A Guardian investigation finds insurer quietly paid facilities that helped it gain Medicare enrollees and reduce hospitalizations. Whistlebl
The United State's scummiest insurer, and formerly one of the 10 most profitable corporations in the world, for years worked to keep nursing homes from sending their sick residents to hospitals where they could actually receive proper medical care.
In several cases identified by the Guardian, nursing home residents who needed immediate hospital care under the program failed to receive it, after interventions from UnitedHealth staffers. At least one lived with permanent brain damage following his delayed transfer, according to a confidential nursing home incident log, recordings and photo evidence.
“No one is truly investigating when a patient suffers harm. Absolutely no one,” said one current UnitedHealth nurse practitioner who recently filed a congressional complaint about the nursing home program. “These incidents are hidden, downplayed and minimized. The sense is: ‘Well, they’re medically frail, and no one lives for ever.’”
For-profit medical insurance is a system of rationalized brutality in the name of siphoning even more money from those who have no choice but to pay. UnitedHealth's share price is plunging as its brand has become toxic following the discovery of widespread fraud, but the same amoral financial calculus runs through the entire system.
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I'm on a 20+ city book tour for my new novel PICKS AND SHOVELS. Catch me in LA TONIGHT (Feb 19) for an event with WIL WHEATON in LA, and in SEATTLE TOMORROW (Feb 19) for with DAN SAVAGE. More tour dates here.
Thomas Piketty's 2013 unexpected bestseller (a 750 page economics book translated from French!) Capital in the 21st Century, offers a very convincing explanation of our political decay, and it continues to serve this purpose as the decay undergoes alarming acceleration:
Let me sketch out that argument really briefly for you here. Absent any kind of government intervention, markets make investors richer than workers (AKA "the rate of return on capital exceeds the rate of return from growth" or "r > g"). This is true even for extremely powerful workers who get very, very rich indeed. Piketty illustrates this in many ways, but my favorite is the Parable of Bill Gates, Liliane Bettencourt and Bill Gates (again).
Bill Gates founded Microsoft in 1975 and he stepped down as CEO in 2000. In the intervening 25 years, he built the company into the most profitable firm in human history and grew very, very rich. This is Market Lore Canon: found a successful company, grow rich.
Now, Bill Gates started with a bunch of money – he comes from a wealthy family – but he grew his personal fortune over those years in extraordinary ways, and not by investing it, but rather, by founding a company and working at it.
Now consider Liliane Bettencourt, who, during Bill Gates period as Microsoft CEO, was the richest woman in Europe. Bettencourt was born very, very rich, heiress to the L'Oreal fortune. Unlike Gates, Bettencourt didn't have a job. She just sat around, while financial planners invested her family money. Over the 25 years when Bill Gates was growing Microsoft from zero to the most successful company in planetary history, Bettencourt made more money than Gates. Gates made his money by doing something. Bettencourt made her money by emerging from a very lucky orifice and just hanging around.
But here's the kicker: after Bill Gates quit Microsoft, he became a professional investor. He stopped doing a job and started investing in companies where other people were working. Over the next 13 years, Bill Gates (investor) made more money than Bill Gates (Microsoft CEO) made in his 25 years of doing a job. He also made more than Liliane Bettencourt.
That's what r > g means: that even the most successful worker in human history can't make as much as a person who merely has a lot of money, and the more money you have, the more money you make.
If you think about this for a second, you can see how it'll play out: in economies both good and bad, the people who emerge from lucky orifices will get wealthier than anyone else, wealthier than the people who do things that grow the economy. And because they're getting wealthier faster than the economy grows, they come to command ever-larger shares of the economy, so that even when the pie gets bigger, their slices gets bigger still, and the remainder that we all share isn't just proportionally smaller – it's actually smaller. We don't just have less relative to the rich – we have less relative to our parents.
For Piketty, this is an iron law of markets, born out by analysis of hundreds of years' worth of capital flows. He devotes many of those 750 pages showing how even the most profitable sectors of the economy at any given time are disproportionately benefiting investors, even relative to the most successful managers and workers at any given time. This is where oligarchy comes from: it is the natural end-state of a market economy.
But (Piketty continues), oligarchy is intrinsically destabilizing. For one thing, once the fortunes of Bill Gates' or Liliane Bettencourt's are large enough, growing them by even, say 1% requires that some capital come from other rich people, because 1% of Bill Gates's holdings will eventually exceed 100% of the holdings of everyone who isn't insanely rich. So, over time, rich people eventually have to fight with each other in order to keep getting richer – see, for example, World War I.
