— PROFESSOR G. ON SOCIAL AND BUSINESS LEGISLATION AND POLICY
The danger to our system clearly is not that the “people” will spontaneously rise up and dispossess us. The “people” never initiate anything. All successful movements are led from the top, usually without the knowledge of the movement, by men like your father with vast resources and brilliant plans. The real danger arises in the upper-middle classes. Occasionally, these people make vast fortunes through some brilliant technological innovation in their business or through the favor of local politicians that escape our influence. Because of their ignorance of the reality of our power, however, the new rich usually fall easily into our hands. For instance, they seldom realize until too late that the dozens of loans they may owe to apparently independent banks can be called simultaneously with a mere nod from your father. Graver danger is presented by those whose enterprises are so successful as to be self-financing. Since the advent of the corporate income tax truly self-financing corporations are extremely rare. Most disquieting is when these upstarts acquire the covert or open support and advice of your father’s major international antagonists. This is particularly dangerous in countries with long democratic traditions where it is difficult to make our arbitrary rulings stick.
The best solution is to enact comprehensive taxes and business regulations in the name of the common good. Such measures reduce the incidence of significant upstart competition to manageable levels. This policy, of course, strangles innovation and productivity. Reduction of the GNPs in countries under your father’s control would be acceptable in the interests of secure power under the pretext of conservation, ecology, or no-growth stability except that if carried too far your father’s clout vis-a-vis his international rivals would be impaired. The most difficult problem for the money lord is determining the level of social and economic freedom he dares allow for the sake of his international power. One method is to maintain a home base of carefully monitored, relative freedom on which to base the economic and military strength required to maintain an empire of totalitarian dictatorships abroad. The following measures, however, are found necessary by nearly all money lords:
1. Steeply Graduated Income Tax. Income tax does not affect us because our money was accumulated before the tax was imposed and most of it is now safely protected in our network of tax-exempt foundations. Foundation income and capital can legally be used to finance the bulk of our social, economic, literary, and even political propaganda. In a pinch it is easily diverted to illegal uses. Expensive “studies” required by our profitable economic operations can be legitimately financed through foundations.
To the middle classes, however, income tax makes life into an endless treadmill. Even the most productive find themselves unable to accumulate significant capital. They are forced into the clutches of our Central
Bank entourage for injections of the inflationary credit which we are privileged to create out of nothing. The self-financing wealth of the legendary 19th Century robber barons and early Twentieth Century tycoons is no longer possible. Although your grand father owed his start to just those wide-open conditions, he was among the first of the super-rich to advocate the erection of the tax wall that is now in place. Please note that in democratic countries eternal vigilance is required to prevent our tax shield from being riddled with loop holes by conniving legislators, who are usually of the tax oppressed, upper-middle class origins themselves.
2. Business Regulation. When upstarts slip through our financial tentacles and tax shields, perhaps with the aid of outsiders, a second line of defense becomes vital. Licensing in the crucial area of broadcasting has proven particularly necessary. This makes serious upstart-led mass political challenge impossible. Harassment by bureaucrats armed with arbitrary and voluminous industrial safety regulations is a new and increasingly effective technique. Security registration requirements, “to protect the small investor,” can cause fatal delays in an upstart’s ability to raise capital on the stock market. Ecological considerations are easily perverted to stymie the plans of those who would upset the stability of our carefully planned system.
Anti-trust law, however, is our ultimate weapon. The handy doctrine of “pure and perfect” competition which we have fostered in our universities is ideally suited to convicting any successful competitor, at our discretion. If the competitor charges a lower price than ours he is accused of “unfair competition” aimed at driving us from the field to impair future competition. If he asks the same price as we, he is open to the charge of collusion. If he charges more than us, he is obviously exploiting his “monopoly power” at the expense of the consumer. Fortunately, the rulings of our bureaucrats are so complicated that even when successfully appealed in court many years elapse before the ruling is rendered. By then our goals are often achieved through harassment.
Product quality, safety, and testing regulations are excellent methods by which we insulate our established industries from potential competition. Beside raising the costs of entry into the auto business, for instance, the cost of “safety” can be passed to the consumer along with a healthy profit mark-up.
3. Besides, Tariffs, and Foreign Aid. Although direct subsidies can occasionally be procured for our entourage of corporations by appealing to the masses’ desire to preserve jobs, this exploitive technique is usually too obvious. Tariffs are easily passed, but lead to retaliation against our foreign holdings. Foreign aid and soft (sure to be defaulted) government guaranteed loans, however, fill the bill perfectly under modern conditions. Foreign aid maintains our empire of foreign dictators abroad while providing guaranteed, highly profitable sales to our corporations at home base. Foreign aid should always be contingent on the purchase of goods, usually military hardware, that only our entourage of firms can provide. Few have the courage to oppose such altruistic aid to the “starving masses” of the “third world.”
4. Centralization of Power. Real division of power between national, state, and local government is dangerous to our system. When local politicians have real autonomy, even in limited spheres, they can do much to enable upstarts to challenge our power.Our program is to bring all levels of government under our sway through such innovations as federal aid, revenue sharing, high federal taxation, and regional government.
5. Alliance with the Lower Classes. In order to keep our valuable regulatory machinery in place and under our control we must have the mass support of the numerous lower classes against our vigorous, but scarce middle-class rivals. The best method is to provide the lower classes with subsidies at the expense of the middle class. This creates a mutual hatred that prevents the middle class from appealing effectively to the lower classes for support. Social security, free health care, unemployment benefits, and direct welfare payments, while doing nothing for us directly, create a dependent class whose support for our critical measures can easily be made part of a package deal.
Please note also that the major labor unions began with our financing and are led to this day by leaders of our choosing. No one can rise to or remain at the top of a rough and tumble union without our financial backing. In spite of their rebellious rhetoric, bought union leaders are the source of our power over the management of firms with widely held stock. Unions are the ultimate weapon for destroying otherwise invulnerable, self-financing rivals. Further, downward flexibility of wages and prices which obtains without widespread unionization would in crease the ability of the economy to survive without our aid during the economic crises we create.
Bread and circuses are as useful today as in Roman times for mobilizing the mob against our staid adversaries.
Next, Professor D. will describe our education policies.
Part -> 8