Triage Starts in Government Bailouts: Who will get the money?

Eric Zuesse, originally posted at Strategic Culture

Governments throughout the world are now facing heavy activity by lobbyists seeking a bailout by their government. The activity is ferocious, and ferociously competitive, because some lobbies have bigger money backing them than others do, and different politicians owe their careers to different types of lobbies; so, for example, if one politician is funded primarily by the oil industry, and another is funded primarily by the retail industry, those two politicians will probably be looking to save different special interests. Since there now will be an enormous number of bankruptcies, there will be an enormous need for governments to redirect wealth, no matter how opposed to socialism a given government might be.

In normal times, the total society’s wealth is rising, and so any such governmental interventions, which result from the routine competitions between lobbyists, are usually for federal funds which are expected to come from the growth in governmental spending. However, at a time like the present, when we are at the beginning of a depression, which means a period of declining wealth, this competition between lobbies is vastly more intense, because the companies’ own economic survival is actually at stake.

The global coronavirus depression starts with the necessity to increase “social distance,” meaning the physical separation of individuals from each other and especially from strangers. This means immediately that local durable good retailers will see less traffic and Amazon dot com and other online retailers will see more traffic; and, so, absent the amount of government corruption that exists, taxation upon the latter group (the online retailers) would be soaring in order to fund the former’s (brick-and-mortar stores) not going bankrupt. This would be an example of the type of socialism — democratic socialism — that would exist if the government were not corrupt (i.e., if it were democratic, instead of aristocratic — otherwise known as “oligarchic” or “kleptocratic” — “aristocracy” here meaning controlled by a wealth-privileged group).

Also: restaurants, movie theaters, and other industries that depend upon crowds, will be going bankrupt, whereas delivery-services for competing goods and services (such as home-delivery and, again, online providers) will be experiencing increased patronage.

All types of travel and tourism services will be going bankrupt, and this also means that commercial aviation for passengers will be hit hard and produce bankruptcies, but air freight services will be little affected and therefore the latter would be taxed more and the former (passenger airline services) would be taxed less, if there were no corruption; i.e., if the country were democratic, instead of aristocratic.

Fascism might be defined as corrupt government, since it is a form of government that values only certain groups, which are the holders of governmental power, and it devalues all other groups, which do not hold governmental power. Consequently, under the present circumstances, the types of redistribution of wealth that have been described above for democracies would not occur, but, instead, the types of industries that are being crushed by the consequences of the coronavirus catastrophe will be allowed to sink and then drown, and the types of industry that are being boosted by the coronavirus catastrophe won’t be taxed extra for benefitting from it.

However, the situation in fascist countries will be even worse than what has just been described here. The more deeply systemic wealth-redistributions will be occurring at the financial level, where the options that were faced by governments during the 2008 financial crash will re-appear but with an even greater intensity: whether to direct the bailouts to the giant financial institutions, which had ripped off the public and thus produced the crash, or instead to the public who had been ripped off by them. Virtually all of the bailouts left whole the fraudsters who had enormously increased their personal wealth by deceiving investors and home-purchasers. Virtually all of the damage they did to their victims remained uncompensated, and received from those fraudsters zero in the way of restitution to their victims. In other words: virtually all governments were actually fascist. They were aristocratic, not democratic. They favored the top-level fraudsters, not the public. This is fascism.

For an example of how this would work in the present circumstances, American billionaire Bill Ackman said on March 18th that “I’ve been aggressively buying stocks including Hilton today. And I’ve been buying all the way down — Hilton, Restaurant brands and Starbucks,” and he said “No business can survive a period of 18 months [which is the minimum the Department of Health and Human Services expects] without revenue,” so he is expecting the U.S. federal Government (via the Fed and ultimately the U.S. Treasury) to bail out these giant corporations before then: CNBC reported that “Ackman predicted that hotel stocks including Hilton could ‘go to zero’ soon if no action is taken. He is a major shareholder in Hilton.” Obviously, since he’s “buying all the way down,” he is betting that the U.S. Government will again be a socialism for the rich — such as for people like himself. So, he wants the U.S. Government to bail out large corporations such as Hilton, which he is “aggressively buying” on the expectation that socialism for the rich will again happen, as it did with Bush in 2008 and continued under Obama in 2009 and afterwards. At 11:55 in CNBC’s accompanying video interview of him, he said “Boeing will not survive without a government bailout,” and he said this there arguing that, for the next 30 days, government should be bailing out everything, which, of course, will not happen. (He knows it, too, but some billionaires try to be respectable to liberals — not only to conservatives — so as to keep the con going.)

