Profits Über Alles?

By Gonzalo Lira.

Neoliberal economics has been a wonderful driving force for progress and material prosperity—but it cannot be the single ruling principle of our lives, of our government, or of our society.

If we allow the profit motive to be the only motive, then we and our society are doomed.

We are already seeing the shape of that doom, in our health care, our government, and our industry.

Isn’t this blasphemous?
Dear God, is this
us???

So this morning, I woke up to a piece by Michael “Mish” Shedlock—a piece that, being a fellow middle-aged man, scared the ever-living shit out of me.

Mish opens his piece describing how last October 2012, he took a standard prostate cancer test and came up positive. What follows is his no-nonsense journey of beating his cancer. The whole piece is a must-read; here is the link.

(Refreshingly, Mish doesn’t inflict the needless emotional bullshit on us. I’m sure he felt scared out of his wits, and I’m sure he had quite a few dark-nights-of-the-soul, especially as he had only recently lost his wife. I have nothing but compassion for him as a human being—but as a reader, I’m so glad he didn’t roll around in the emotional muck, which is such the fashion today.)

The thing that struck me about Mish’s piece was how one of his doctors, the surgeon who performed the initial biopsy, wanted to do surgery right away. Mish adopted a wait-and-see approach, coupled with a cocktail of drugs, to see if this counteracted the cancer. And rather than another biopsy, Mish wanted more and more-frequent blood tests. The surgeon, “Dr. G.”, insisted on biopsies instead of blood tests—he wanted to perform surgery so badly that he effectively gave Mish an ultimatum: My way (biopsies/surgery) or the highway.

Mish walked on Dr. G., concluding that Dr. G. was interested in the fat fees he would receive for performing biopsies and eventual surgery.

Mish was right—but then again, Dr. G. was being exceptionally rational, according to our current Neoliberal paradigm: It paid him (and rather well at that) to perform surgery, regardless of whether there were other options for his patients. And it was a drain on his resources to have a patient such as Mish on his client list: Mish was wary of losing his prostate, which well might mean losing his ability to perform sexually, as well as possible urinary incontinence. Hence Mish’s reluctance to dive right into surgery without exploring all the other options. Such a patient, for Dr. G., was a waste of time, and time is his main resource.

So his ultimatum to Mish was ruthlessly “efficient” in the paradigm of Neoliberal economics: If Mish stayed with Dr. G., then Dr. G. would make money through the surgery. If Mish walked, Dr. G. would be unburdened from having to spend time on a non-performing patient; “non-performing” in the sense of not being a billable client.

Of course, this flies in the face of what a doctor ought to be: A healer. A professional whose interest is to cure his patients of their disease, howsoever that cure may come about, be it surgery, drug cocktails, or whatever other treatment is available and scientifically reasonable.

Yet Dr. G., far from being a weird outlier of a greedy surgeon hungry for fees, was being the ultimate Neoliberal Man: Rationally prioritizing profits over care. He is in fact a common exemplar of the medical-insurance business. He’s the norm, not the exception.

Now for something completely different:

Newsweek magazine ran a piece a few days ago, where it reported a study carried out by Paul C. Light and others, which concluded that the Federal government overspends $300 billion a year on private contractors. The money-quote:

In theory, these contractors are supposed to save taxpayer money, as efficient, bottom-line-oriented corporate behemoths. In reality, they end up costing twice as much as civil servants[.]

According to the Neoliberal paradigm, the private sector is supposed to be ruthlessly efficient—yet this “ruthless efficiency” was bilking the government—ultimately bilking us, the taxpayers—of $300 billion a year: Roughly $1,000 a year for every man, woman, and child in America.

Could you have used an extra $1,000 last year? Me, I wouldn’t have minded getting an extra grand. But I didn’t get this extra money. It went instead to an “efficient” private contractor that bilked the government.

The Neoliberal paradigm might sell the illusion that it’s all about “ruthless efficiency”—but it’s not. Neoliberal economics is in fact all about the pursuit of Return On Investment (ROI): Profits as a ratio of income to capital. That’s it. That’s all Neoliberal economics really is, at its core: Maximizing ROI, and creating the social conditions where that maximization might occur with the least amount of societal or governmental interference.

