II find particularly mendacious and revolting the claims of the notorious
ideologue of monopoly capital and lackey of the financial oligarchy Thomas
Sowell in his lick-spittle and servile adulation of the fat-cat business
élite setup come what may. Sowell – it's
important when uttering his name to mispronounce the ow dipthong so it sounds
like “so” and not like “sow”, with its unpleasant porcine associations -- is the great economic prophet of the US
right. His word is law unto them.
I
make a great effort to be objective when
assessing the merits of writers,
especially if I sense an ideological conflict. Consequently I started reading some of
Sowell’s popular books with as open a mind as I could muster -- which is pretty goddam open compared to
most people. However very soon Sowell’s output started distastefully reminding
me of East German communist propaganda, from the time I was studying economics
in West Berlin. East German TV was a gas. The propaganda was so thick you could
eat it with a spoon. Well, Sowell is just about the same, only from a different
viewpoint. His propaganda lies are numerous and egregious. Of course he's a
clever fellow and would never say anything that is a demonstrable falsehood.
But by making the right noises, omitting certain vital facts and using
suggestive vocabulary, he gives to an
economically unsophisticated reader a distinct impression of reality that is at
complete variance with the truth. His discussion
of how US household earnings have changed over the last 3 decades – with its
tough-ass private-enterprise Republican ideology that impoverished the masses
and showered fabulous wealth and power on a tiny group of parasitical financial
oligarchs – is a masterpiece of evasion
and diplomatic pauses while he waits for the reader to draw the right
conclusions without having to actually lie to him.
He
actually pulls off the master stroke of discussing at length variations over
time of household income without mentioning a
single number! He keeps his cards very close to his chest. It's all about more
of this and less of that, while about the same of the other. Now if that isn’t
phony like hell, I’d like to know what is.
Typical
of his approach is the way he treats the delicate issue of executive salaries.
It's a sore point in the US, where in 30 years executives have gone from
earning only 100 or 200 times as much as an assembly-line stiff to earning
thousands and even tens of thousands as much. Since all the data clearly show
that variations in executive pay – variations over time and variations between
different companies -- are not correlated with variations in profits, he faces
the difficult task of persuading the reader – without a shred of evidence to
back him up -- that the system rewards effort and punishes incompetence. In
other words his mission is to convince the reader that the current US
capitalist setup is fair. If you do a good job, you will be rewarded, if you
screw up, your ass is grass. Which is a total and absolute lie.
This
operation is called “legitimizing the system,” and is a vital ideological
stabilizing factor in any society. Only in some societies it's easy to show
that everyone gets his piece of the action. Those are societies that really
are fair, or pretty close. However when you're tasked with legitimizing a
colossal rip-off like communism, or the latest – monstrously iniquitous -- incarnation of
American capitalism, it gets dicey.
His
solution to this severe propaganda
challenge is masterful. Stalin would have loved it. He naively remarks that
well, um, he can't think of a single reason why a company would pay lavish
salaries, bonuses, fringe benefits and stock options – not to mention golden
parachutes – to an executive if that executive weren’t producing MONSTROUS
profits for the company. Now your average Joe-Sixpack reader reasons as
follows, and quite rightly, too: "Well, this Sowell – excuse me, So-ell –
guy must be a pretty smart cookie, if he's got a sinecure at the Hoover
Institution and whatnot, big-shot perfessor, written stacks of books and stuff.
Well if a guy like that can't think of a single reason, it has to be because
THERE ISN’T ANY REASON! Meanwhile Sowell is gazing absent-mindedly into the
distance, like a cobra ready to pounce, but not letting on, waiting for the
reader to reach the appropriate conclusion without actually lying to him.
Well,
actually , he IS lying, because I'm sure he can think of a HELL OF A LOT of
reasons why those shit-heel executives
should be doing hard time instead of jetting off to see their lovers in
Paris. But although he's telling a
blatant lie, it's difficult to prove, because he isn’t actually misstating an objective fact that
you can disprove by pointing to a statistical bulletin. He's just saying something about what's going
on inside his brain, namely he can't think of something. And what goes on inside your brain is a
subjective matter that is out of bounds
for prying questioners. Challenges are easy to deflect through cunning sophistries. His last-ditch line of
defense is to plead senile idiocy.
In
discussing high pay for corporate executives, Sowell claims that they must be
worth what they earn or they wouldn’t earn it.
I
retort: Currently (2008) the main component of high executive salaries is stock
options. Stock options are offered to encourage executives to pursue policies
that favour the shareholders, by making the exec a shareholder himself. However
this has had the effect of making executives try to maximize share price, not
nec profits.
Secondly,
there is a distinction between short-term and long-term profits. The financial
capitalism that prevails now is obsessed with short-term profits. Corporate
raiders burden their newly acquired companies with debt so that they can vote
themselves huge dividends which they then remove from the company, leaving it
with a scarcity of investment capital and consequently with poor long-term
prospects. This not conventional profit maximization as we know it.
In
a word Sowell is relying on an unchanging model of profit maximization whereas
in reality profit maximisation means different things at different times. He
refuses to recognize the irrational elements in capitalism, especially
financial capitalism. I presume he also denies the irrational herd behavior of
the financial markets, whose existence has been proved beyond any doubt.
He
bases his arguments on hypotheses of rationality which he does not bother to
justify empirically.
For
example: “Any serious explanation of corporate executives’ salaries must be
based on the reasons for those salaries to be offered, not the reasons why the
recipients desire them. … Why then do corporations go so high in their bidding
for top executive talent? Supply and demand is [sic] probably the quickest short answer …” (Economic Facts and Fallacies,
pages 141-142) Whaddya mean “probably”? There are stacks of empirical studies
that research the reasons. There is no need to resort to speculating.
Nonetheless Sowell Olympically ignores data to make simple little arguments
whose validity presumably holds for all time, regardless of the characteristics
of the economic period in question.
This
is a typical right-wing approach to economic argument. Whenever possible resort
to general reasoning based on a simple-minded presumed rationality. Same thing
with Murphy (The Politically Incorrect Guide to Capitalism).
This
turkey draws a vast salary as a resident scholar or something like that at the
Hoover Institution. Can't the Hoover institution afford a couple o research
assistants for Prof. Sowell, so we don’t have to rely on his intuition all the
time? There being so much good data lying around.
Actually
I was just kidding. If Sowell says “he assumes” something, and that something
is an empirically verifiable assertion of fact, then it is extremely
unscientific to presume when you can simply assert.
On
pp 124-153 he charges certain authors with cynical manipulation of figures
because they say average household income has stagnated for 35 years. He
counters that income per capita has increased by 50% in those same years,
because the size of households has diminished. However Sowell himself conceals
the fact that this increase in per capita income is the result, not of higher
real wages, but of the fact that Americans now work longer hours than before,
and many women have joined the labour force. In other words their income has
grown, but only because the fraction of household members working outside the
home has increased and so has the number
of hours worked by each employed worker, on average. [check figures]
It's
interesting that he mentions only two figures, both of them ratios. No absolute
figures, no additional data. I'm sure there's a reason for keeping his cards so
close to his chest.
Another
point of mine is that as families shrink, the ratio of home-made consumption to
store-bought consumption rises. A Family of 6 people is likely to sit down together
and eat a meal produced by the
matriarch. 3 families of 2 people each are much more likely to buy takeout or
whatever. Consequently they depend on
the market for everything. Thus if real wages remain stable and families become
smaller, people become poorer, because they don't produce anything at home.
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