The megacorporations all hire huge lobbying firms, which virtually write our laws. Basically, the lobbying firms represent America’s billionaires, who control the nation’s largest corporations and all of its international corporations. America’s billionaires expect to be bailed out again, and they actually oppose and prevent socialism for anybody else (which would be a democracy). (For example, how did Joe Biden beat Bernie Sanders? Biden represents the DNC, which represents the Party’s mega-donors, all of whom were terrified of Sanders.)  And they think that the country is so corrupt that it will happen again — bailing out the top while letting everyone else flop.

This is fascism. It’s what billionaires expect, and, actually, demand. For example: who can doubt that Donald Trump will want the Trump Organization (all those hotels and resorts) to be bailed out by the federal Government? America is a gravy train for its billionaires; that’s what they expect, and what the American public tolerate (such as when, on February 29th, Biden won his first Presidential state primary in all of his long career’s three separate attempts to win the Democratic Presidential nomination).

And there is sound evidence that, this time around, just like after the 2008 crash, it will be the billionaires who get the bailouts. For example, on March 20th, Zero Hedge headlined “Confirmed: Fed Bailed Out Hedge Funds Facing Basis Trade Disaster”, and closed with “the Fed launched the repo bazooka, allowing all those who had the basis trade on to quietly exit stage left, bailed out by a deceiving Fed that told the world its mission was to rescue main street when in reality it was just making sure the billionaires had someone to dump their money-losing positions to.” (And that “someone” isn’t even nearly as much Wall Street as it is Main Street.) This is fascism. Some would call it, instead, “Robin Hood in reverse.” It’s the American reality — and has been, ever since at least around 1980.

All of the “Robin Hood in reverse” Government fits with President Trump’s priorities. On February 10th, USA Today reported that, in his new budget proposal, “Trump is proposing $740.5 billion, a 0.3% increase, in military spending for the fiscal year that begins in October. Non-defense programs would be cut by 5% to $590 billion.” And “The Wall Street Journal reported that the budget will seek $4.4 trillion in savings over a decade – and $2 trillion of that come from savings from entitlements [Social Security, Medicare, and Medicaid].” Of course, if America were a democracy, then a person such as this wouldn’t have become President, at all, and also his opponent wouldn’t have been Hillary Clinton; it would have been very different types of leaders, not leaders whom the billionaires have selected; but it’s not a democracy; so, it produces leaders such as these.

Consequently, anyone who is in an economic category which will be particularly harmed by the coronavirus-19 plague (such as small businesses) can reasonably expect not to be salvaged by the politicians who nominally represent them but who actually represent those politicians’ mega-donors; and anyone such as Jeff Bezos who is in an economic category which will be particularly benefitted by this plague can reasonably expect to keep all, or almost all, of his extra winnings from it. This is how fascism is supposed to function.

Also on March 18th, Trump’s chief economic advisor, Larry Kudlow, publicly raised the possibility that the Government “might take an equity position” (buy stock) in some corporations that would otherwise be bankrupted by coronavirus. Doing that would not necessarily be bad for the American public, because it would not only prevent layoffs by those firms, but it might also produce profits for the Government selling the stock after the crisis had passed. However, it would be especially good for the other stockholders in the given corporation, by preventing it from going bankrupt — this would rescue the firm’s other stockholders. It would probably be done only for corporations that are controlled by billionaires (and that therefore possess political clout). Small locally-controlled firms would be ignored. In an authentic democracy, the billionaire-controlled firms would be ignored, and the locally controlled firms would be salvaged. 

Whatever society emerges from this, after the plague has subsided and gone, will therefore probably be even more unequal in wealth than now exists. Fascism tends to concentrate wealth, and the recent history of the U.S. is fascist.

Although there has been a widespread belief that fascism lost in World War II, that was only on the military level. Fascism as an ideology continued, and, by its gradually taking over completely in the United States (euphemistically renamed there as “libertarianism”) and then being spread by this country throughout the world (euphemistically renamed there as “neoliberalism”), the ideology has won, despite the fascist nations having lost militarily in 1945. It’s a lesson for history. America wasn’t fascist then, but it is now. All indications are that with the coronavirus plague, this reality will become even more entrenched as being part of history — a post-WW-II ideological victory for fascism (“libertarianism,” or “neoliberalism”).

Every government now faces a triage of bailouts. All indications, if the present is anything like the past, are that no bailouts would be better than the bailouts that are likely to come, and that bailouts which take from the richest and give to the poorest, such as would occur in an authentic democracy (socialism for everyone but the rich), would be the best solution for the problems that are ahead of us today. That outcome would constitute an authentic democratic revolution. However, given the extreme wealth-inequality which already exists in America, it is extremely unlikely that this fascist country will become a democracy. Far likelier, it will only become yet more fascist.

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Investigative historian Eric Zuesse is the author, most recently, of  They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of  CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.