We've been hearing a lot about the need to reduce taxes even further on the alleged "job creators" -- the wealthiest of the wealthy. The Republicans propose to pay for this tax reduction by increasing taxes on the working class, who do not (in their view) pay their fair share. This excerpt from Alan Maass' The Case for Scoialism
offers some insight into the true nature of the "job creator" class.
Let’s consider one of them: Stephen Schwarzman, Corporate America’s best-paid chief executive in 2008 and number 50 on the Forbes 400 list of richest Americans the next year. In 2008, Schwarzman raked in $702 million as head of the Blackstone Group, a Wall Street investment firm—most in the form of stock awards from an arrangement struck before Blackstone became a publicly traded company the year before.
What does Blackstone do that it needs to reward its top executive so handsomely? Blackstone is one of the world’s leaders in private equity investments, having helped pioneer the corporate takeover strategy. The idea is that an investment group swoops in and buys control of a company, takes out huge loans to finance the purchase, restructures operations to slash costs and free up cash, then resells the company and pays off the debt, while pocketing a big profit. The basic principle is nothing more than buy low and sell high, but the key is in the borrowing, or what Wall Street calls leverage. If you can get control of a company by only putting down a fraction of its purchase price, then your rate of return on the original investment multiplies.
For those who think that entrepreneurs take risks: That's the way it used
to work, that's the way it should
work. But the whole capitalist game has been largely taken over by guys like Schwarzman, who take no risk at all
. He uses other people's money.
Blackstone has diversified into other areas. It dabbles in real estate and manages some hedge funds. But these other operations share something in common with Blackstone’s main business: They contribute nothing of any use to the economy or society. Blackstone doesn’t launch new businesses or develop innovative products. Its chief activity is to be a traveling parasite.
Schwarzman lives, much of the time, in a $35 million Manhattan mansion previously owned by John D. Rockefeller. (Say what you will about John D., at least he
provided a useful product.) That's not Schwarzman's only home, of course; he considers himself a collector of houses.
The tens of millions that Stephen Schwarzman spent on another mansion in the Hamptons is money that thousands of workers didn’t get paid because they were laid off after a corporate takeover engineered by Blackstone. The trillions that the U.S. government committed to the Wall Street banks is money that can’t be used to expand food aid programs or to rebuild crumbling schools. The hundreds of billions devoted to the Pentagon every year is money that won’t go to conquering AIDS in sub-Saharan Africa.
From the point of view of anyone who wants to do something to make the world a better place, this is money that has been stolen—pure and simple.
At one time, the virtues of capitalism were competition, creativity and efficiency. But that's not what's happening now. Small business owners are true job creators, yet they can't get business loans. They are dying for lack of credit. Schwarzman, on the other hand, will always be able to use the money of others to play his parasitic games.
The libertarians say that they favor small business owners, but their ideas always make life easier for guys like Schwazman, not for those lower down on the food chain. The libertarians say they favor capitalism, but what they really favor is an unsustainable anarchy we might call post
In our new system, the people who want to make things
cannot. The vampires thrive.