Jeremy Grantham Exposes The Corporatocracy: America’s “Run By Those Guys For Their Own Interests”

america the corporatocracy

Have profit margins risen to a permanently higher plateau? Are average Americans better off than they were a generation ago? I had the opportunity to discuss those questions, which are centrally important to investing and economic policy, with Jeremy Grantham a couple of weeks ago.

The discussion took place as part of a larger interview about climate-change investing. Grantham is the co-founder and chief investment strategist of Boston-based Grantham Mayo Van Otterloo (GMO).

It’s been widely reported that over the last 20 years the number of publicly traded companies has decreased by about 50%. The common explanations center on the fact that the number of de-listings, mergers, acquisitions and bankruptcies have outstripped the initial public offerings (IPOs).

But I wanted to know if there was a deeper explanation related to the fact that corporate profit margins are at historical highs. Over the last dozen years, with the exception of the financial crisis, profit margins have been between 9% and 11% of GDP. Prior to that, the last time they were above 9% was in 1951.

The U.S. economy has become more concentrated in the service and technology sectors, which are inherently more profitable than the manufacturing businesses that dominated 50 years ago. Those business, like Amazon, Apple and Google have built incredibly strong, near-monopolistic franchises that should translate to higher margins.

If the market has become dominated with highly profitable, monopolistic franchises, then maybe that is why there are fewer companies and profit markets are no longer “the most mean-reverting series in finance,” as Grantham once claimed.

GMO has looked at this issue extensively. As Grantham noted, “profit margins and return on sales will vary much depending on whether you are in the supermarket business or whether you are in some software company. There is no average to which it moves.”

But that doesn’t necessarily mean that returns for equities will be greater going forward. As Grantham explained, higher margins will attract more capital and reduce the returns relative to other asset classes. “If your capital is returning more in this area than the other area then capital will flow and balance it out,” he said.

Higher margins have been offered as an explanation, by Grantham and others, for why the cyclically adjusted price-earnings (CAPE) ratio is higher than its historical average. But CAPE ratios depend on other factors, such as real interest rates, so margins only tell part of the story.

Grantham said that the monopoly factor has increased margins “a bit.” “Corporate power as exercised through Congress, particularly in the U.S., has clearly increased the total domination of regulatory boards by the industries. Regulations have gone from being concerning to laughable, and totally run by those guys for their own interests,” he said.

Grantham is far more concerned about the societal impacts of unchecked capitalism than he is with its effect on margins. “We are seeing a flowering of corporatism where government is designed to maximize the opportunities of giant influential companies and industries that spend a lot of money lobbying,” he said. “We continue down that primrose path today with yet another cycle of deregulating designed to help corporations.”

Grantham spoke about the “punishing consequences” that tax cuts and deregulation will have on the general public. He said that “maximizing the returns and the share of the pie going to corporations and the superrich is deplorable and has terrible effects on the economy in the long run. The average person in the street doesn’t have the buying power increments that they used to have.”

American prosperity

But is the average American really losing buying power? On this point, Grantham and I disagreed. Whether you go back 10, 20 or 40 years, I contend the standard of living for Americans has increased enormously.

Grantham, however, said that in terms of general well-being and happiness, Americans are worse off.`

“If you do your best to control for everything and measure happiness, this is not a particularly happy country,” Grantham said. “It is not entirely dependent on income by any means, and we have not improved.”

He acknowledged a couple areas where Americans are better off – entertainment, such as high-tech computer games, and medicine, where he said progress in drugs and technology are keeping people alive longer. To those I would add food, in light of the advances in the quality and variety of choices in cuisine, and transportation, considering the speed and safety at which we can travel by car, plane and other means.

But Grantham said that the average worker has not been paid more since 1974 for an hour’s work. “Does he feel more content, or does he feel extremely frustrated by his relative lack of progress compared to others?” he asked, rhetorically. “There is no doubt that he is more frustrated. The suicide rate in that group has gone way up. The drug addiction has gone way up.”

Indeed, he said there are all the indications of a “thoroughly miserable middle America.”

Read More: https://www.advisorperspectives.com/articles/2018/01/08/jeremy-grantham-on-profit-margins-and-american-prosperity

The Deep State’s Christmas Present to America: Surveillance That Never Ends

Big brother holiday poster

Just in time for Christmas, the Deep State wants to give America the gift that keeps on giving: never-ending mass surveillance.

I’m not referring to the kind of surveillance carried out by that all-knowing and all-seeing Jolly Old St. Nick and his informant the Elf on the Shelf (although, to be fair, they have helped to acclimate us to a world in which we’re always being watched and judged by higher authorities).

