Two things happened over the past two weeks that seem to go together. The first is the Pope Francis trip to Cuba and then the U.S.A. and a former hedge fund manager taking over a pharmaceutical company and raising the price of a medication from $13.50 a pill to $750 a pill. This hedge fund person also tried to do the same thing with another medication some time ago. The Pope, on the other hand, warned the world about how greed has hijacked capitalism over the last few decades.
Since I am not Catholic, the question of infallibility of the leader of the Catholic Church is not mine to interpret. It is, however, strange on two accounts that some of our business leaders, and politicians, choose to disregard the Pope on some issues, while supporting him on others. This is not anywhere near what I have come to expect from practicing Catholics.
There is also a question of how such successful business and political leaders can choose certain portions of the capitalist ethos and disregard others. As the politicians are fond of doing, they harken back to the founding fathers (and mothers) to bolster what it is that they are proclaiming. I find that to be true with the Ayn Rand minded tycoons who back up their ways with the writings of Adam Smith.
The rationale for creating an economy that disregards everyone other than the kingpins, was heading for a last roundup. In 2008 and 2009, if it weren’t for the federal government, the entire panoply of pseudo Adam Smith followers, would have been flushed down the toilet. Even though these mavens of the ruling class hate the federal government, they got down on bended knee to have the feds bail them out. I viewed their bleating with a jaundiced eye and did not complain because of the possibility of huge numbers of workers being thrown onto the scrapheap of the unemployed.
As Pope Francis has said, “I am not a lefty.” The term “market forces” is thrown around with impunity. It appears that there are no balancing forces in our time. That hedge fund manager is not the only CEO of a pharma company to raise the price on a drug that was used by a minority of people. We cannot just blame him for entering the “greed machine.” At this time in our civilization, market forces can be manipulated by the very powerful. When the CEOs of companies earn 300 times more than the average worker in comparison to 20 times more just a few years ago, one has to wonder how this happens. As wages stagnate, and worker production increases (as it has), as private entrepreneurs invade the prison system and fight to keep it large, as we charterize our schools, as we give away our veteran’s health to private companies, where do we go from here ?
Our current president has philosophized on these topics. Yet, the band plays on with just a small sound of discord from our erstwhile leaders. Larger and larger companies grow to absorb any small competitors. Large chains have the power to make their suppliers lower their prices dramatically, so that they can sell their goods for lower prices and pay their own workers low wages. The suppliers then have to pay their own workers lower wages to keep up with the lower prices.
Do you really think that his was the first time this kind of thing has happened. Take a look at the early part of the 20th century. The Robber Barons were pretty much doing the same thing. It is called monopolistic practices. If you want to go back even further, even before Adam Smith, take a look at the “Decree Dealing with Monopolies passed by the Diet of Cologne in 1512. It sounds like it just happened yesterday. “This decree, which shall not be construed to prohibit the establishment of partnerships for the purpose of buying and selling of merchandise, applies only to acts by which merchants monopolize supplies, fix prices arbitrarily, and agree among themselves not to see to third persons at a lower price.” Sound familiar?
It even goes back further to the Roman Empire. The emperors recognized that monopolies were not in the public interest and confiscated all of the offender’s property. Guess it all went into the Emperor’s coffers. So it has happened before. Can a balance be struck between the overwhelming desire of the Cafeteria Capitalists to make more and more dough and the public’s need for a fair system of goods and services?
I’m not sure that I will be around to see it. I don’t think it will be the “lefties” who will change the system. At the beginning of the 20th century it was a well heeled member of the ruling class who brought the Robber Barons to heel. He was no liberal, but a man with uncommon sense about the public interest. Theodore Rex understood why those practices were bad for the United States. Wish that I could say that there is one of those around now. After listening to all of the political entreaties by current presidential candidates of both the left and the right, I see no one.
Now that we have internationalized these practices, it will be even more difficult to change things. By the way, Adam Smith was not a fan of international trade. He was a home trade kind of guy.