Greedy Bastards


Imagine an ordinary man so desperate that he decides to rob a bank. For years, he’s worked a steady job, but when he loses that job, the only work he can find is as a part-time clerk in a convenience store. Still, he makes do. He cuts his expenses and relies on a little help from his family, though he hates to do so. Then he starts to develop health troubles. He’s nearly sixty years old, and he needs foot surgery. He develops crippling back pain and a frightening bone protrusion sticking out of his chest. He can no longer lift the stock he is supposed to load onto the shelves at the store. Although he could move in with his sister, he doesn’t want to be a burden, and he knows that she can’t afford to pay for his health care out of pocket any better than he can. So what choices does he have? He goes into the local bank and slips the teller a note. It demands $1—and health care.

This is not a fantasy, and the man wasn’t crazy. He was thinking clearly about a crazy situation. Jail, he realized, was the one place where he could get health care without bankrupting himself and his family. “Because he only asked for $1,” Yahoo! News reported, “he was charged with larceny, not bank robbery. But he said that if his punishment isn’t severe enough, he plans to tell the judge that he’ll do it again. His $100,000 bond has been reduced to $2,000, but he says he doesn’t plan to pay it.” Jail, he said, was the best of his bad options.

That true story is one glimpse of a country going seriously wrong. Our unemployment is stuck near Depression levels, prompting outcries on both the left and the right. “We’re well on the way to creating a permanent underclass of the jobless,” wrote economist Paul Krugman in the New York Times. “One-sixth of America’s workers—all those who can’t find any job or are stuck with part-time work when they want a full-time job—have in effect been abandoned.” In the National Review, Rich Lowry wrote, “The statistics tell a dire, but incomplete, story. We were built to work. When we want to and can’t, it is an assault on our very personhood.” But even as the assault continues, our politicians seem not to notice, or not admit, how this country has changed. As Peggy Noonan, former speechwriter for President Ronald Reagan, asked in the Wall Street Journal, “Do our political leaders have any sense of what people are feeling deep down? They don’t act as if they do. I think their detachment from how normal people think is more dangerous and disturbing than it has been in the past.”

If jobs are a bad deal, housing is worse. More than one in four houses are underwater, and that figure obscures how bad it’s gotten in the hardest-hit states. According to data from CoreLogic, a private research company, 63 percent of all mortgaged properties in Nevada are worth less than the owners paid for them. In Arizona, it’s 50 percent. In Florida, 46 percent. Lacking jobs or stuck in low-paying ones, unable to sell their homes and move somewhere more promising, many Americans find that now is truly the worst of times. The US Census Bureau says that 43.6 million of us are now living in poverty—that’s more poor Americans than ever in the half century since records have been kept. Talk about a bad deal.

According to the Central Intelligence Agency (CIA), the US infant mortality rate is nearly twice as high as those of France, Japan, and Australia. In 2011, as food prices around the world continued to rise, the New York Times reported that 16 percent of Americans answered yes to the following question: “Have there been times in the past 12 months when you did not have enough money to buy food that you or your family needed?” Compared with over thirty other “advanced economy” countries, New York Times columnist Charles Blow found that the United States now ranks among “the worst of the worst” on measures such as income inequality, student performance on math tests, average life expectancy, and the percentage of our citizens in prison. No wonder that in a CBS News poll, 70 percent of Americans surveyed felt that the country was going in the wrong direction.

Even people who are used to feeling good about their lives are sensing the changes: the University of Chicago’s General Social Survey found that in 2010, only 29 percent of men and women reported being “very happy”—the lowest level of very happy people since the poll was first conducted in 1972.

But if this is the worst of times for many, it is an explosively wealthy time for a fortunate few. While jobs, investment capital, and confidence in the future drain away, there is good cheer in corporate boardrooms. According to a 2011 survey by the Business Roundtable, an association of chief executive officers from leading US companies, American CEOs felt more confident than ever before. And why shouldn’t they? A survey by Equilar, a private research company specializing in compensation, found that median pay for CEOs in 2010 had risen to $10.8 million: an astonishing 23 percent pay raise compared with just the year before. How about you? Did you get your extra 23 percent last year?