That's not the only way extreme wealth inequality creates political instability. Once the 1% are sufficiently wealthy, they capture government, and the only policies that can be enacted are those that don't gore some aristocrat's ox, and once the rich become super rich, they own all the oxen. So sensible policies that are needed to ensure an orderly, stable society (for example, limiting war bond repayments to a sustainable level that won't bankrupt the economy to make wealthy bondholders even richer) become impossible, and then you get societal collapse (see, for example, World War II).
The backbone of C21 is a time-series of 300 years' worth of global capital flows, painstakingly assembled by Piketty and his grad students. This time series shows the same pattern emerging over and over: as the rich get richer, they capture more and more of the state's policy-making apparatus, triggering more wealth-friendly policies, which make them even richer, and makes their grip on policy stronger. This continues until inequality reaches a tipping point, and then you get a rupture, like the French Revolution, or the World Wars. These are orgies of capital destruction, and because nearly all the capital is in the hands of the rich, when the dust settles, they emerge with much less capital and much less power. Society is shattered, but it is more equal, and this means that we can once again make good policies that help us rebuild a society that benefits everyone, not just the rich (the French call the 30 years following WWII "the 30 glorious years").
But, if this society doesn't include some kind of mechanism to address the fact that capital is still growing faster than the economy – even a post-war boom economy – then eventually the share of wealth held by the rich will reach a tipping point, and we'll see policies that benefit the wealthy crowding out policies that support human thriving, and the rich will get richer, and they will feud with each other, and society will destabilize, and we will face collapse.
So, let's talk about Ronald Reagan! By the late 1970s, the share of wealth held by the top 10% had grown significantly from its post-war low point. With all that excess capital, the rich started spending money to promote candidates and policies that would make them richer. At a certain point, they have enough money to buy Reagan's presidency, and we get a deregulatory bonfire: lower taxes for the rich, looser rules for finance, fewer protections for workers, less spending on social programs.
This makes the rich richer, even as wages stagnate. The next 40 years are a procession of ever-more-wealth-friendly policies and politicians – not just the Bush years, but also Bill Clinton's welfare bill and Obama's foreclosure crisis – and the rich get richer and everyone else gets poorer. Monopolies consume the American economy. GDP goes up, because the corporate sector is super consolidated and it's jacking up prices and slashing wages, leaving more for profits and dividends.
Society grows progressively less stable. Policies that benefit the wealthy at the expense of everyone else – ignoring the climate emergency, slashing the safety net, starving infrastructure, etc – dominate. Inequality worsens. No one can afford a house, health care, or university. Your life's savings are stolen by a subprime mortgage, or a pension-fund raid, or bitcoin grift. Instability worsens. Policies that benefit the wealthy at the expense of everyone else – endless imperialist wars, noncompete agreements, private equity rollups – multiply. Wages stagnate. Inequality increases. The rich get richer. One political party is captured by finance ghouls. The other one is also captured by finance ghouls, but welds them into a coalition that includes virulent, apocalyptic racists.
Which brings us to today, and Trump, and imminent collapse, and Elon Musk and his child soldiers, and JD Vance, and the whole fucking thing.
Today, Piketty posted some pointed thoughts on the situation in Europe in the face of rising American fascism and belligerence:
It's common for Americans to write off Europe because its "economy isn't growing" the way the US economy is. Piketty points out that this is a mirage: American economic growth is due to rising prices and plummeting wages, which is great for the share price of giant American companies whose cartels and monopolies make everyone except the tiny number of Americans with substantial stock market portfolios much poorer: "When measured in terms of purchasing power parity, the reality is very different: the productivity gap with Europe disappears entirely."
Once you adjust US economic figures to account for this, it's clear that America truly is in decline – the real US GDP has lagged China's since 2016. China now has an adjusted GDP that 30% higher than America's, and it's on track to double US GDP by 2035.
The US is losing control of the rest of the world, and Trump is accelerating this phenomenon. Take de-dollarization: the US (and only the US) can make as many US dollars as it wants, so for so long as things around the world (oil, say) are available for sale in USD, the US can buy them on better terms than any other country in the world:
What's more, the fact that dollar-clearing takes place at the Federal Reserve gives the US the ability to spy on and control other countries around the world (think of US SWIFT sanctions on Russia after the Ukraine invasion, or the vulture capitalists who forced Argentina to pay up even after it defaulted on its debts). Trump's pro-bitcoin policies are intrinsically anti-dollar policies. The rest of the world was already increasingly nervous about the way that the US dollar is a vehicle for soft power around the world, we're already seeing a lot of oil denominated in rubles, and now Trump is encouraging the growth of a shadow currency that will make it even easier for transactions to take place without dollars (notably, cryptocurrency will help America's ultra-rich evade even more taxes, and commit even more bribery):
Trump is also waging war on the CIA and NSA. Good riddance, sure – but these are also major sources for projecting US power around the world – think of the NSA's mass surveillance program, in alliance with the "5 Eyes" countries whom Trump is setting out to alienate.
