[UnderseaLcpl]

Originally Posted by Snestorm

Does Haliburton and others, such as The Carlysle Group, serve the state, or do the stateS now serve them?

The answer should be obvious, given the nature of their relationship with the state. Each serves the other, and their interests become increasingly fused.

In many ways, the actions of companies like Haliburton are not much different from the actions many of us take in securing our own livleyhoods. Where we write resumes and put on our best face and clothes for interviews, these companies hire PR experts and professional lobbyists in an effort to secure contracts. They are the same thing, just on different scales.

There is nothing notably wrong with all that, aside from the little white lies that both we and businesses tell when a job is on the line. Where it becomes wrong is when the state is given the power to actively regulate business rather than simply punish infractions. There are few people on this planet intelligent enough to start and run a successful company that are not also not smart enough to see the potential of regulation. There are even fewer who are so noble as to not act upon that knowledge.

The power to legislate is a prerequisite for the power to regulate, and where there is law there is the potential to outlaw things. For the shrewd businessman this means that there is potential to outlaw the competition, and that is precisely what they have been doing for hundreds of years. We just don't see it very often because they are so good at it. They hide their intentions behind noble-sounding causes like safety and environmental or job or whatever protection, or strategic and national interest. It is no small coincidence that most of the landmark regulatory decisions made in this century were generally supported by the largest firms in the industries concerned, and that those same firms offered their services in an advisory capacity for the regulatory boards to be formed. Half the time their employees or ex-employees are actually on the damn boards! Thus, the competition is either outlawed or the industry becomes prohibitively expensive to enter, which is just a way of outlawing something without actually outlawing it.

This is, once again, the natural progression of things. To simultaneously illustrate the point and provide an example of how this kind of mechanism is at work even amongst those of us who are not business tycoons, I give you the example of the modern labor union. Most people think unions are a good thing. After all, they protect jobs and work for higher wages and better working conditions for employees, do they not? Indeed they do, but the detriments of labor unions are not so readily apparent and certainly not as widely publicized.

The first labor unions had the much less noble-sounding moniker of "guilds". In essence, they were nothing more than conglomerations of established businessmen who sought to both regulate who could and could not practice their trade and win the support of the crown or the local noble(s). Obvious twofold goal there - elimination of competition and securing a source of work and therefore revenue.

Most of the guilds were eventually destroyed or disbanded when the industrial revolution came about. Machines that could produce plentiful and cheap goods replaced skilled artisans in fairly short order. The guilds could not compete, and thank God they could not or else we would still be living in a society where luxuries and good jobs were not available to the common person.

The industrial revolution also brought problems, however. The common conception is that workers labored ceaselessly in terrible conditions for very little pay, and this is true to some extent. The advent of machine labor meant that many goods could be produced quickly, but the population willing to buy those goods was still relatively small, so prices for both goods and labor fell.

Nonetheless, people still flocked to the cities to find work in factories and foundries. Why do you suppose they did that? Again, the answer is obvious; people left the farms to work in the factories because despite the dire conditions it was still a better way to make a living than scratching about in the dirt for even longer hours and even less pay. The industrial revolution alsop revolutionized agriculture, and there was more food than there were consumers to buy it, so the already miserable practices of share-cropping and serfdom were made even less appealing than before.

This state of affairs continued for a good while, but as the general standard of living improved, so did the lots of the workers. The most successful companies began paying higher wages to attract and keep better employees. In the most extreme examples they actually set up corporate welfare systems, where the company literally paid for and provided everything from birth to death. Today this is viewed as an abhorrent practice, but why? Those of us who are the teeming masses should all be so lucky to be guaranteed such a lifestyle.

The reason for the discontinuation of the practice was because the companies practicing it were hamstrung by regulation and were even outlawed in some cases. Enter the labor unions and the trust-busting of the late 19th and early 20th centuries.

As technology and industry advanced a few firms in key industries, led by great businessmen, emerged supreme from all the fierce competition. Companies like US Steel and Standard Oil became market dominators, and both their employees and their customers reaped the benefits of their efficient production of goods. The prices of things like steel and oil had never been so low, and the compensation of workers and the volume of inventory moved had never been so high. Well-documented statistics from the period indicate this, but today these firms and the men who commaned them are viewed as a failure of capitalism. Look at any high-school US history textbook. The companies concerned are called monopolies, and their leaders are called robber-barons. So what happened?

What happened is that competitors got upset about being beaten. Since they could not compete effectively, and they could not innovate sufficiently, they sought the help of the state to bypass the market. We cannot ever really know what words passed between them and the political representatives of the states in the lobbies of the Capitol building at the time since such things are not recorded, but we do have enough access to Congressional records from the period and the nature of modern lobbying to field a reasonable guess as to what was said. It probably went a lot like this; "Wah wah wah, we're the little guys and we support the worker and these companies are too powerful and it isn't fair how the workers are being treated and there should be some ground-rules set and we'll be happy to serve in an advisory capacity in this effort." I exaggerate, but not much. As a consequence, there were a lot of regulations enacted to protect workers and fix prices and so on and so forth. There was also a lot of media attention focussed on the subject.

Now, on to the unions. Unions had been around well before all this happened, but they weren't very powerful. They had to strike a delicate balance when negotiating with employers because if they made too many demands as a whole they would simply be fired as a whole and a new workforce would be hired to replace them. This situation was made worse by the tremendous amount of available labor. In their darkest days, the nature of labor unions was revealed in startling clarity as they beat, maimed and even killed strikebreakers. This says something of just how far people are wiling to got to protect their own interests, to say nothing of what New York City police did to the strikers, which says something of just how far the state (in that case, the Tammany Hall political machine) will go to protect its' interests.