The fact is, the very rich are doing very, very well, as they have been for two or three decades. Journalist Robert Frank, the Wall Street Journal’s first full-time correspondent about the very rich, found that “the United States is now the world leader in producing millionaires—even if it lags behind China and India in other kinds of manufacturing.” Their demand for servants has raised butlering, once a dying career, into one of American’s fastest growing trades, along with maids, nannies, personal assistants, and private security guards.

Butlering is one of our notable growth industries. It’s not supposed to be like this. The United States is still a wealthy country. Wealth in a capitalist country is supposed to be invested, making new ventures possible, turning our ingenuity into new industries, creating jobs, and helping the economy grow. In the phrase that President John F. Kennedy used often, a rising tide lifts all boats. But something has gone wrong in America. For the last few decades, the rising tide has been lifting only the yachts.

Almost anywhere you look, if you just open your eyes, you will see ordinary, hardworking people struggling. Not far away, you’ll find a few greedy bastards making out like bandits. What defines greedy bastards? It’s not merely that they’re rich. I’m a capitalist; I am in favor of making lots and lots of money, as long as it comes from creating value for others. Americans have a long tradition of getting rich by making a great product or service that contributes to the growth of our country. But greedy bastards have given up on creating value for others and instead get their money by rigging the game so that they can steal from the rest of us.
Do You Suffer from Greedy Bastards?
Do you have greedy bastards in your state? In your congressional district? In your workplace? Are greedy bastards supplying your supermarket? Your big box stores? Are they lurking at your doctor’s office, your hospital, your gas station, your power company, your elementary school, your local college? If you have an infestation of greedy bastards, you need to be able to see them. You need to know how they got in, and you need to know what actions to take to get them out.

So what do we do about all these greedy bastards?

That question has obsessed me since 2008, when the banking crisis hit. At the time, I was hosting the financial news show Fast Money on CNBC. I’d made a career as a financial news anchor and reporter, chatting up the big traders and billionaire CEOs, and breaking the stories that helped investors pick the right stocks to buy and sell. My success in financial journalism was due in large part to the many personal relationships I’d built with the business leaders I interviewed, such as Carl Icahn, Mohamed El-Erian, and Bill Gross. Shortly after the federal bailout deal was reached in 2008, I had lunch with a banking CEO who asked if he could speak off the record. He said, “Dylan, do you see what is going on here? This is the largest theft and cover-up in American history.”

I didn’t have to take his word for it. My then thirteen years of financial reporting were my education in the ways that business can build up or tear down a country, and the most important thing I ever learned was that if you want to understand where a country is headed, you have to follow the money. So I followed the money trail, and I discovered that many bankers are no better than gangsters, shaking down the American people. As I explain in chapter 2, “The World’s Biggest Ongoing Heist,” the theft was the banksters’ ability to sell bad insurance on loans and keep the income even when they failed to pay legitimate claims. The cover-up was the government’s choice to print trillions of dollars in new money to make it seem (for a while) as if the problem had been fixed.

It was true: the financial crisis and bailout were indeed the biggest theft and cover-up ever seen. Greedy bastards are making almost unimaginable fortunes by skimming money from the customers they are supposed to serve and giving virtually nothing in return. And then those same greedy bastards get more taxpayer money to keep the scam going.

