The system isn’t rigged Mr. Sanders. It’s built for risk takers

Senator Bernie Sanders, Independent of Vermont, has been proselytizing on the ills of the American political economy, specifically that the economy is rigged in favor of big banks and the wealthy. I wouldn’t use the word, “rigged”, because that implies that the American political economy was marketed to the average citizen as one that guaranteed some level of success.

That was never the case. Rather from its colonial beginnings, America was marketed as a place where if capital was willing to take on high risk, there would be higher returns on his capital versus had he stayed home in Europe. The system was never designed for comfort-seekers, the type of citizen that Mr. Sanders is catering to in his campaign for the Oval Office. It was designed for risk takers; the investors in the stock trading companies that opened up trading posts in the Americas with the intent of monopolizing trade routes with the blessing of their monarchs.

The other risk takers were those that bought into the marketing schemes of the trading companies that needed people to settle and work the soil in the New World. These common folk were lured by the opportunities to get rich or fell for the narrative that the New World offered haven for those seeking to practice their religion in peace.

I would be remiss not to mention my West African ancestors whose slave labor, along with the indentured servitude of my Irish ancestors, was leveraged by plantation owners to reduce risk of lost returns on their investments in the New World. These individuals would not be sharing in the gains risk takers expected.

One need not look to far for proof that the American political economy favors risk takers. Capital claims larger shares of income than labor. It is capital that fuels commercial growth after all. Also, the tax code favors entrepreneurs versus wage earners where entrepreneurs have overall a lower marginal tax rate and have access to the opportunity to write-off a larger set of expenses against their incomes.

Even if the system is rigged as Mr Sanders believes, then he should share with Americans specifically how the system is rigged and how he plans to un-rig the system. Constantly repeating that “bankers gone bad” traded high-risk securities recklessly in the financial markets and consequently got themselves a tax-payer bailout doesn’t quite move me as a proper description of the cause of a melt-down of a complex American economy.

Mr Sanders policy prescription for solving the problem of a rigged system should address the variables that, in Mr Sanders’ opinion, caused the 2008 melt down in financial markets in the first place. I honestly don’t see the Sanders campaign making this attempt. It is easier to scream rhetoric and raise campaign money than to provide a substantiated, well-reasoned analysis.

About Alton Drew

Alton Drew brings a straight forward and insightful brand of political market intelligence. Alton Drew graduated from the Florida State University with a Bachelor of Science in economics and political science (1984); a Master of Public Administration (1993); and a Juris Doctor (1999). You can also follow Alton Drew on Twitter @altondrew.
This entry was posted in Bernie Sanders, economics, Economy, Election2016 and tagged . Bookmark the permalink.

2 Responses to The system isn’t rigged Mr. Sanders. It’s built for risk takers

  1. kenski2013 says:

    ” Senator Bernie Sanders, Independent of Vermont, has been proselytizing on the ills of the American political economy, specifically that the economy is rigged in favor of big banks and the wealthy. I wouldn’t use the word, “rigged”, because that implies that the American political economy was marketed to the average citizen as one that guaranteed some level of success.”

    I don’t think that the definition Alton Drew supplied for “rigged” is what Bernie Sanders has in mind. I think what Sanders has in mind is that big businesses (and for that matter, even some small businesses) of many varieties of have tried to tilt the playing field excessively in their favor by monopolistic business practices to run competitors out of business and by literally buying influence from legislators and other government officials to reduce their risk, enhance their revenues and profits, and exploit their employees and customers for financial gain.

    It’s interesting that Alton should mention his ancestors who were either slaves or indentured servants that were used to reduce the risk of their owners/masters. He says these latter would not be sharing in the gains that their risk taking owners/masters received. Does this means Alton approves of slavery and/or indentured servitude? Indentured servitude was a choice made by many who wanted to get to the New World, and by contract had a limited time span. Slavery had neither choice nor limited time span as originally conceived by the slave traders/slave masters.

    I’m OK with rewarding risk when there is actual risk.

    But sometimes, after taking the initial risk, and doing well, businesses take excessive advantage, my opinion.

    What business does, when it can, is try to reduce its risk, because business is about risk, but business owners are risk averse. OK, but the idea of our capitalistic society was that competition would reign in business excesses and monopolistic practices that artificially raise prices (over above what supply and demand sets) and therefore prevent such behaviors from excessively enriching some at the expense of others. We all know how that worked out, because years ago the US Congress passed various anti-monopoly laws to deal with issues created by the Rockefellers and others over time.

    Even legally previously allowed regulated monopolies like telephone companies have been broken up and deregulated because it appeared that the regulations did not sufficiently protect consumers or provide maximum benefits to consumers. If you read the book “The Idea Factory”, which is about the history of the American telephone company previously known as AT&T, you will see that the US government gave AT&T a monopoly for a long time, but kept a close eye on AT&T.

    Now for a couple other, more recent examples:

    Right now Microsoft is trying to shove Windows 10 onto every PC that runs a prior version of Windows, whether or not everybody wants it, and whether or not it is a good idea (some older PCs are not really good candidates for this upgrade, judging by recent comments on the WWW).

    There are concerns that Microsoft is using what appears to be a monopolistic position it has created in the market place by doing this, so that later on it can do things like start charging yearly fees for Windows, when at the present time one buys a version of Windows and pays once, and that’s it.

    AutoDesk, the provider of AutoCAD CAD software, this year got rid of the one time only purchase of its software, and will charge yearly henceforth for all purchases starting in middle January of 2016. Like Microsoft, AutoDesk has sort of a monopolistic position, in that lots of architectural, engineering, and other firms use its software to design buildings, cars, you name it. There are other software choices for both AutoCAD and Windows, but they don’t necessarily support all the functionality that is provided by AutoCAD and Windows.

    Microsoft has been accused before of monopolistic practices, like not allowing competitive web browsers to work with Windows operating systems.

    Both AutoDesk and Microsoft took risks in developing and providing software that is incredibly useful and helpful to users, and have made a lot of money doing so. Does that now mean they have the right to charge whatever they want for these products so they can make a lot more money? How is that beneficial, or harmful, to society and to individual consumers?

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