Then there's trade. The US has pushed pro-oligarchic policies on the world through its trade deals. To access US markets, foreign governments must enact punitive laws that make it easier for US giants to loot their economy, like IP laws:
Not all the profits of giant US companies arise from ripping off 99% of Americans. Some of those profits come from ripping off foreigners, but that's only possible because foreign governments have passed looter-friendly policies in exchange for tariff-free access to US markets. Now that the US is shutting that down, there's no reason to allow America to continue stealing from your citizens.
As Piketty says, Trump dreams of a "national capitalism." National capitalism is a disaster, even compared to global capitalism:
the strength of national capitalism lies in glorifying power and national identity while denouncing the illusions of carefree rhetoric about universal harmony and class equality. Its weakness is that it clashes with power struggles and forgets that sustainable prosperity requires an educational, social and environmental investment that benefits all.
National capitalism walls its oligarchs off from the possibility of draining the riches of other countries, limiting them to domestic looting. Eventually, all the wealth in the country is held by its looter class, and the only way they can grow is by attacking each other. No one has more direct, recent experience with this phenomenon than Europe, a wealthy trading bloc of 500m. Trump has demanded that the EU commit 5% of its GDP to building up arms and its standing armies.
Piketty says this is a dead end. As the US is abandoning its role as global rule-of-law haven and transaction clearing house, the EU has an opportunity to become a very different kind of world power:
Europe must heed the calls from the Global South for economic, fiscal and climate justice. It must renew its commitment to social investment and definitively overtake the US in terms of training and productivity, just as it has already done in terms of health and life expectancy. After 1945, Europe rebuilt itself through the welfare state and the social-democratic revolution. This project remains unfinished: on the contrary, it must be seen as the beginning of a model of democratic and ecological socialism that must now be thought through on a global scale.
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
NEW POST: Financialization is not just about shareholder value and rentier capitalism; it is also about breaking the power of organized labor, since workers and unions fought to protect the gains and rights achieved during the postwar era
NFTs and meme stocks are contributing to the financialization of the self
Financial inclusion may seem like a way of teaching more people how to successfully participate in speculative markets for their own benefit, but this narrative masks the often predatory terms of the inclusion for the benefit of the existing systems. Just as philanthropically framed microloans allow the global financial centers to open a thousand tiny cuts of interest collection in previously inaccessible areas, the new tech platforms and gimmicks reshape our lives and selves to more effectively serve as resources to be extracted and exploited. As Rob Aitkin argues in “A Machine for Living: The Cultural Economy of Financial Subjectivity,” “the process of financialization … entails the configuration not only of new assets in financial markets but also ever-widening kinds of populations that could understand themselves as risk-bearing, investing or indebted subjects capable of navigating those markets.” Financialization enters our daily lives not just through macroeconomic fallout — unemployment rates and global capital flows — but through the attitudes and behaviors it encourages or forces us to internalize, often in the guise of “opportunities.”
These practices create inroads to extract new forms of value from individuals: as data to inform the speculative investments of larger hedge funds, as users on platforms, and as debtors under the thumb of financial surveillance and discipline. They work to fill our minds with the language of debts and returns on investment, in much the same way as widespread student and medical debt do. In Revenge Capitalism, sociologist Max Haiven argues that these structurally imposed debts are construed as individualized “responsibilities” around which one is obliged to manage one’s life and future.
In other words, the sort of “financial inclusion” promised by pseudo-democratized investment entails a risky incursion of neoliberal market logic at the level of individual practice. In an environment of deregulation, risk, and desperation, people are urged (or compelled) to take on an entrepreneurial subjectivity.
[...]
Choices in life become “gambles,” as one scrambles to find bits of work or the big payout that would allow one to escape the condition of alienated work altogether, and our knowledge and skills become like assets that we must plan to increase the value of and deploy for high returns as performance in this arena is individualized. The terms of inclusion, which prompt us to see ourselves as smart, hard-working self-investors, can seem flattering, encouraging us to keep playing along. And while there’s always the vanishingly small possibility of becoming a runaway success in investments or stardom, most of the time we have no choice but to play to lose.
