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Date: 2022-07-02 Page is: DBtxt001.php txt00008591

Paul Buchheit

How Capitalism is Dismembering America

Peter Burgess

How Capitalism is Dismembering America

Some wealthy and uninformed individuals have referred to the lowest-income, 47 percent of Americans, as the “takers,” who enjoy government benefits at the expense of the high-earning one percent, but their claim is meaningless.

Too many Americans are unaware of the extreme disparities that have been caused by the unregulated profit incentive of capitalism. Our winner-take-all system is flailing away at once-healthy parts of society, leaving them like withered limbs on a trembling body, even as the relative few who benefit promote the illusion of opportunity and prosperity for all. Concerned citizens armed with facts are not fooled. Instead, the more they learn the angrier they get. And as in revolutions of the past, discontent leads to change.

Hacking Off the Poor Half of Society

Some wealthy and uninformed individuals have referred to the lowest-income, 47 percent of Americans, as the 'takers,' who enjoy government benefits at the expense of the high-earning one percent. But their claim is meaningless. The total amount paid out in 'welfare' (Temporary Assistance for Needy Families) is less than the investment income of just three men in a single year.

The monthly TANF income for a family of four is less than what the average member of the Forbes Top 20 made in one second at the office.

The 47 percent don't own stocks. They don't own anything. The so-called 'takers' have ZERO wealth. The value of any assets owned by nearly half of the country is surpassed by their debt.

Slashing the Security of the Elderly

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Recipients of 'entitlements' are accused by the uninformed of getting something for nothing. The opposite is true. According to the Urban Institute, the typical two-earner couple making average wages throughout their lifetimes will receive less in Social Security benefits than they paid into; same for single males and almost the same for single females.

Getting something for nothing? Yes, the rich are. Tax expenditures, which are deductions and exemptions that primarily benefit the highest-earning individuals, cost about 8 percent of the GDP, the same percentage that goes to Social Security and Medicare.

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If just one of the tax breaks for the rich, the $113,700 cap on Payroll Tax, were eliminated, Social Security would be almost entirely funded for the next 75 years.

Slicing Up Justice

In the last few months American citizens, some of them children, have been arrested for:

  • Looking for Indian arrowheads on federal land.

  • Throwing peanuts on the school bus.

  • Lying about a home address to get the kids into a better school.

  • Sitting on a milk crate.

Meanwhile, not a single banker was arrested for these actions:

  • HSBC Bank laundered money for Mexican drug cartels.

  • Goldman Sachs designed and sold mortgage packages that were meant to fail.

  • Bank of America and Lehman Brothers hid billions of dollars of bonuses and loans from investors.

Severing the Head from the Global Body

If you could gather together the world's 200 richest individuals, ask each one his or her net worth, get the actual numbers from Forbes, and then add it all up, the total would be more than the total wealth of half the population of the world, 3.5 billion people.

The U.S. is one of the greatest contributors to this shameful disparity. It's no coincidence that we're both the third least taxed developed country and the fourth highest in wealth inequality among all nations. It's also no surprise, with so little revenue going to the general public that our country is the fourth worst in the overall well being of its children.

Castrating the Taxman

Corporations have doubled their profits and cut their taxes in half in ten years. The burden of taxes, which Oliver Wendell Holmes called the price of a 'civilized society,' has been shifted to workers. For every dollar of employee payroll tax paid in the 1950s corporations paid three dollars. Now it's 22 cents.

Globalization has allowed U.S. corporations to stop paying for national defense and infrastructure and all the benefits of the U.S. legal and educational systems. All of the following companies had sizable U.S. revenues, but they claimed losses here while declaring billions of dollars of profits overseas.

  • Bank of America, with 82 percent of its revenue in the U.S., declared $7 billion in U.S. losses and $10 billion in foreign profits.

  • Citigroup, with 42 percent of its revenue in North America (almost all U.S.), declared a $5 billion U.S. loss and a $28 billion foreign profit.

  • Pfizer, with 40 percent of its revenues in the U.S., declared almost $7 billion in U.S. losses to go along with $31 billion in foreign profits.

  • Abbott Labs, with 42 percent of its sales in the U.S., declared a $256 million U.S. loss and $12 billion in foreign profits.

  • Dow Chemical, with 32 percent of its sales in the U.S., declared a $15 million U.S. loss against foreign profits of over $5 billion.


If there's anyway capitalism will work it has to be regulated. Otherwise greed takes over. Blind greed. The sneering head at the top of the body watches limbs being chopped off, but it doesn't seem to recognize that we're all bleeding to death.

ABOUT PAUL BUCHHEIT Paul Buchheit is a college teacher with formal training in language development and cognitive science. He is the founder and developer of social justice and educational websites (,,, and the editor and main author of 'American Wars: Illusions and Realities' (Clarity Press). He can be reached at

Submitted by Peter Burgess on April 22, 2013 5:52pm. Peter Burgess's picture

Paul Buchheit gave us a good summary of the problem, but there have been hundreds, if not thousands of summaries of the problem. On the other hand there have been little discussion about what to do about it.

Several decades ago there was a fear that Communism might be the alternative to Capitalism, but Communism demonstrated that it was not a sustainable economic idea, at any rate in its Soviet version. This concern vanished in the early 1990s with the implosion of the Soviet economy.