No, this particular bit of Yuletide gift-giving comes courtesy of the Deep State (a.k.a. the Surveillance State, Police State, Shadow Government and black-ops spy agencies).

If this power-hungry cabal gets its way, the government’s power to spy on its citizens will soon be all-encompassing and permanent.

As it now stands, Section 702 of the Foreign Intelligence Surveillance Act—the legal basis for two of the National Security Agency’s largest mass surveillance programs, “PRISM” and “Upstream”—is set to expire at the end of 2017.

“PRISM” lets the NSA access emails, video chats, instant messages, and other content sent via Facebook, Google, Apple and others. “Upstream” lets the NSA worm its way into the internet backbone—the cables and switches owned by private corporations like AT&T that make the internet into a global network—and scan traffic for the communications of tens of thousands of individuals labeled “targets.”

Section 702 has been used as an end-run around the Constitution to allow the government to collect the actual content of Americans’ emails, phone calls, text messages and other electronic communication without a warrant.

Under Section 702, the government collects and analyzes over 250 million internet communications every year. There are estimates that at least half of these contain information about U.S. residents, many of whom have done nothing wrong. This information is then shared with law enforcement and “routinely used for purposes unrelated to national security.”

Mind you, Section 702 gives the government access to the very content of your conversations (phone calls, text messages, video chats), your photographs, your emails.

So beware of what you say, what you read, what you write, where you go, and with whom you communicate, because it will all be recorded, stored and used against you eventually, at a time and place of the government’s choosing. Privacy, as we have known it, is dead.

For all intents and purposes, we now have a fourth branch of government.

This fourth branch came into being without any electoral mandate or constitutional referendum, and yet it possesses superpowers, above and beyond those of any other government agency save the military. It is all-knowing, all-seeing and all-powerful. It operates beyond the reach of the president, Congress and the courts, and it marches in lockstep with the corporate elite who really call the shots in Washington, DC.

The government’s “technotyranny” surveillance apparatus has become so entrenched and entangled with its police state apparatus that it’s hard to know anymore where law enforcement ends and surveillance begins.

The short answer: they have become one and the same entity.

The police state has passed the baton to the surveillance state.

This hasn’t fazed President Trump who, much like his predecessors, has thus far marched in lockstep with the dictates of the police state.

For months, the Trump Administration has been actively lobbying Congress to reauthorize Section 702 in its entirety. Now, according to The Intercept, Trump is actively considering a proposal to establish his own global, private spy network that would circumvent official U.S. intelligence agencies and answer directly to the White House.

If approved, this would be yet another secret government agency carrying out secret surveillance and counterintelligence, funded by a secret black ops budget that by its very nature does away with transparency, bypasses accountability and completely eludes any form of constitutionality.

As if we weren’t being spied on enough already.

On any given day, the average American is now monitored, surveilled, spied on and tracked in more than 20 different ways by both government and corporate eyes and ears.

Every second of every day, the American people are being spied on by the U.S. government’s vast network of digital Peeping Toms, electronic eavesdroppers and robotic snoops.

Talk about a system rife for abuse.

Ask the government why it’s carrying out this warrantless surveillance on American citizens, and you’ll get the same Orwellian answer the government has been trotting out since 9/11 to justify its assaults on our civil liberties: to keep America safe.

Yet warrantless mass surveillance by the government and its corporate cohorts hasn’t made America any safer. And it certainly isn’t helping to preserve our freedoms. Frankly, America will never be safe as long as the U.S. government is allowed to shred the Constitution.

Now the government wants us to believe that we have nothing to fear from its mass spying program because they’re only looking to get the “bad” guys who are overseas.

Don’t believe it.

Warrantless mass surveillance of American citizens is wrong, un-American, and unconstitutional.

Clearly, the outlook for reforming the government’s unconstitutional surveillance programs does not look good.

As I make clear in my book Battlefield America: The War on the American People, whenever the rights of the American people are pitted against the interests of the military/corporate/security complex, “we the people” lose. Unless Congress develops a conscience—or suddenly remembers that they owe their allegiance to the citizenry and not the corporate state—we’re about to lose big.

It’s time to let Section 702 expire or reform the law to ensure that millions and millions of Americans are not being victimized by a government that no longer respects its constitutional limits.

Mark my words: if Congress votes to make the NSA’s vast spying powers permanent, it will be yet another brick in the wall imprisoning us within an electronic concentration camp from which there is no escape.

Read More: https://www.rutherford.org/publications_resources/john_whiteheads_commentary/the_deep_states_christmas_present_to_america_surveillance_that_never_ends_s