With the advent of new regulatory laws, however, their situation changed drastically. One of the main ways that the competitors of big business sought to bring it down was to increase its overhead costs, and what better way to do that than to attack the most significant overhead cost of any business; labor.

Small firms have little to fear from unions. They don't have armies of specialized personnel to deal with. If the bookkeeper refuses to work because he feels he is not being adequately compensated it is no great matter to fire him and replace him. If an entire host of bookkeepers strike and you cannot legally replace them, you will find yourself in a very difficult situation. In retrospect, this was a vey foolish tactic for the leaders of unsuccessful firms to adopt. After all, even if the competition is eliminated and the way made clear for success, they would eventually have to deal with labor unions. I suppose their foolishness isn't entirely surprising, given that they were the leaders of unsuccessful firms. They were happy to trade ultimate success and the economic fate of a nation for a few moments of security.

The labor unions they empowered were no different. With their power to collectively bargain, arbitrate, and strike enforced by the state they had little incentive to refrain from seeking additional compensation. Most of the large corporations and corporate welfare systems in the US were destroyed before they had the presence of mind to react. Those that survived were broken under Teddy Roosevelt's administration.

America began a plunge into economic crisis as it became less and less competitive and more and more speculative. Few people remember it, but there was a great fiscal crisis in 1907, and even fewer remember why it happened. Ironically, it was one of the robber-barons, J.P. Morgan, who was largely responsible for the near-immediate recovery. The Central bank was re-founded by some ambitous souls shortly thereafter. Plutocracy breeds plutocracy.

America did not immediately plunge into another recession after these events. We owe our relative stability during that time to the idiocy of European politicians and monarchs more than we do to successful economic policy, however. As they slaughtered each other by the millions a huge demand was created for American war goods and it fueled our economy for several years. Once the war was over, America found itself in the exact same position it had been in before, with labor unions and regulation discouraging new enterprise but encouraging investiture in established companies. It was further helped by the fact that Europe, its main competitor, had largely annihilated its industrial and finacial base for no apparent reason.

Investiture is a good thing, but not if everyone invests in the same thing and it fails. Market "bubbles"(unsustainable growth trends) began to form in the early twenties. The biggest bubble of all was that of interests secured by expectations of German war reparations both directly and indirectly. In 1929 America recieved a triple-blow when many of these bubbles popped, a bank run began, and the Federal Reserve (as the central bank came to be called) enacted a disastrous policy of freezing monetary assets, which it called a "bank holiday". When banks are failing left and right because of a lack of near-money assets, the worst possible thing one could do is to freeze those assets. The assets can be frozen, but the market forces that govern them cannot. It is no surprise that the very day the bank holiday was ended, the market crashed even more steeply. It was like containing thousands of cheering fans at a popular event for several hours and then suddenly allowing them to rush the stage or arena or whatever. It was the fiscal equivalent of a soccer riot. No wonder people got trampled to death.

This post is already getting very long, and I must restrain myself from launching into a detailed analysis of the great depression, but the point has largely been made. Unions were a major contributor to the state of US industry and the circumstances in which it found itself.

Now, let's move to the modern labor union. The same basic mechanisms that drive it are still in place but the circumstances have changed. Unions now lobby congress with greater fervor and sums of money than ever before, and US industry has suffered as a result. Just look at the state of unionized US industries. They all suck, and they all produce inferior products at tremendous cost. They try to combat global competition with tariffs and mandated industry standards, but they are gradually being replaced with more cost-effective foreign business models. They have failed so utterly that they have, on more occassions than the recent auto- industry bailout, been forced to seek public aid to shore up their collapsing firms.

Yet they are still viewed as a good thing. When people scream about bailouts and job loss and outsourcing they almost never point a finger at the unions. They never really ask themselves why things have become the way they are. The members of the union themselves certainly don't ask any questions. Like the failed businessmen who first lobbied congress to empower them, they are willing to trade the future of a nation for a moment of safety.

I am no different. I am a member of one of the largest labor unions in the country, the United Transportation Workers Union, and also a member of the Brotherhood of Locomotive Engineers and Trainmen. Given the way things are inevitably going to progress, I'd be a fool to not be a member of those organizations. They guarantee me a good wage and a secure job. Even now, when I am furloughed, my seniority remains and I recieve benefits for being employed at a lesser wage than the compensation rate dictated by the union. One day I will return to the railroad and everything will be as if I had never left. My health benefits also remain intact, but at what cost to everyone else? Working people who are not me have to pay for those expenditures. Is that moral or immoral? I consider it immoral, but I have bills to pay and a life to sustain. I wish I had some more virtuous cause, but that's it.

Perhaps now you see the power behind the natural progress of things, and you can more readily answer questions like the one you posited above for yourself.

Haliburton and companies like it will eventually merge themselves with the state in the manner most beneficial to themselves, just as unions do. They don't do it out of malice or some complex design, they just do it because it is what is best for them.

The solution to this problem is to eliminate the state's power to respond to lobbying. If it is extremely difficult to legislate or regulate, companies won't waste their time and money trying to bypass conventional market mechanisms, so they must either perform or innovate. This was the idea behind the US constitution, but it was not refined enough. What we need is a constitution that sets in stone a certain number of powers granted to the state with absolutely no room for interpretation, and that needs to be stated as well. The original constitution tried to do exactly that, but it didn't do it well enough. There needs to be a host of other safeguards to protect against the natural progess of things. There should be restrictive provisions made upon federal budgeting and legislation. There should be extremely restrictive statutes set concerning changing the provisions set for federal budgeting and legislation. All other powers should be reserved to the states and the people.

This is the way in which we fight the tendency of state and business towards monopoly. It is not a perfect solution, but it will buy us time until the next great thinkers come along and propose a more moral and sustainable system.