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Monday, December 14, 2009

The U.S. as an Oligarchy

The President, in his 60 minutes interview, came out with this quote in particular that seems to have the most staying power.

I did not run for office to be helping out a bunch of fat cat bankers on Wall Street

Whether President Obama did or not, in fact, that's exactly what's happened. The only thing that is clear that's come out of the financial crisis is that our banks were on the brink of collapse, they were given a near $1 trillion lifeline, and now most are doing just fine. That was followed immediately by a $50 billion lifeline to the auto companies.

So, President Obama's populist rhetoric means little with a policy that clearly favors the connected in the business world. In fact though, President Obama is not unique. Most of those in power produce policies that favor those in power. This isn't a Republican or Democrat thing but a power thing. President Obama merely produced rhetoric that made some people believe that he would be different. When push came to shove, he showered the elites with billions like every other politicians.

What we effectively have in this country is an oligarchy.

An oligarchy (Greek Ὀλιγαρχία, Oligarkhía) (oligocracy) is a form of government in which power effectively rests with a small elite segment of society distinguished by royal, wealth, intellectual, family, military, or religious hegemony

It's a government run by the special interests, big business, and everyone else with access to power. Long ago, it stopped being a government of the people, by the people, and for the people, if it ever really was.

This time last year, Goldman Sachs was on the verge of collapse. Now, it's making billions trading oil futures. The same could have been said of Chase. Now, it's making billions in mergers and acquisitions. Fannie Mae/Freddie Mac have stripped the illusion entirely of being separate of the government and are now just owned. Before then, powerful politicians would move seamlessly from D.C. to powerful positions within either or both (a la Rahm Emanuel) and, as a result, both have been given special treatment and perks for decades. While President Obama demands reforms of just about everything, he's doing nothing to reform either Fannie/Freddie.

After the banks got their bailout, the auto companies were next and the bailout was followed by cash for clunkers which made served as a major stimulant to sell cars. All of it has a dubious effect on the economy as a whole, but certainly it benefits the bankers and the automakers.

President Obama is not unique in this at all. For decades Republicans have protected the oil industry as though their cousins worked there. Six companies control more than 60% of the entire market. All of them make tens of billions yearly all at once and no politician finds anything the slightest bit wrong with any of it.

The insurance companies receive their own special favors. McCarron/Ferguson gave the health insurance provider a special denomination that exempts them from Sherman Anti Trust and as a result they have conducted a so called market that's actually just created a set of regional monopolies that allow the insurance companies to dominate their own regional markets and leave other regional markets for their so called competitors. In reality, it allows a series of health insurance companies to all make money at the same time all while enjoying an environment with little competition.

If it isn't big business that gets special treatment, then it's big labor. The labor unions enjoy just as many special privileges from our government as many of our biggest companies. Health care reform can't pass unless it gets its stamp of approval from the top labor unions. When I say stamp of approval, I mean that health care reform can't hurt the health care packages of the unions.

The list goes on and on. We have a government based on influence and power. In Chicago, we call this clout. Our government benefits those with clout. If you have clout, you have influence. If you have influence, the government legislates in your favor. You could just call it an oligarchy.


Anonymous said...


In other words, you are saying that our campaign finance system works this way. Clout = money, money buys bureaucrats, bureaucrats pass laws to favor the money, so every one in the system is happy.

There is something wrong with this system. It is totally out of whack.

The system needs someone to go rogue on it.


Jason Gillman said...


"This time last year, Goldman Sachs was on the verge of collapse. Now, it's making billions trading oil futures. "

The way I saw it at the time, is they were doing just this thing prior to the collapse. With 10s of billions propping up the prices for oil costing Americans dearly. When the market went whump, suddenly they had a significant loss. We bailed em out, now they are back to pushing it up again.

I understand the need for futures buyers, because without them, sometimes we would have shortages etc.. The theory is sound, but sometimes over indulgence has undesired results.

Some folks never learn however.. I guess that means us. Yes it is indeed an Oligarchy