There are essentially three ways to improve ROI:

  • Sell more units than previously.
  • Sell each unit at a higher price (or lower cost) than previously.
  • Reduce your capital while maintaining your sales.

Neoliberal economics—and its cheerleaders—claim as a matter of faith that it is “ruthlessly efficient”. But it’s not. Its efficiency comes as a very welcome byproduct of its pursuit of profits—but Neoliberalism is not inherently more efficient.

There’s nothing wrong with pursuing profits. Quite the contrary, our very modern existence is a byproduct of this relentless pursuit of ROI. Think of the computer you are using to read this very essay—infinitesimally cheap and light-years better than the computer made a mere twenty years ago, or even ten years ago. The second way of improving ROI—lowering the cost of each unit sold—is in fact the great efficiency engine of Neoliberalism from which we have all benefitted. Efficiency and progress is a byproduct of Neoliberalism’s pursuit of ROI—and a very welcome one at that.

But to apply the Neoliberalist Paradigm to all facets of our lives and our society is creating the mess we have today.

Look at how our government is being bilked—because the Neoliberalist Paradigm is not “efficient”: It’s just looking to maximize ROI, that’s all. Contractors, when selling to the government, will maximize their ROI not by being “efficient”, but by selling more to the government. And if they can’t sell more to the government, then they will sell more expensively: $250 hammers, trillion-dollar planes—whatever it takes to maximize ROI. Thus why private contractors are being rational per the Neoliberalist Paradigm—and thus why private contractors are a complete disaster when working for the government, ultimately forcing us taxpayers to foot the bill for these “efficiencies”.

Likewise with other industries, and other sectors of our society: The Neoliberal Paradigm is being implemented where it has no business being implemented. And far from improving our lives, it is making our society more inefficient.

Consider health care, and the example of Mish Shedlock: ROI is being relentlessly pursued by all the participants in the disastrous American health care system. Insurers, Big Pharma, doctors, the big health care providers: If you analyze each and every one of the participants in the health care nightmare, as I analyzed Dr. G. above, you will find that each and every one of them is rationally chasing ROI—and the result is a complete mess. For obvious political reasons—if only to prove that they are trying to help people—the government is (inefficiently, ineffectively) sticking its nose in this tussle, creating even more inefficiencies, ultimately hurting the people even more.

I wrote about the results of the health care inefficiencies brought about by the Neoliberal Economic Paradigm here. It pissed off a lot of people, but no one refuted the data. The data can’t be refuted because it’s true. The data shows how the health care nightmare actively hurts the American people.

Apart from government and health care, the Neoliberal Economic Paradigm is being aplied to all sectors of our society—and its effects have been the same: High ROI which benefits the few, while destroying industries which benefit us all.

After all, it was the Neoliberal Economic Paradigm which destroyed American industry, in the guise of “globalization”.

It sounded so wonderful—“globalization” this and “globalization” that—but what it ultimately was was closing American factories and exporting manufacturing jobs for the sake of improving ROI, and leaving the American economy a hollow shell.

The whole point of “globalization” was the improvement of ROI by way of reducing capital, and/or reducing production costs. How was capital reduced and production costs lowered? By closing factories in America, and exporting whole industries to Third World and developing countries so as to exploit the cheap labor there.

Today, there is no healthy civilian manufacturing in America. The only heavy industries that are thriving are the defense industries—which by law have to be in America. All other manufacturing jobs? Gone—globalization took ‘em all. The third driver of ROI maximization took ‘em away. The only jobs left for the American working classes are low-paying, low-skill service-related occupations—especially health care.

This shit’s still going on, by the way: It’s no accident that the last five years have experienced anemic—not to say non-existent—growth. Profits? Oh they’re up—just ask the banksters or the health care industry. They’re ROI has been outstanding, as they cut and cut and cut costs—jobs. Outstanding last five years.

But real, honest-to-goodness, meat-and-potatoes growth?

Crickets.

There won’t be any real growth in America—not if we continue indiscriminately applying the Neoliberal Economic Paradigm. We have to realize that Neoliberalism is a tool—just like a lever, a gun, or a power drill: A great tool, but highly specialized, useful for only certain tasks, and very dangerous if misapplied to all tasks.

