailability of health care/child care, not enough jobs for living wage – that’s already a state of emergency for many brothers and sisters of all colors. But now that Wall Street has collapsed, it’s an indisputable, undeniable state of emergency across the board. But we need to sustain our hope on a tight rope, with a sense of grace and cool in the face of catastrophe – in order to empower everyday people.

Earlier in the campaign, Michelle Obama expressed some pride that "hope is making a comeback." Do you share similar sentiments, and what must we then do to sustain its balance?

Sister Michelle Obama is absolutely right. Keep in mind that hope is pitted against fear. For so long, people have been fearful. Hope is making a comeback, in part, because of Brother Obama’s brilliance, genius and charisma. He’s generating a sense of hope, but we’re still on that slippery tight rope, and we’ve got to be really courageous, bold and determined. We’ve got to have fortitude to help other people, and serve other people.

In light of Mrs. Obama's remarks, we have a financial meltdown that promises escalating despondency. To paraphrase Melle Mel, how does the Black Community keep from ‘losing its head’?

That’s a deep question. One thing we’ve got to realize is that, we’ve dealt with catastrophe before. We are a blues people, and the blues is: An autobiographical chronicle of a personal catastrophe expressed lyrically. But it’s always with a sense of grace and cool. And the country now has the blues. They either learn something from a blues people, or lose their democracy.

Do you believe we will survive this storm?

Well, it all depends on how much courage, vision and service we have. We might not survive it, because if greed, indifference, and fear continue, and McCain wins, there’s a good chance that we’re not going to survive it. But in the face of greed, we need justice; in the face of indifference, we need compassion; and in the face of fear, we need hope. That’s what Brother Obama represents.

Dr. West, there's a new class of Black public intellectuals - Eddie Glaude, Boyce Watkins, Marc Lamont hill - coming up. How confident are you that they can help raise the banner of truth and justice even higher?

Oh, I’m sure they will. We’ve got some serious young folks coming up. We’ve got Brother Tavis [Smiley], Bakari Kitwana, and a lot more. I’m impressed by a lot of the young brothers and sisters coming up. I’m satisfied that they’re going to surpass me; and that’s the reason I’m strong – to make them even stronger. They’re stepping forth with grace and dignity.

Your new Hip-Hop album, “Never Forget: A Journey of Revelations,” hit shelves earlier this year. What is your message to the younger generation; and why did you decide to use Hip-Hop as the avenue to facilitate that message?

Well, Hip-Hop is the universal language of youth culture. I was in Egypt, Belgium and Brazil; I walked into the clubs, and it was all Hip-Hop. So, because I’m an educator, I can write books and present a textual education, but with the CD, I can present a danceable education. I’m just trying to educate, and be educated. But most importantly, it’s just a matter of loving young folks and respecting them enough to learn from them. So it becomes a matter of reciprocity and mutuality in our awakening, and consciousness-raising. That’s what that CD is about. So you bring in artists like Prince, Andre 3000, Gerald Levert, Talib Kweli, KRS-One and Jill Scott – they are part and parcel of the conversation on the danceable education album.

On the subject of Hip-Hop, how can the present generation reshape and retake the culture, in a way that it represents, once again, a force for good, enlightenment and empowerment?

I think that one has to, first, support those crucial voices within Hip-Hop who are trying to take it to a new level. So, when Brother Lupe Fiasco talks about ‘the cool,’ you know, in fact, that he’s reflecting on a level of Hip-Hop artistry that goes beyond the dominant everyday perspectives. The same is true for Nas, with the “Untitled,” album. And there’s a whole host of others out there who need our support. I was just in the studio with Rhymefest for El Che. It’s a matter of acknowledging that we really do have voices in Hip-Hop, of the younger generation, that we need to be supporting. When you listen to Game and Lil’ Wayne talking about “My Life,” you’re moved, man. It’s coming from the soul. I love Lil’ Wayne’s dedication to his craft. He’s got to be the hardest working brother in Hip-Hop – just like my hero, James Brown. I try to be the hardest working man in the academy.

Lastly Dr. West; what message do you hope the general public grasps unto at this transitional moment in our earthly experience?

I think, at this particular moment, we need a strong democratic awakening that tries to push back the greed, indifference and fear. The first step is to try to get Brother Barack in the White House. The second step is to put pressure on him – so that he can engage in some of this public spending directly to the people and they can have access to health care, child care and jobs with a living wage. We need to get these home-owners to stay in their homes, so that these bankruptcy courts can re-adjust the mortgage. And we need a stimulus plan to get the economy running again. That’s the beginning of turning things around, so we don’t have a system tied only to the strong, but one that takes seriously the plight of the weak. So, it’s not just for the rich, but for the many.

Thanks for the time, Dr. West.

Watch Dr. Cornel West In Action:

This interview was conducted by Tolu Olorunda, Staff Writer for YourBlackWorld.com