The privatizing of profits while socializing losses was clearly cited by U.S President Andrew Jackson as he worked to close the Second Bank of the United States. By diverting all federal deposits to other institutions in 1833 through an executive order, Jackson set in motion a series of events leading to its liquidation in 1934.
The majority of the stocks were held by a few hundred wealthy Americans. Four thousand private investors had held eighty percent of the bank’s capital. Among them were one thousand Europeans. During its reign at the commanding heights of the U.S. economy, the institution was the largest monied corporation in the world.
In recent memory, a form of intervention in which government subsidies go to poorly managed corporations is often done citing justifications such as preventing systemic damage to what might otherwise be considered a free marketplace. These subsidies have taken the form of full or partial bailouts, such as those occurring during the 2008 financial meltdown.
Lemon socialism, or more precisely crony capitalism, is best described through the Icelandic term “pilsfaldakapítalismi.” Pilsfaldur refers to the hemline of the skirt. “Skirt capitalism” therefore conjures images of guilt ridden children hiding behind their mothers’ skirts after having done something the child knew was wrong.
An erring child’s reluctance to suffer with bad consequences lends itself well to an understanding of just how skirt capitalism contrasts with democratic socialism. The so-called Great Recession was, in fact, the inevitable result attendant upon the latest of many Great Swindles.
Understanding what does or does not count as a “subsidy” is the key to unraveling the skirt capitalism that represents the worst aspects of both capitalism and socialism.
During his senior management reign at Exxon and ExxonMobile between 1984 and 2005, Lee Raymond denied that his company had received any subsidies from the federal government.
To this executive, the Fifth Fleet, the Sixth Fleet, the re-flagging of Kuwaiti tankers, the Air Force’s protection of mid-east oil fields, the fighting of oil-well fires and the numerous other government services rendered to maintain the oil industry’s long, long pipeline were not subsidies somehow inuring to the benefit of Exxon.
During the same time Raymond was relentless in his attacks on ethanol subsidies, automotive fuel efficiency standards, and solar energy. He and his industry have been successful in labeling solar energy as “alternative.” Even in light of the fact that fossil fuels would not exist without photosynthesis, even when there is no useful physical energy in this solar system without the blazing orb that occupies its center, the fossilized world view is that solar energies will never be mainstream.
The first use of coal occurred about 2000BC in China. This was followed in 200BC with that region’s development of natural gas as an energy source. By the first century the Chinese had refined petroleum. The Dutch were using windmills in the 1590s. And, in 1838, William Robert Grove developed what he called a “gas battery.” Today we call those fuel cells.
The immense potential of petroleum resources and applications attracted the interest of John D. Rockefeller. Rockefeller worked to gain absolute control of the industry, covering each phase of the process. He formed the Standard Oil Company of Ohio in 1870. In the early 1870s, oil exploration in Pennsylvania’s Oil Creek region grew significantly, and the effort would expand to other states and nations during the next decade.
In 1876, William Grylls Adams conducted the first demonstration generating electricity directly from sunlight in a selenium solar cell. His pioneering work portended quantum mechanics long before most chemists and physicist had accepted the reality of atoms. This early effort was not deemed “economical” because selenium solar cells failed to convert enough sunlight to power electrical equipment. Even so, Adams and his student, Richard Evans Day, proved that a solid material could change light into electricity without heat and without moving parts.
In 1878, Augustin Mouchot displayed his solar engine at the Universal Exhibition in Paris. The production of ice using concentrated solar heat won him a gold medal. During this same time, the economic advantages brought about by the Cobden-Chevalier Treaty, combined with a more efficient internal transportation for coal delivery, made coal much cheaper in France, thus reducing the necessity for research into “alternative energy.” The French government determined that solar energy was uneconomical, deeming Mouchot’s research no longer important thereby ending his funding.