A great and noble tool—
but would you use it
to caulk tile?

Just in case it needs mentioning, economically, I’m a die-hard, hard-core conservative. Anti-bailouts, anti-progressive tax, anti-government subsidies, anti-targeted tax breaks, anti-free trade agreements—and as to the banks, fuck ‘em if they go broke: Arrest every last motherfucking one of the banksters’ sorry asses if they lose so much as a penny of depositors’ money. (As to social conservative issues, I’m cheerfully to the right of Attila the Hun: Anti-abortion, anti-gay rights, anti-affimative action. The only big social issue with which I differ from my conservative brethren is the death penalty, of which I have written about here; and I’m not opposed to the death penalty on principle, but rather in practice.)

Yet I recognize that the profit motive cannot be the only motive for a thriving, healthy society. In fact, the profit motive should be a subordinate goal, both for individuals and for society as a whole.

For individuals, satisfaction and happiness in life ought to be achieved through personal relationships, leisure, and work—not merely money. Money ought to be the byproduct of work, not the end in itself.

For a society, industries should be harnessed for the common good, not let loose like wild horses, fingers crossed and hoping for the best. Wild horses cannot pull a stagecoach—they might have the energy, but they certainly do not have the organization. This isn’t to say we should have managed industries—but we most definitely should have a coherent industrial policy, whose aim is to provide us with goals that we as a society can all agree upon.

As a conservative—as someone looking to live in a stable society with a reduced government, where extreme poverty is anathema, and yet where anyone can achieve their maximum potential irrespective of their birth or station—we should be reëvaluating our common good. Reëvaluating those things which Americans all agree are important, and worth protecting: Freedom of speech, freedom of worship, freedom from fear, freedom from want.

Unrestricted Neoliberalism is hollowing out the United States. We have a chance to turn it around—but we as a nation have to wake up to what Neoliberalism is, and is not: It’s a great tool—but it is not and cannot be an end in itself, and it cannot be applied to every situation.

If we do not put the reins on Neoliberalism—and put those reins on soon—then we as a society are doomed. And it will be reflected first in our economy—as we are seeing now.

In case you haven’t heard, I’m giving a web seminar on Thursday, December 19, at 8pm EST, called “What A Recession In 2014 Will Look Like”. Click on the link to check it out and sign up. —GL

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  • rp1a

    The problem here is that the doctor is not respecting his customer. He is being greedy and trying to coerce Mish into getting something else. That’s bad business and Mish was right to walk away. You don’t go to McDonalds and order a hamburger and they insist you buy chicken mcnuggets.

  • Tonto

    The article is somewhat shallow in its description of failing ethics. How often does the author (or Mish) think the “positive” for prostrate cancer is actually on the up-and-up? And as for the expensive medical surgery procedures, how often are these procedures actually more harmful to the patient’s quality of life, than were he/she left to the body’s own best results? Medicine is like custom software installations. Only about 5% of the time is the outcome anything like what is promised, and about 40% of the time, the installation is a complete failure.

    Another example are all these McMansions being built coast to coast. They’ve been built all over the country for decades. They are monstrosities. They are obscene. People made a lot of money building McMansions for other people. But, don’t think you are getting a deal when buying a foreclosed McMansion at 10 cents on the dollar. You definitely are not. McMansions are crappy, and wholly unaffordable monstrosities to heat and maintain. Bigger is simply, not better, when it comes to housing. And the materials put into these money traps are made so poorly, you can count on seeing great swathes of McMansions being torn down very soon. They already are being torn down.

    And what about the guy who goes to the doctor for treatment for a serious Staphylococcus infection, gets prescribed several doses of various strength antibiotic treatments after repeated visits to his billing GP, only to pass his infection onto his wife who subsequently succumbs to the mutated strain?

    But the big problem is some things are relatively easy, for a while. During the 1960’s the U.S. sent its surplus agricultural production to feed starving Africans in arid climates. Those African populations thrived and reproduced very rapidly. When the surplus dried up, those populations starved in greater numbers than had ever starved on the African continent.