But Capitalism is also in trouble, and a big part of this is the way the monetary mechanism works and the terrible trio of money metrics: (1) money profit for business; (2) stock prices in capital markets for investors; and (3) GDP growth for politicians and pundits. When decision makers use these metrics to assess performance, the results are bound to be bad for everyone except the investor class, C-level executives and enabling politicians.

Adam Smith concluded that a market based laissez faire system would deliver the optimum outcomes in the economy of his day. But this was a low productivity and shortage world. 200 years later the economics changed significantly because of amazingly high productivity which produced a surplus of production. The bye-product of this is a surplus of labor, increasing shortage of resources, increasing damage to the environment from solid waste, carbon pollution, etc.

Bluntly put, since the 1970s the quality of life for workers in industrialized countries has been going down while the owners of capital have appropriated all the benefits of increased productivity. Quality of life to most of the world's poor remains scandalously low.

My contribution to the needed change is to promote metrics that are more meaningful. I call this TrueValueMetrics. The concept is simply that in addition to the accounting and reporting of money flows, there should be equally rigorous reporting of value flows. There should be rigorous money and value analysis for all economic activity and the data from economic activity then aggregated both into the implementing organization AND into the community. Based on this, there can be optimization of the economic activity so that BOTH the implementing entity and the community (place) are both winning.

When this is applied to the energy sector, the big integrated oil companies will have to account for the depletion of the petroleum resource in their value analysis which makes their operations far less profitable and makes renewable energy way more competitive.

When this is applied to the implementation of outsourcing, the increase in money profit for the business has to be offset by the value destruction that happens in the community. The numbers work a bit like this. Firing the individual in the community and outsourcing increases the profit by (say) $20,000 but the person and the family and the community no longer has incoming income of (say) $40,000. But that $40,000 has a 'multiplier' that may be 2.5 or maybe 10 ... but (say) 2.5 so the community impact is $100,000.

Profits up $20,000 ... community down $100,ooo does not sound like a good deal for the society as a whole. But it is worse ... if this generates long term unemployment, the loss of value gets to be continuous.

At the moment there is not a CFO in the corporate space that is required to think in these terms. I was one some time ago. Our work was to figure out how profits would be increased for the entity ... impact on the community is not in the figuring.

Anyone that watches sport knows that when you change the way the game is scored, you change the way the game is played.

Let's change the scoring system in the economy, and then we will change the behavior in the economy.

Related to this is the need for reform of the money regime. Specifically, there should be ubiquitous local currencies to complement the out-of-control fractional reserve money that is abundant where it is not needed and scarce where it is needed.

With more meaningful metrics and complementary currency, the modern economy can deliver on its promise. The promise is huge. Science and technology ... knowledge ... is better than at any time in history. More youth around the planet are better educated than at any time in history. The opportunities exist and huge the needs exist ... but the money profit titans of the banking and business community do not know how to engage in a way that will deliver on the potential because the only dimension they are working with is money profit, stock prices and GDP growth!

Submitted by Jeff Lewis on April 22, 2013 10:29pm.

Good points.

I especially appreciate your paragraph about Adam Smith. I think we all need to recognize how much the economic environment has changed over time. In Adam Smith's time, it was all about individuals figuring out how to be self-sufficient, and maybe figuring out how to tap some local resource. The closest thing to a CEO was a slave owner; the closest thing to a corporation was a large sailboat filled with sailors (paid mostly with rum) contracted to serve the queen; disputes were settled brutally, with a dagger or otherwise.

Today we have legions of lawyers who happily get rich creating documents to shield accountability and delay any justice; we have a majority of corrupt politicians who cannot see the tip of their own nose past the ink on a dollar bill; and we have convoluted laws and a broken judicial system that only accelerates the present orgy of greed.

Both Capitalism and Communism were 'invented' centuries before the current program, which is filled with complicating workarounds. As such, it is frankly silly and ineffective for any of us to bog down too much on the two 'C's'. Hell, our grandparents and parents wasted far too much effort on this debate, which was folly then, too.

Submitted by GreenInCA on April 29, 2013 10:07am.

This reply is for both Jeff and Peter.

You both mention communism as the (deservedly) failed alternative to capitalism. In today's global economy, those (mostly young) people who know they're being exploited but don't understand how, and are desperate for an alternative, aren't turning to communism. They're listening to the Wahhabist imam at their local mosque, and turning to radical Islam.

Think about what Osama bin Laden said he was fighting. It wasn't Christian missionaries, or Hindus in India, or even Shiites (though he was Sunni). It was capitalism. He didn't target the Vatican; he targeted the World Trade Center. No wonder he's viewed as a martyr by millions outside this country who see him as the 21st-century Che Guevara.

Two sad ironies here: first, he, and the aforementioned madrassas, were and are supported by Saudi oil money--provided by short-term-damn-the-pollution-let's-burn-it capitalism; second, he permanently alienated from his anti-capitalist cause all those Americans who today are being exploited by the new colonialists. Those colonialists are multinational corporations, not national governments any more. The 19th century is over, but colonialism is alive and well. Go try to get Monsanto to permit labelling of GMO foods, or meat packers to quit killing and maiming their (largely undocumented) workers.

And those would be minor efforts compared to trying to break up the 'too big to fail' casinos masquerading as banks. IMO that will be a struggle on the scale of Gandhi's efforts to get England out of India.

Published: Monday 22 April 2013
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