Week of 06/14/2010

Birth of the Corporate-State
– by David Matthews 2

Here’s something that should make you shiver…

At some point in the near future, someone will OWN Greece.

I don’t mean that metaphorically. I don’t mean through political corruption or military intimidation. I mean someone will literally OWN Greece. Lock, stock, and barrel. The whole nation, its government, everything. Some private entity will at some point PURCHASE and OWN the whole country of Greece.

If it isn’t a single person that makes the purchase, then it will be a private entity. A multinational bank, or perhaps a private group like OPEC.

And if it isn’t Greece, then it will be some other nation that is in a similar situation. Maybe the United States?

Unthinkable? Not really.

Greece is in some economic dire straits right now. Far worse than America’s problems. They are in an economic hole so deep that they can’t even begin to get out of it without outside assistance. And every solution from the government seems to result in making matters far worse.

The first thing a new leader in Greece does is hire more public workers. This is a short-term solution, especially when the private sector is temporarily unable to do that job. But public workers must be paid by the government and government has to get revenue SOMEWHERE. Usually that comes through tariffs, taxes, or debt. According to European economists, Greece hasn’t exactly been too keen on collecting taxes. So they have been getting their money like many Americans (and their leaders) have… through debt.

Unfortunately, Greece is now in a situation where they can’t tap into debt like they used to, they don’t want to go after the tax dodgers, and the bill is due for all of their public sector jobs they’ve created and sustained with some of the best wages and benefits in Europe.

As it is right now, Greece is getting help from the European Union and the International Monetary Fund. But their leadership is going to have to make some tough choices about how they spend what money they currently have. They’re not used to making these kinds of choices, but they had better learn quickly.

Time will tell if the leaders in Greece will be smart enough (and lucky enough) to pull through. But even if they are able to do it, Portugal, Spain, and even potentially the United States itself may have to do the same thing.

But at some point, a country like Greece, or Portugal, or Spain, or the US, will get so far in the hole that there will be no choice but turn everything over to a private entity.

The idea of a Corporate-owned state was always the stuff of science fiction. “In some distant future”, the prologue usually goes, “the governments of the world have been replaced by major corporations.” This is the fantasy that leads into movies such as the original “Rollerball”, or even the near-future world of “Robocop”. And traditionally that is where such ideas end.

We all laugh at the concept of any country, especially the United States, being owned by private entities. It’s just unheard of! Nobody would EVER have the money needed to make that kind of a purchase! And the leaders certainly wouldn’t “ALLOW” such a takeover to happen, would they?

And yet we are getting closer and closer to making that kind of world a reality than most of us would ever admit to.

The U.S. Government has been putting itself on the biggest credit card in the world, financed through a perpetual stream of treasury notes. As long as there were banks or countries that were purchasing those notes, the government had money to spend on anything and everything it wanted. When those notes came due, we financed another batch of notes to pay for those, and so on and so forth.

Yes it’s reckless, but that is what we’ve been doing for years, and nobody really cared way back when about the consequences.

Conservatives and neo-conservatives are quick to blame President Obama and the Democrats that run Congress for this massive debt that America has amassed, but in truth the spending spree started with their predecessors. With George W. Bush and the GOP-ruled Congress using their USA Ultra-Platinum Card to finance two wars, expanded government programs, disaster recovery, overhauling national security, bailing out the airlines in 2001, and bailing out Wall Street in 2008. Let’s not forget the extensive tax cuts given to big corporations that were supposed to “stimulate” the economy in 2001 and 2008 but only served to fatten the profit margins.

No matter who was responsible for our current mess, the fact of the matter is that we are in the thick of it, and with Corporate America FAILING to do their bit and create new jobs to offset the massive unemployment, that only serves to make the burden in the public sector even worse. And while massive spending now may be needed to get America out of its immediate economic doldrums, the overall problem of debt continues to loom.

Should Corporate America be allowed to continue with its ineptitude and abuses, the economy will NOT be allowed to recover and instead would put the United States in a situation very similar to that of Greece.

What will happen at that point is one of two scenarios, neither of which will be pleasant to undergo.

The first is that the United States will simply implode. Much like the old Soviet Union did in 1989, the government would fail, and many of the states would follow suit. It doesn’t matter what kind or how many taxes are imposed at that point. It doesn’t matter which political party would be in charge at the time. There would be no money for the military, no money for government services… no money, period. Without the financial backing of the FDIC, banks would outright fail. Without the continued bailouts to fund it, AIG, the largest insurance backer in the nation, would outright fail. Without Medicaid and Medicare and Social Security, several hospitals and insurance companies would outright fail.

What would happen after that would be anyone’s guess, but it is safe to say there would not be a United States as we know it anymore. If what happened to the Soviet Union is any guide, you’d see a fragmentation into several smaller nations, each with supporters and sponsors of other nations.

The other scenario would be essentially a leveraged buy-out of America. In that situation, either one or (more likely) a collection of nations and private industries (i.e. Bank of China, OPEC, Bank Swiss) could step in and own the debt that America has amassed, essentially OWNING the United States. The leadership and government structure would remain intact, but all decisions and legislation would be subject to revision and veto by the new “sponsors”.

This kind of takeover would be subtle. The kind of action that would be approved in the dead of night, without debate, and certainly not publicly acknowledged. In fact, this kind of action could have ALREADY happened and nobody would know. That would certainly explain the lack of accountability by the federal government and why certain private entities are seemingly allowed to get away with just about everything.

Let’s get brutally honest here… as long as we have to deal with gross mismanagement and incompetence from those in government… from ANY political party… the more and more likely the concept of a corporate-state would become a reality. And that does not mean that it would be an improvement. Quite the contrary; given the horrific experiences that many Americans have had to endure with corporate bureaucracies, a whole country being run by a corporation would be far worse. Indeed, without the mechanism in place to keep the private sector in check, corporate abuses would be far more draconian than even during the very Industrial Revolution that spawned such regulatory need.

There are some things that the private sector can do far better than would the public sector, but that still doesn’t mean they can govern any better. The private sector lives in a world of capitalism, of profit at all costs. When it becomes the caretaker of a nation, then that nation is also governed by that requirement. In other words, that nation would also be bound to the rules of capitalism, of decisions made not in the name of equality or of freedom or of any kind of “fairness”, but rather on the sole basis of profitability.

As Thomas Paine himself once commented, “The sun never shined on a cause of greater worth.” Neither should a country be run for the same basis.