    You see, the problem is not just the profit motive. The problem is that human beings naturally think they can solve insolvable problems, and the tools for solving them have grown more powerful and complex, exceedingly dangerously so. In fact, human beings are prone to making matters much worse, before the infinite complexity of reality acts like an entropy on human “genius”, dragging the results of applied human genius down into the muck and mire of much more common human ignorance.

    Just because something sounds like a good idea, that doesn’t mean it is a good a good idea. A better rule to follow is, if it sounds like a good idea, assume to proponents of it are lying through their teeth.

    That is what has happened with both ObamaCare and global warming’s carbon credit scam. And again, I am sixty-four, somewhat past middle age. I have not seen a doctor in well over thirty years. I know for a fact they’d have bad news for me, news that would probably prove despondently fatal to someone who believed what they were saying. But I just keep rolling along like the EveryReady Bunny impervious to the devilish incantations of modern medicine. I plan on living into my nineties without ever going to see a doctor.

  • Name

    Neoliberal economics is just a multi-level marketing scheme that America bought into back in the 80s: We can all be middlemen and “knowledge workers” and the money will come from those who are newly recruited (by force if necessary) into the pyramid. Of course, by now everyone realizes this hare-brained scheme can’t possibly work, but the Feds and the Fed have to keep pretending it will, because if they admit they screwed up they will all be out on their asses, and there might be a chance for real democracy without a ruling elite.

  • gozounlimited

    If we allow the profit motive to be the only motive, then we and our society are doomed.

    EPA Climate Expert Beale sentenced to 32 months plus restitution for fraud –
    http://www.cfact.org/2013/12/18/epa-climate-expert-beale-sentenced-to-32-months-plus-restitution-for-fraud/
    Federal Judge Ellen Huvelle called Beale’s crime of defrauding the U.S. government of over $1 million “inexplicable” and “egregious.”

    Beale said that he did it for “greed, simple greed, and I’m ashamed of that greed.”

    • gozounlimited

      16 Signs That “Global Warming” Was A Lie And That We Have Now Entered A Period Of Global Cooling

      1. According to a leaked UN report that absolutely rocked the “global warming” believers, the earth has not gotten any warmer for the past 15 years.

      2. The amount of ice covering the Arctic is up by 50 percent compared to this time in 2012.

      3. In just one week in late November, a combined total of more than 1000 new cold temperature and snowfall records were set in the United States.

      4. In just one week in December, a combined total of more than 2000 new cold temperature and snowfall records were set in the United States.

      5. On December 15th, 53 percent of the United States was covered in snow. That was the highest level on this date in 11 years.

      6. A snowstorm that spanned more than 1,000 miles slammed into New England on Sunday.

      7. Some areas of upstate New York were hit with about six feet of snow a few days ago.

      8. Chicago just experienced that coldest temperatures that it has seen in December in nearly 20 years.

      9. On December 7th, Eugene, Oregon recorded the lowest temperature that it has seen since December 11th, 1972.

      10. A few days ago, three feet of snow closed roads in Jerusalem. It was the worst snow storm in Israel since 1953.

      11. Heavy snow also fell on parts of Saudi Arabia. That was considered to be extremely unusual.

      12. The recent snowfall in Turkey was so bad that it closed 900 roads.

      13. Temperatures have dropped so low that some Syrian war refugees are actually dying from the cold.

      14. Cairo, Egypt just had the first snowfall that it has experienced in 100 years.

      15. It was so cold in Canada recently that the Arctic Winter Games biathlon trials were forced indoors.

      16. According to NASA satellite data, a temperature of minus 135 degrees Fahrenheit was recorded in Antarctica back in July.

      So why is all of this happening? http://www.activistpost.com/2013/12/16-signs-that-global-warming-was-lie.html

      • gozounlimited

        There is a suspicious full backpack sitting in front of my house….has been there for several hours. Not touching it…. with no bomb squad in the sticks….. guess I’ll wait till local police/sheriff have a problem with it, and want to deal with it.

    • gozounlimited

      EPA’s Highest-Paid Employee Pretended To Be CIA For 12 Years

      http://www.youtube.com/watch?v=MGsJgDNeUyA