The two fundamental structural problems of the United States’ corporate capitalist system are that it is designed to exploit the saving or working population to benefit those who conduct financial transactions, and that criminal acts perpetrated by corporations cannot result in criminal prosecution of these entities. Only people working for the corporations can be individually held accountable for corporate crimes. Usually, this legal responsibility is highly diluted or entirely sheltered by the transfer of liability to non-human corporate entities.

The cycles of real estate and equity market crashes are inevitable in a system where each transaction results in higher prices as the banks, brokers, agents and lawyers take several percent of the real estate or stock market deals. Only those that can wait out the cyclical drop in the stock market and have invested with high quality corporations that will regain the equity losses, can be immune to these fluctuations. Usually those are only the very rich or oligarch billionaires, who do not need to sell their stock holdings for the duration of the downturn. Often, they are simply the holders of the corporate stock of their own companies, which they cannot sell if they want to remain majority shareholders and the companies remain just as profitable as they were prior to the crash. They continue to make money as their revenue remain unchanged and adjust to the wider recession which can affect their business. However, because this recession is usually local and many such business have multinational presence, not only can they see the recession coming when the bubbles burst, they can easily avoid falling victim to them by a wide range of means. Those who lose, are small investors and pension funds that have expenses which necessitate further stock trading at a loss, or paying out money that comes from the fund. When pension funds fail to make payments, they must renegotiate and thus the working population always takes a major hit during a stock market crash. This is then further compounded by the cuts in the labor force which the companies, corporations and multinationals use to reduce their costs during the subsequent economic downturn so they can keep their profits and bring up their stock value. Often this is a result of outsourcing or transfer of business assets and production to another country and their revenue doesn’t decrease at while their tax burden is reduced.

The same is true of the crashes in the housing bubbles of the real estate cycle. Pensioners are robbed of their savings, homeowners are robbed of their equity. The banks however, and the financial professionals, continue to make money on the entire process even in the downturns. They transfer responsibility to the insurance companies, bundle toxic assets and sell them to foreign banks or investors who end up taking a hit and even more paradoxically, often have to settle U.S. gov’t law suits because of their purchase. The banks further make money on the taxpayers’ inability to control public finances because the political system is skewed in their favor. This imbalance exists, because corporate entities have financially unrestricted power to influence the U.S. political system to keep tilting it in their favor.

This results in vividly unfair outcomes. For instance, to keep their liquidity the banks get money to led to their customers at zero cost from the Federal Reserve System. Even when the Fed does charge them something, it is nominal, .5% to 1.0%. The money that the Fed gives to the banks, usually comes for the taxpayers. It is then lent back to the taxpayers by the banks, so workers can make ends meet; these banking products come in the form of personal loans, credit cards, car loans and mortgages, for which the banking industry charges anywhere from 4% to 35%, not counting points, fees, and commissions. Essentially, the taxpayer gives free loans via their ‘representatives’ of the Federal Gov’t to the bankers, who in turn charge the workers exorbitant sums of money, which they get for free from the taxation of their wages.

Moreover, the system is designed to violate human rights, such as that to having a place to live; and it uses law enforcement to evict residents and confiscate real property, even if it is done in error, through criminal deceit or fraud. The economic repercussions are obvious. This then accelerates the drop in the real estate market value, thus causing the bubble to burst. The banking and financial industry however, continue to make money by transferring criminal responsibility to their corporate entities and the perpetrators face no jail time, while the corporations simply settle class action or gov’t law suits for nominal sums that usually do not amount to any significant fraction of the illegally or criminally generated profits. This further reduces their future liability, and in fact the settling of such pending obligations often results in increases in their stock value as the liability for their crimes is permanently purged. This is also true of large American multinational corporations in the tech industry, energy industry or the military industrial complex. 

Furthermore, those who profit most from this system, siphon the money out of the country through many of legal means, thus avoiding taxation entirely or their tax rates are ridiculously low to being with. The infamous Warren Buffet statement that he pays a lower tax rate then his secretary, illustrates this problem vividly. The American workers are robbed of their pensions, equity savings and wages by a system that favors the oligarchy and the corporate multinationals. For over half a century now, the real wages have remained stagnant for the American worker.

US real wages 1964 to 2016 - PEW

This is possible, because the US dollar is a reserve currency and any economic downturn can be transferred abroad by the multinationals and the oligarchs. In a smaller country, that has a national currency that can and must be devalued, these losses usually result in inflation and if skillfully managed, they can be spread around uniformly in the society, thus making the country’s exports cheaper and more competitive. Domestically such a country sees no great social injustice and the crashes are prevented by currency devaluation. However, states like Greece and Spain who are part of the common reserve currency system within the Eurozone cannot do that. The bubbles burst and a prolonged recession occurs with major social upheaval and economic losses. Other such capitalist systems with no fiscal breaks to manage the inflation rate or unable to increase exports during devaluation of their national currency, fall into hyperinflation and economic collapse; something that usually prompts a regime change, a revolution or necessitates foreign fiscal intervention by allies, the IMF or worse… a military invasion due to collapse of social order, war or insurgency.

Unfortunately, the Western oligarchs seek to exploit the legal systems of countries that had good laws protecting their societies against human rights violations (see Article 25. (1) of The Universal Declaration of Human Rights) in housing and did manage economic downturns by fighting them off with their national currency. Thus, for instance in Poland, the cabal of American capitalists installed a puppet regime to destroy such protective laws and permit eviction of residents without ensuring that new housing is available. When the Occupy Wall Street movement arose several years ago, its inception was meant to do exactly the opposite, it was meant to improve national legislation of countries and increase their resilience against human rights violations by corporate entities. It was meant to keep them accountable. It seems that we are not winning.