My private conversations with top business leaders encouraged me to trust my own eyes. So while many business journalists were cheering the government for our latest “rescue” from crisis, I was calling for the government’s supposed heroes to go to prison. As a guest on The View, I said that the politicians who authorized the bailout should go to jail. On the Today show, I accused AIG, the insurance company that received an $85 billion bailout, of blackmail. At first, most people in the media business thought I was straight crazy. They couldn’t believe that I was saying this stuff. Many of the companies I was calling out were the ones buying the commercials that paid for financial news programs like mine. So I left Fast Money, started The Dylan Ratigan Show, and I kept talking. Because what makes me so angry, even today, is that the underlying problems have not been solved. The banksters are still using their sway with politicians to commit mind-boggling theft. Ordinary Americans are still being fleeced. All that the supposed rescue did was to shift the cost of their reckless gambling from the wealthy and powerful who had created the problem to ordinary people on Main Street.

I realized that our banking system, on which every business and every one of us depends, has become a greedy bastard’s delight. Instead of serving its customers, it feeds on them. Vampires feast on blood, weakening and eventually killing their victims, but greedy bastards extract the lifeblood of countries, which is capital: the money, resources, and human potential that must flow through the body politic to nourish a nation’s health and growth. When our capital is drained away to private bank accounts and foreign investment, the country becomes weak and sick, threatening our investments, our jobs, our homes, and our future as a great nation.

In a vampire industry, all the usual rules and incentives of good business are reversed. Instead of trying to provide the highest quality product to serve the customer best, a vampire industry preys on its customers. Rewards go not to whoever competes best, but to whoever cheats best. In a vampire industry, the most successful employee is not the one who is most productive, but the one who is greediest. If the job descriptions were honest, they would say, “Wanted: greedy bastards. Responsibilities: to take our customers’ money any way you can.”

Greedy bastards don’t make money at all. They just take it. Here’s what I mean:

If I start a venture capital firm that lends out money to drug researchers trying to find new cures for disease, and I get rich doing it, then I made my money by investing in the productive future of this country; I used my money in a way that facilitated scientific innovation and a cure. I’m what director of the Havas Media Lab Umair Haque calls a “capitalist who makes.” But if instead I take the same money and use it to lobby for changes in a government regulation—changes that help me trick a union into investing its retirement savings in flawed investments so that I can collect the commissions—then I may move as many dollars into my bank account as someone who funded cures for diseases, but I haven’t made anything. I’m a “capitalist who takes,” exploiting my power to influence the government for my own private gain, no matter the harm to anyone else. I’m a greedy bastard.

In my reporting, I found banking overrun with greedy bastards, but banking was just the beginning. As I followed the money trail—the flow of capital through the body politic—I found multitrillion-dollar theft, perpetrated every day not just by banksters but also by greedy bastards in international trade, energy, health care, education, and by the politicians they buy. As I explain in chapters 3 through 6, we are borrowing from future generations to help send our jobs and our most productive industries to China. We have the least efficient energy industry in the developed world, wasting more than two-thirds of all the fuel we use. We have the least efficient health care industry in the world, paying up to seven times what some other countries pay for the same level of care. We spend more than almost anyone else on education, but our results are heartbreaking.

These industries were not always corrupt and wasteful. They once wanted many of the same things that the people did. There was a time in the past century when each industry was essential to our nation’s progress. As Josh Fox, creator of the 2010 documentary Gasland told us on The Dylan Ratigan Show, “Oil and [gasoline] built the whole last century. We have them to thank for that.” But the economic and environmental damage from our reliance on twentieth-century fuels is too severe for us to continue relying on an outdated energy industry. The same is true of finance, trade, health care, education, and politics. Each one had a productive life, and, as I’ll explain, with the changes of the digital revolution, each should have died a natural death. But instead of making room for the new industries of the twenty-first century, they refused to die. They became undead, preying on the customers they used to serve.

In the original Dracula by Bram Stoker, it took a long time for people to realize that actual vampires walked among them. Count Dracula dressed elegantly and carried himself like royalty. People were slow to believe in the vampires’ dark magic, which allowed them to move in secret, to hypnotize and control their servants, and to drain their victims’ blood while keeping them from feeling the terrible cost. Today’s vampire industries, too, have a dark magic: an unholy alliance with government based not just on the money that they contribute to political campaigns and spend on lobbying but on their ability to hypnotize us with false prices. How can a price be false if we pay it and they accept our payment? When the price we’re aware of paying is only the first cost we have to bear, and there is a second, hidden cost that is far higher, I call this the Very Bad Deal hypothesis. It works like this.

