The One Percent
is a look at the working machinery and mentality of wealth. It’s competently produced and ticks all the boxes for a decent documentary. Jamie Johnson’s own role in it is that of the guy asking the questions. He’s asking the questions the 1% never seem to ask and should be asking continuously. He gets answers, too, and they’re not pretty.
The irony of the American 1% is that they have this enormous wealth, but don’t seem to know how it acts in the economy. Myopic business deals and political hustling undercut the economic benefits. Even Milton Friedman, the god of free enterprise, doesn’t appear to see the inherent risks in the gigantic imbalances in economic policies and macroeconomic toxins that some of the practical applications of “business for the sake of business” create.
The One Percent starts with a truly weird cultural introduction. The family is playing croquet. Jamie is told not to film. Secrecy, about a game of croquet? It’d make sense if a croquet court was a security-sensitive area, but not otherwise. Jamie is also repeatedly told not to raise the issues he raises, usually by underlings and middle managers but at least a few times by his family.
His family isn’t impressed, throughout the video. One of them says, “Why can’t I be secretive?” and goes on to say in effect that what he does in his own home is his business when Jamie arrives with a camera at a business meeting. In fairness, it’s pretty obvious that the perspectives are a long way apart.
There’s a cultural background here that most people won’t get. The truly rich have a very different view of themselves. They’re currently extremely sensitive to the massive new hostility to their class. They don’t think they’re doing anything “wrong” and they don’t see why it’s some sort of crime to be rich in the eyes of so many. They resent it, understandably enough.
I grew up in an area full of very rich people. This mindset is endemic. The rich feel that their success is earned, regardless of inheritance or other circumstances. They say, with some reason, “Hey, I’m running a business that creates jobs and puts money into the economy. What crime have I committed?”
The naivete comes from not seeing the gigantic downsides. They can’t. These things are invisible to them. They have absolutely no exposure to the realities of the 99%, particularly the lower end of the income scale. They feel, understandably if incorrectly in economic terms, that these situations literally aren’t their business.
What’s worse is that they also have no exposure to the nothing less than criminal culture of what’s euphemistically called “middle management”, the office boys and girls in their systems.
These people are in business for themselves. They create business operations which are basically self-promoting oligarchies. They create business deals which effectively sabotage the economy. They’re inefficiency incarnate, in business terms, but there are multiple layers of them in every big business owned by the 1%.
These people produce outcomes the way spammers operate. They come up with good numbers and good projections in gigantic quantities and most of the time these scams get under the radar. Mortgage securities were a good example. The very bad, often legally very iffy and incredibly stupid business practices were ignored when the mortgage securities were doing well. When everything hit the fan, the sales people just moved on to other financial “products” of equally dubious distinction. The toxic assets created by these scams still infect the US macro economy.
The trouble is that the middle levels and the 1% are in a parasite/host relationship. Decisions are made at lower levels for different reasons to those that the 1% would consider in their best interests. The fleas are telling the dogs how to be dogs.
The 1% don’t usually ask questions about what makes them money and how it does so. They wear blinkers. They mechanically continue to do the things that make business sense in short term moves. It’s like being addicted to Monopoly. You’ve won the game, now you want to win it again.
There’s another issue which is anything but obvious. What’s “right” as a conventional business move is far more complex than it might look. The 1% know the right moves, but only to a limited degree. They don’t and usually can’t see the wider effects, or translate those effects into risks.
The American economy, based purely on measures of consumer spending, spends an average of $12.48 billion or so per hour. That’s 312 million people spending an average of $40 per hour. Wall Street crows when a firm produces a report saying it made a few billion in a year. Compared to Main Street, Wall Street is a very much overrated, peanut vending, megalomaniacal waste of space. It could be replaced with some software.
Main Street is being maimed on a daily basis by bad business options. The original US economy, the one that created the superpower, was very different. It was far more productive. It literally built the America that’s now falling to pieces visibly before the world’s eyes.
The trouble is that the 1% don’t have the training to see the implications of bad economics. These problems would have been considered impossible when the current generation of 1% business owners got their business expertise. Add to this the roaring hostility of the 99%, to whom these problems are daily realities, and you get a degree of disconnection which is colossal.
Reality vs. the 1%
This is a very different and very treacherous new environment to which the heirs of the 1% will be fully exposed. The current 1% are insular in the worst and most dangerous possible ways to their own best interests and those of their kids. When the big crash came, the 1% came blinking out into the sun asking if there was a problem.
