Sunday, November 25, 2012

Reject austerity: Fight back against the coupon clippers

Here's one reason your public services are cut
Steven A Cohen is a rich man.  He is the head of SAC Capital Advisers, one of the "Biggest names in the hedge fund world" says the Wall Street Journal. If you work for a living its not likely you'll be using the services of SAC Capital Management. SAC helps those who prefer not to work for a living.

The FBI have been trying to build a criminal case against Cohen as a partner in one of what the WSJ claims is the "most lucrative insider trading scheme" ever.  Cohen's firm has a $14 billion fund and brings some of the best returns on Wall Street.  "Returns" are like wages for the coupon clippers except they don't have to do any real socially productive labor* to achieve them; "returns" are dependent on others to do that.

Cohen has done very well as $10 billion or so of the $14 billion fund is "his own money" according to reports. That depends which side of the class divide you're on of course as all the overtime in the world couldn't bring $10 billion in to a wage workers' savings account. If our economic status in society was dependent on the sacrifices we make for the common good, a social worker or war veteran would be a millionaire and Donald Trump or the hedge fund managers (15 of them earned $25 billion in 2006)  would be begging at a freeway on ramp.

The FBI has accused Mathew Martoma, one of Cohen's underlings, with securities fraud and insider trading and have been trying to get him to turn on his former boss claiming that the two of them participated in the scam.  It seems Martoma got a hold of confidential information about a drug trial from a neurology professor  at the University of Michigan.  Using this information Martoma traded shares based on this illegal information as did his boss which allowed the fund to rake in a handy $246 million in profits.  As they can't yet prove Cohen knew about the information, he is named as "portfolio manager A" in the filed complaints.  For snitching on Martoma, the esteemed professor has been given immunity from prosecution.

Basically, the complaints against the two claim that they shared this information and used it to trade in the shares of two companies involved in the drug trials, Elan Corp and Wyeth Pharmaceuticals, now part of the giant Pfizer Corp.  Rather suspiciously, a week before poor results of the trial were made public which sent share prices south, Cohen and Martoma began selling "hundreds of millions of dollars" of the shares and----get this---- made bets that the share prices would head south; some insight, some savvy eh! See, if workers had those sort of smarts we'd be rich.

Technically, you can get long sentences for insider trading as, after all, your stealing directly from other coupon clippers.  But as the Journal reports, most of those caught in insider trading scams who cooperate with the government serve no jail time at all. The esteemed professor is "very thankful" he won't serve any jail time says the Journal.

The health industry is very lucrative field for making what the bourgeois refer to as "illegal profits""If you have a pending application for a new drug, the difference between yes and no on approvals can be tens or hundreds of millions of dollars." says  Rod Rosenstein, a US attorney for the state of Maryland. When we consider the sales of some of these drugs like the statins, we are talking about billions of dollars.  It's no wonder they call them "blockbusters".   It's no different than having your capital employed in the movie industry.  That profits come from the unpaid labor of the worker is no matter, it is legal theft.  Swapping a $10 bill for a $20 would be considered an unfair exchange and cheating, but paying labor power less value than its use creates is revered activity, the epitome of success.

Outside of the extraction of surplus value from labor, this type of theft is rampant and amounts to trillions of dollars.  Part of it included in the more than $26 to $32 trillion estimated to be stashed away in offshore accounts. It's not just health care either, "The markets are awash in insider trading..." says Bloomberg Businessweek. I take that to mean what it says, that the markets are awash in insider trading. And it's from the horses mouth.

Just as an aside, we should consider another source of funds when we are asked for "shared sacrifice" and the need for austerity in the form of slashing of public services and jobs, and that's what they call the Shadow Banking Industry. According to the Financial Stability Board, worldwide assets in shadow banking totaled $67 trillion in 2011 with the US accounting for 35% of that figure. The Shadow banking industry has little regulation,  like most of the 1%'s activity that affects our daily lives, determines whether we eat or starve, we are not privy to it.

Most workers understand this sort of thievery goes on in the abstract but for me, and this might be a little selfish, I have to constantly remind myself of it ( and anyone else that might listen) as a means of defense against the onslaught of lies, trickery and arguments about hard times and merits of so-called capitalist democracy that we are forced to endure from the mass media, the pulpit, the universities and other institutions of theirs.  We cannot stand against this ideological warfare and more importantly fight for an alternative to this madness if we do not lay bare the objective truths, if we do not allow objective reality to prevail.

We do not live in an economic democracy. Their financial books and industrial methods are secret. Who knows about the Financial Stability Board or the Bank of International Settlements or the inner workings of the Business Round Table, the National Association of Manufacturers or other institutions of national and global capitalism?  I was trained to read their serious journals, we can't fight the class that rules without understanding what they're thinking and discussing about how they can best govern society and facilitate the plunder of its wealth.  But I come across institutions daily that I never knew existed like the Financial Stability Board.  These structures are part of the interconnected web of capital that links them all together and helps to maintain a semblance of stability in their rapacious quest for surplus value. Capital abhors obstacles, interruptions in the process of accumulation and exploitation of labor and it demands a certain honor among thieves and between nations, an impossible dream in a social system based on thievery but try they must, the consequences of conflict in the nuclear age are too dire.

We cannot begin to transform society, to see another way forward, to rid ourselves of a system of production that makes a commodity out of everything, art, water, air, the human body, if we don't reject in our own consciousness the alien view that society cannot provide a decent and productive existence for all humanity; that poverty is the fault of the poor.  Yesterday, more than 100 workers died in a fire in a factory in Bangladesh.  They died, like the 23 or so who died in a similar fire in a factory in North Carolina some years ago because they were unable to escape, there were no emergency exists.  In the NC incident if I recall, the doors were blocked to stop the workers' stealing out for a smoke.  Many of these workers' were women, possibly children.  They were murdered by the institutions of capitalism and those who perpetuate it and enforce its rule. These conditions are not accidental.

The alternative to this madness is for us to collectively own, manage and determine how we produce the necessities of life and how we allocate the capital and the labor to facilitate that process in a way that is harmonious with the natural world.  A global federation of democratic socialist states. We can only gain by hasting the demise of a social system that has reached a historical dead end.

* For the capitalists, "productive" labor is that which produces surplus value.  Surplus value is the difference between the value of the commodity produced and the value of the capital involved in the production process and is the source of profit.  "To be a productive laborer.." wrote Marx, " therefore not a piece of luck, bit a misfortune." Capital Vol 1 Chap XV1  By socially productive labor I am referring to the production of use values, products society needs to maintain our existence and improve it.

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