First, a greedy bastard offers us a low price on something we want or need. We accept the deal—but there’s a catch. Along with this thing we want, we have to accept a tiny chance that something terrible will happen. Here’s where it becomes a Very Bad Deal: even though, on any given day, there is only a tiny chance that the Very Bad Thing will occur, in the long run the terrible thing is certain. It’s as if we were offered a delicious candy bar, usually expensive, at a low price. The catch is that what makes the low price possible is that somewhere in each candy bar is a rock hard enough to break your teeth. You can’t see the rock, and there is no way to figure out where it is. Any given bite of the candy bar is tasty and sweet, but every bite increases the chance that you will bite down on the rock. By the time you finish, you will surely hit the rock—and the greedy bastards will take little or no responsibility for the harm you suffer.

In this book, I will show you the worst of the Very Bad Deals and their hidden costs. I explain how our banking system gives us cheap credit for buying houses and cars and flat-screen TVs, and our trade relationships give us cheap imports from China, but if we continue to rely on these Very Bad Deals, we will wind up so deep in debt that our economy will be permanently crippled. I will show that the price of gasoline in America, which is far lower than in Europe or Asia, seems like a great deal, but if we continue to rely on our current energy system, our country will wind up bankrupt, badly polluted, and mired in endless wars. In these industries and more, as I will explain, the profits go to the greedy bastards, but the costs when they come due are paid by the government—that is, by taxpayers like you and me. I may enjoy that delicious, inexpensive candy bar, but my taxes will go up to cover my reconstructive dental work. In the end, that cheap candy will be the most expensive treat I ever bought. Talk about a bad deal.

In each of these bad deals, the hidden price we pay keeps going up as the value of the product we receive goes down. This is known in technical terms as an outrageous rip-off. Where is all that wasted money going? Some of it is lost: burned off or thrown away. The rest can be found in the pockets of the greedy bastards. They are the well-paid servants of the vampire industries.

When someone goes to an emergency room, the first medical professional he or she sees conducts triage, identifying which patients’ conditions are the most serious, so that they can be treated first. It’s time to conduct some honest triage on the United States of America. The truth is that we have been living with several massive, outdated industries. We all depend on them, but they are vampires that no longer give us what we want. We want clean domestic energy, but we get dirty imported energy. We want to grow our economy through international trade, but instead we’re trading away our long-term economic assets and our jobs while our manufacturing economy shrinks. We want education that prepares all our young people for the future, but we get educational resources concentrated on a wealthy few. These are our most urgent problems because they endanger us the most.
Extractionism
Greedy bastards often call themselves capitalists, but what they are doing is the opposite of capitalism. Call it “extractionism”: taking money from others without creating anything of value, anything that produces economic growth or improves our lives. In an extractionist system, you actually lose value at an increasing rate over time. Instead of giving people incentives to make good deals where both sides can benefit, the system rewards those who take and give nothing in return. Such people are commonly known as thieves. Sadly, America and many other countries across the globe have adopted extractionism as their chief economic policy, building it into our present systems for everything from trade and tax policies to banking.

If we don’t deal with the rock in our candy bar—that is, trillion-dollar vampires—all our talk about the million-dollar and even billion-dollar problems will ultimately be futile. Right now, it’s as if the United States is a vampire’s victim brought to the ER by her family (the political parties). They tell the doctor, “She’s pale! She’s weak! She’s in pain!” The Democrats want to get her a blood transfusion, to renew her strength and return the color to her face. The Republicans want to post armed guards outside her door day and night so that no one can attack her. They argue. They accuse.