By 1879, Standard Oil controlled 90 percent of U.S. refining capacity. It controlled the majority of rail lines between urban centers in the northeastern U.S. It held leasing companies at various sites of oil speculation throughout the country. Due to Rockefeller’s efforts and developments, petroleum became the primary energy source in the U.S. and around the world.
The World’s Columbian Exposition, also known as the Chicago World’s Fair, was held in Chicago in 1893 to celebrate the 400th anniversary of Christopher Columbus’ arrival in the New World in 1492. The Morrison Electric was an American Automobile originally produced by William Morrison in 1887. In 1890 Morrison’s second generation electric automobile featured 24 batteries and had an output of 112 amperes at 58 volts. The vehicle took 10 hours to recharge. Each cell weighed 32 pounds. The motor developed about 4 horsepower, was mounted beneath the carriage and geared to the rear axle. The motor was energized by a switch that regulated the number of cells cut in and out. The speed varied from six to twelve miles per hour. A range of about 100 miles was obtained without recharging. The Morrison Electric was featured at the 1893 World’s Fair.
At each and every juncture the oilees would meet a competitive threat by insuring it had a price advantage over any upstart, be it hydrogen, wind, photovoltaic, etc. That low price would last just long enough to put the competitor out of business. In the past few decades the oil concerns have acquired and squelched promising battery technology, wind turbine companies, and those manufacturing solar cells.
Sourcing crude in war zones, while refining it in hurricane zones would not make any sense from a business perspective, unless government resources are brought to bear protecting the pipeline while politicians are paid for to manipulate an otherwise free market. Piping crude from Canada across sensitive aquifers to this same hurricane zone also makes no sense from a business perspective unless the industry is exerting a corruptive influence upon executives and legislators. When damage awards related to the Exxon Valdez spill got reduced by the courts, time and again, until the victims come up virtually empty, the an integrity challenged judiciary was also implicated. When a documentary movie about the spill, and the fraud perpetrated to make residents feel good about the resources that would be in place in the event of a spill, disappeared from the market, it became apparent the media was manipulated as well.
All of this seems complicated and that is not by accident. The truth of the matter is easier to understand through one simple question. If the oil industry were now paying its fair share to insure safe operations in the mid-east, and if keeping the seas clear of pirates was on the industry’s side of the ledger, what would a gallon of gas cost at the pump? Forty dollars? Fifty dollars? There is no better example of skirt capitalism than the oil industry. When politicians receive money to help erect barriers to market entry for renewable energy concerns, or when their support for sustainability amounts to mere tokenism, it is time to contrast and compare alternatives.
When the financial industry gets bailed out after engaging in bad faith on every front, when real-estate appraisers are not held to account for habitually inflating home values to please loan officers. When credit rating bureaus are permitted to continue in business after giving triple A ratings to worthless derivatives. When legislators refuse to regulate credit default swaps as insurance, when swaps are explicitly being sold as insurance, such politicians are clearly not putting the best interests of the country or the citizenry before their own self-interest.
Skirt capitalism privatizes assets and socializes liabilities. Democratic socialism is true to democracy as opposed to oligarchy. It is not the unbridled socialism that rewards indolence or professional alms takers. It is not penny wise and pound foolish for it is invested in sustainability. When Augustine Mouchot developed a solar powered steam generation system to drive industrial machinery, he did it because he was worried by the possibility of fossil fuels, such as coal, running out. Mouchot was thinking about future generations.
Democratic socialism is not compatible with the counterfeit wisdom and unmitigated selfishness that are at the heart of skirt capitalism. It is vested in a great humanity It leverages diversity. And yet it is not give-away artistry. It sees the value in education, healthcare, and old age insurance for all. It looks forward to a time when our profit motivation will be augmented and eventually displaced by service motivation.
While a politician thinks about the next election, the true statesman works for the next generation. While a politician exploits the power of incumbency to secure squatters rights, the statesman would gladly sacrifice his or her political career if it would somehow serve the greater good.
— Robert H. Kalk