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This chain of bubbles and busts [in the global economy] began in Latin America in the late 70s. An influx of recycled petro-dollars (stimulated by sub-zero real interest rates on the dollar) generated a whole series of risky financial innovations (including the infamous “adjustable rate loan”), which all collapsed when the Volcker shock brought interest rates back up. It was recycled surplus dollars from Japan that saved the US economy from the subsequent deflation and enabled Reagan’s redoubled Keynesian spending programmes. Yet the US thanked Japan for its kindness by devaluing the dollar relative to the Yen in the Plaza Accords of 1985, sending the Japanese economy into a[n] asset-price bubble of even greater proportions, which finally collapsed in 1991. This in its turn set off a series of bubbles in the East Asian economies, to which Japan had exported its manufacturing capacity (in order to get around an appreciating Yen). These economies, as well as other Latin American economies that had pegged their currencies to the dollar, then imploded as a delayed result of the dollar revaluation in the reverse Plaza Accords of 1995. Yet this merely shifted the bubble back to the US, as the US stock market bonanza created by the appreciating dollar gave way to the dot-com bubble. In 2001 the latter turned over into a housing bubble, when US corporate demand for debt proved to be an insufficient sink for global surplus dollars. If the last two bubbles were largely restricted to the United States (although the housing bubble also extended its reach to Europe), it is because due to its size and seniorage privileges it is now the only economy able to withstand the influx of these surplus dollars for any sustained time period.
If we place this phenomenon in the context of the story of deindustrialisation and stagnation described above, it becomes plausible to envisage it as a game of musical chairs in which the spread of productive capacity across the world, compounded by rising productivity, continually aggravates global overcapacity. Excess capacity is then only kept in motion by a continual process that shifts the burden of this excess on to one inflated economy after another. These latter are only able to absorb the surplus by running up debt on the basis of excessively low short term interest rates and the fictitious wealth this generates, and as soon as interest rates begin to rise and the speculative fever abates the bubbles must all inevitably collapse — one after another.
Many have called this phenomenon “financialisation”, an ambiguous term suggesting the increasing dominance of financial capital over industrial or commercial capital. But the “rise of finance” stories, in all their forms, obscure both the sources of financial capital, and the reasons for its continued growth as a sector even as finance finds it increasingly difficult to maintain its rate of return. For the former, we must look not only at the pool of surplus dollars, which we have already described, but also the fact that stagnation in non-financial sectors has increasingly shifted investment demand into IPO’s [initial public offerings], mergers and buy-outs, which generate fees and dividends for financial companies. As for the latter, the dearth of productive investment opportunities, combined with an expansive monetary policy, kept both short and long-term interest rates abnormally low, which compelled finance to take on greater and greater risk in order to make the same returns on investment. This rising level of risk (finance’s measure of falling profitability) is in turn masked by more and more complex financial “innovations”, requiring periodic bailouts by state governments when they break down.
Unprecedented weakness of growth in the high-GDP countries over the 1997-2009 period, zero-growth in household income and employment over the whole cycle, the almost complete reliance on construction and household debt to maintain GDP — all are testament to the inability of surplus capital in its financial form to recombine with surplus labour and give rise to dynamic patterns of expanded reproduction.40 The bubbles of mid-19th century Europe generated national rail systems. Even the Japanese bubble of the 1980s left behind new productive capacity that has never been fully utilized. By contrast the two US-centred bubbles of the past decades generated only a glut of telecommunication wires in an increasingly wireless world and vast tracts of economically and ecologically unsustainable housing. The “Greenspan put” — the stimulation of “a boom within the bubble” — was a failure. It merely demonstrated the diminishing returns of injecting more debt into an already over-indebted system.
Endnotes 2, “Misery and Debt: On the Logic and History of Surplus Populations and Surplus Capital” (April 2010)
An implosion of the “Old Normal” so complete that the expected minor adjustment to a “New Normal” is no longer possible. Which strongly suggests the "New Normal" will in reality be much closer to “De-Normalization”.
We're already in a post-normal world because the expansion of globalization and financialization needed to fuel the Old Normal has reversed into contraction.
This reversal is an extinction event for all sectors and institutions with high fixed costs: air travel, resort tourism, healthcare, higher education, local government services, etc. because their fixed cost structures are so high they are no longer financially viable if they're operating at less than full capacity.
Only getting back to 70% of previous capacity, revenues, tax receipts, etc. dooms them to collapse. And there's no way to cut their fixed costs without fatally disrupting all the sectors that are dependent on them.
Reducing costs is even more difficult for institutions such as hospitals, colleges and government agencies. Most of these institutions are unable to cut more than a few percent of expenses; a 10% reduction in expenses would require the closure of entire departments and eliminating core services.
Denormalization is an interlocking series of self-reinforcing feedbacks. People have less money and more insecurity, so they spend less. Those living off the fixed costs paid by the private sector (landlords, local government, insurers, etc.) can't survive on less than their full measure, and this inability to absorb massive cuts causes everyone in the food chain above them to collapse, which eventually triggers their own collapse.
