Requiem for the American Dream: The 10 Principles of Concentration of Wealth & Power

Chomsky exposes corporate greed as unsympathetic, dangerous, and selfish. Corporate greed is the root cause of America’s lack of social security programs, which are based on solidarity—that is, caring for the needs of others. For example, the quality of public education, increasingly funded by the public rather than the government, is declining, while tuition increases exponentially. As a result, quality education is locked behind a heavy payroll. In comparison, the previous century in US history saw the complete opposite. After World War II, the US government ratified the GI Bill of Rights—which funded tuition for veterans—and contributed to the push toward mass public education. Chomsky notes that the US was much poorer in the wake of WWII yet managed to fund education; no logic supports today’s lack of resources.

In addition, corporate greed focuses on short-term goals to maximize profit. For example, the US healthcare system is largely privatized and unregulated, which results in inefficiencies and heavy costs for patients. Insurance companies, including those attempting to privatize Medicare, use the “sunset principle” to galvanize voters: They lay out an attractive short-term proposal by providing immediate benefits while indebting later generations. Similarly, pharmaceutical corporations in the US fight to keep the government from controlling drug prices. Due to their influence, corporations sabotage every attempt to implement national health care, including Obama’s Affordable Care Act, which was shut down despite its overwhelming popularity. This once again demonstrates the undemocratic and unequal nature of the current US political system: The wealthy affect policy at the expense of the rest of the population.

The elite typically want a small government: The less government interferes with their interests, the more they can do as they please. However, they’re interested in maintaining a state for two purposes: employing military power to control the world scene and using taxpayer money for corporate gains. This results in extraordinarily high military spending at the expense of other social programs. In other words, corporate greed and its capacity to influence policy are the culprit for the failing US public education system. Chomsky concludes that education can be free and economically sustainable; the reality, however, differs because funding social programs doesn’t benefit corporations, which act only to maximize profit.

Chomsky notes that more often than not, regulatory measures to restrict corporations are initiated and supported by corporate tycoons themselves. With enough money and power, regulators can be bought, and the companies can take over their work, essentially allowing corporations to self-govern. Chomsky points out that banks and lobbyists are the ones writing the rules of financial regulation; thus, the more powerful a corporation is, the easier it becomes for them to influence policy. This process is called “regulatory capture,” and it underlines how policymakers become lobbyists, who then fight to control legislation in a perpetual system of “revolving doors.”

Corporations didn’t always enjoy this amount of power. In the 1930s, the US government implemented the Glass-Steagall legislation, which separated commercial banks (where the federal government backs people’s deposits) from investment banks (which could reinvest people’s savings and whose losses the government didn’t guarantee). Not until the 1970s did lobbies multiply, as a result of the coordinated business attack on the social gains of the previous decade.

Lobby control eventually led to undermining of the Glass-Steagall legislation during the Clinton administration. Republican Phil Gramm and banking executive Robert Rubin successfully forced government backing of investment banks as well. In other words, even if banks engaged in high-risk ventures, they no longer needed to worry about going bankrupt: The government was now legally obligated to bail them out—using taxpayer money.

This type of deregulation began during Reagan’s administration and continued into the Clinton’s. The 1970s and 80s were laden with financial crashes, whereas the 1950s and 60s, which still upheld the regulatory measures of the New Deal, had none. When investment banks failed, the Reagan, Clinton, Bush, and Obama administrations were legally bound to bail them out. With a “nanny state” covering for them, banks and corporate tycoons could safely plan to profit from the next financial crash. Chomsky cites a recent study by management professor Winfried Ruigrok and business professor Rob van Tulder, which concludes that public subsidies saved a quarter of the top 100 biggest corporations from bankruptcy.

Deregulation is a neoliberal ideal. It allows financial institutions to operate on a market system, which is solely concerned with maximizing profit and disregards all drawbacks as “externalities.” This is dangerous because powerful corporations can disregard even systemic risks, which can cause the collapse of the entire financial framework. A classic example of this principle at work is the 2007 mortgage crisis, which devastated the entire financial network, including banks, and which only recovered through federal bailouts.

In other words, neoliberalism benefits only the rich. This is true even on the international scene. Chomsky points out that liberated colonies that didn’t follow the neoliberal principle of “letting the market decide” were much better off than the rest. Rather than allow the UK and other imperialist countries to control the price of their goods, they imposed tariffs and monopolized their domestic production. Chomsky cautions that allowing US politics to walk the path of neoliberalism is incredibly dangerous: The wealthy will keep consolidating power at the expense of everyone else.