The media reports that the Democrats have asked for another transfusion, but the Republicans won’t pay for an additional pint of blood. But the problem is not bleeding or pain. Those are effects. The cause is vampire industries. We must stop these vampire attacks, because armed guards outside the door don’t keep Dracula from turning into a bat and entering through the window, and transfusions just offer him dessert. We must stop wasting our time debating symptoms and bogus Band-Aid solutions while the trillion-dollar vampires have their teeth in our necks.

Let me be honest. It can be upsetting, especially at first, to think that we face so many challenges, and each one of them so big. I remember feeling discouraged when I realized that we had so many different trillion-dollar problems to solve. Weren’t these problems complicated and difficult? Where could we find solutions to all these different problems? As Representative Ron Paul of Texas told me, “I think people are in denial, and maybe they don’t want to think about the hard choices and don’t want to think about how bad things are.” But the more I investigated the greedy bastards that have overrun this country, the more encouraged I became. Why? Because I went looking for people with solutions, and I found that solutions are abundant.

One of the great things about my job is that people all over the world talk to me about the alternatives they’ve discovered and the methods they’re testing. New digital technologies have made it easier for innovators to discover what works and to partner up to make good solutions even better. For instance, how to make our banking system more accountable and productive; how to generate cheaper, cleaner energy that doesn’t leave us dependent on our enemies; how to provide better health care at lower cost; and so on down the list, with inspiration at every turn. The United States already has amazing innovators with solutions ready to implement. The real problem isn’t finding solutions. The real problem is that the status quo is so profitable for greedy bastards that they do all they can to prevent these new solutions from being implemented. But I am optimistic because that means we have only one root problem: breaking the grip of the vampire industries so that we can restore American prosperity.

I wrote this book as a manual to stop the greedy bastards: how to recognize vampire industries, how to fight them, how to rescue their victims, and maybe even how to turn the greedy bastards from their destructive ways.

Storybook vampire hunters wield stakes and silver bullets, garlic and crucifixes. Those who fight to break the grip of any vampire industry have their own weapons: four core values acronymed VICI. These principles, which I think almost anyone in this country could share, have the power to turn bad deals into good ones:

Visibility,

Integrity,

Choice,

Interests.

Any deal or relationship, whether involving a business, a government, or even a family, that does not conduct itself according to these values will be prone to greedy-bastard behavior: secrecy, cheating, and exploitation of those it is meant to serve. But any organization or group of people that is true to these four values can triumph over corruption and free its full creative powers to generate success and prosperity. Vici is the Latin word for “I overcame,” or “I prevailed.” The VICI code is not just a set of separate values. Each one naturally leads to the next. Shared visibility brings about price integrity; with integrity of choice and prices, we can better align our interests around shared goals and values. Let’s look at the VICI values one at a time, and how living by this code of values can help us overcome greedy bastards wherever we find them.

VISIBILITY. There is a reason why vampires like the dark: they prefer to move unseen and act with the advantages of secrecy and surprise. In the same way, vampire industries prefer opaque environments. Rigged prices, misaligned interests, and lack of choice are most effective when victims can’t see that they’re being controlled. But the best chance for those victims is to help turn on the lights, refuse the numbing drug of distraction, and recognize that they are dealing with greedy bastards who win when they lose. Visibility makes the other three values possible.

INTEGRITY. Imagine that you’re in a store and comparing the prices for the merchandise on the shelves. You purchase an item, but when you get home, you discover that you’ve been overcharged. You’ve been cheated. The store has acted without integrity. Now imagine that every object in your life—the chair you might be sitting in, the electricity in your home, your last medical bill, the interest rate on your credit cards (even this book in your hands)—was also priced wrong. As I’ll show, that’s exactly the situation we face. The prices we pay are so manipulated by the unholy alliance between greedy bastards in business and the politicians they buy that we can’t tell the real value of anything.