The US had just proven that it could lose money, big capital real and on paper, much faster than it could make it. Main Street was and largely still is a basket case. The most luxurious interest rate deals imaginable went straight into finance, not rebuilding and renovating the mainstream economy. Facebook came on the bourse with people begging to buy in- and lost billions. The one trick wonder of finance failed, yet again. The paper devalued and the money evaporated. It’s like lending to gamblers and being surprised at the result.
The property market, which is where most of US capital rests comfortably in normal times, was also hit, and hit hard. This huge market was hit by multiple whammy results from mortgage securities and the annihilation of capital in the markets:
The banks acquired a lot of toxic assets.
Their books were way out of whack.
Write-downs, the equivalent of self-castration, were the only realistic option.
Mortgagees had to give up their homes, despite the fact that they were paying on time, eliminating a source of cash.
Defaults went through the roof, trashing mortgage portfolios.
Banks started charging each other a lot more to borrow.
The costs of doing business went up accordingly.
Main Street went into a coma in business terms as a direct result.
America, in effect, sent its big major assets into a collective tailspin. Values were down and the ability to buy and create new business was crippled because capital was being diverted to financial markets on the Free Lunch For All Our Friends Plan created by Washington’s stunningly facile insider idiots.
Where did the money go? Into a balancing act, created simply by the fact that Main Street, the macro economy, couldn’t do business. Real business makes America functional. Paper business just loses money and creates a sort of fiscal constipation.
Simultaneously, an ideological industry sprang up. This is the bipolar US political system, which in its insanity seems to think ideologies run businesses and can fix economies. They can’t and they don’t. They create problems, and never know how to fix them. The neoconservatives came along doing the usual sycophantic thing of agreeing with the rich guys. The liberals, who are usually shamefully slow in their understanding of business realities, took the vaguest possible lines in their approach. The result was a collection of non-solutions to huge multifaceted problems
Jamie Johnson asks a few questions about this and gets some pretty unpalatable and downright strange answers. The weird Sugar Act, and its human jetsam of displaced and exploited workers is a good case study. These people, if they were able, could be spending their $40 an hour and contributing. Instead, they made $35-$50 a day for murderous work because the sugar manufacturers wanted cheap labor and were given laws to allow them to import cheap labor. Later they simply turned to mechanical harvesting, and threw those people out of work. See the economics at work? The US Sugar Act simultaneously forces US consumers to pay 3 times as much as world market prices and hundreds of millions for cleaning up Florida. Great use of cash.
(It could also be a violation of trade treaties. Any US government could get out of that deal in a single bit of case law and rid itself of a truly corrupt mechanism. That hasn’t happened in this and uncountable other trade issues, indicating that re-election really is what makes Washington go round.)
Asking questions about an emerging train wreck
The trouble for the 1% in the short term is that it’s extremely vulnerable to the realities of the new economics. What worked in the 1950s doesn’t work now. The damage to the macro economy is hurting the US as a daily event. Jamie Johnson is asking the questions to which his generation will need reliable answers. Not getting those answers will be fatal to both the 1% and the nation. Watch this video, because you’ll see mindsets you'll find hard to believe. The 1% is full of a load of crap promoted by manipulators using them for their own purposes. They’re being sold a load of crap based on privilege and perceptions of privilege. They're flattered and pandered to when they need facts, not fiction. Even God, apparently, is in favor of them, and you can even hire mobile religious media to explain that to your workers. This is the "information" the 1% gets. It's more like a lullaby, and it's lethal when things go wrong.
Until the 1% wakes up to its risks and the risks to the world it depends on for its wealth, it can’t manage them. The new generation of the 1% is going to face problems their ancestors never imagined. It’s absurd to deny them their natural right to question the issues. Consider the possibilities of running a business and not asking questions about the economy, why things don’t work properly and what the emerging problems are. You’d never survive for a day.
Here’s an unasked-for answer to Jamie Johnson’s questions- If you’re rich and you want good information, trust nobody but yourself. Ask your own questions. Get your own facts and use your own judgment. Get those obliging, flattering criminals out of your offices and bring in people who can argue with the delusions and manias effectively.
The new 1% generation don’t know what it’s like to drive the Ferraris, but they’re asking the questions about realities on the road. That’s not disloyalty, it’s sanity. It should be respected as such.