How can that be? Say that I own an old car powered by a gasoline engine. Maybe I’ve started to wonder if my next car should run on electricity or on flex fuel such as ethanol. Like many people, I’ll make that decision based on price. If gas is cheap, I’ll stick with the good deal I already have. If it’s more expensive, I might switch. I use price to judge what things are worth, and I base many of my most important decisions on it.

But what if the price per gallon that I see posted at the pump is actually $10 too low because the oil companies used their influence with politicians to arrange subsidies, tax breaks, and other market controls? Now the government pays the additional $10 per gallon and then passes the bill on to the taxpayers. In that case, the free market can’t help me decide if it’s worth switching from gas to another fuel, because the market isn’t free, it’s rigged. My best attempts to compare prices so that I can make an informed decision about what car to buy will come out wrong, because the prices I use to make my choices are inaccurate. Without price integrity, I can be tricked into spending my money in ways that benefit greedy bastards, because I don’t actually know the price I’m paying. But if I can learn how the prices have been distorted, then I can restore integrity to the system and make smarter decisions as a consumer.

CHOICE. The difference between a victim in the hands of a predator and a free agent in a fair market comes down to choice. If I have only one way to get the health insurance I need or a quality education for my children, then I will pay any price. Economists call this scarcity power: if you can make the thing that I need scarce, then you have the power to make me pay whatever you ask. No choice. And as a rule, any situation where there are very few choices—a handful of extremely similar employer-based health plans, two and a half domestic car companies, two functional political parties—breeds greedy bastards. True choice, on the other hand, creates competition and drives away the greedy bastards.

INTERESTS. People can work together productively only if their interests are aligned. If I’m on a pro basketball team, I may not like all of my teammates. I may not agree with everything the coach says. But if we are all interested in winning, then we will play together as productively as we can. However, if a few players get paid off by gamblers to throw the game, then our interests are no longer aligned. Some of us will play to win and some will play to lose. We will be far less effective. In the same way, if bankers receive bonuses for keeping the banking system running efficiently, they will work as a team to keep the banking industry productive. But if they know that they are going to receive enormous bonuses even when they corrupt the system, then the interests of the bankers and the interests of the rest of us—who need a reliable, effective banking industry—are not only out of alignment, they’re in direct opposition.

Greedy bastards are people whose interests are not aligned with those they claim to serve: their only interest is to take as much as they can, as fast as they can, for themselves. But if an organization can get its interests back into alignment—for example, if banks refused to give bankers bonuses when they fail—then it can motivate more productivity. If bankers can make money only when they help society solve problems, then that is what will happen because it is the only way bankers make money.

Even better, if loans and investments offered the highest payouts when they created the most value as opposed to taking the most risk, we can create win-win deals. This is the true intention of the capitalist system: win-win deals where wise investment creates opportunity, innovation, and valuable goods and services.
Every Problem Is an Opportunity
Once I got past the initial shock of admitting that our country is in the grip of greedy bastards, I didn’t feel discouraged. In fact, I actually felt optimistic, because for the first time, I could see the problem that ties everything together: the bad deal we are getting from the misaligned interests all around us. Only if we learn to recognize it in our day-to-day lives can we set about the business of coming together to change it.

I’m optimistic even when I see the massive waste and the ongoing theft perpetrated every day, because when I see that so much of our resources goes to bad deals, I realize how much we still have to work with—if we can redirect the resources of this great country. We do that by ending the bad deals in finance, taxes, and trade, in the process releasing trillions of investment dollars into energy, health care, education, and so on.

We have the chance to spend far less and get far more for it. We have a great collection of innovative talents—frustrated now by legacy industries that squeeze them out, but eager to put their ideas into practice. We have a vast workforce—underemployed now, but ready to get to work solving our real problems. What we need is to recognize the true dimensions of the challenge we face and align ourselves with the VICI code, to meet that challenge with resolve. The truth will set you free—but first it will piss you off.