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There are plenty of American historical antecedents of Trumpism β fascist movements like the Jim Crow reign of terror, the McCarthy hearings, the gleeful genocide of indigenous people. But when you're thinking about the rise of Trumpism, never forget that America isn't just a nation of cruel bigots; it's also a nation of rich swindlers.
We call Trump a "reality TV star" and it's true, as far as it goes. Trump did play a billionaire on TV long before he grifted actual billions, using his status as the poor man's idea of a rich man to secure liar loans and rip off creditors, contractors, business partners, workers, and governments β local, state and federal.
He rose to power on this, boasting on stage that cheating "makes me smart":
Like so many crooked officials, Trump's brand is "He steals, but he works" (except of course that he doesn't β at any given moment, odds are that he's either taking a nap, watching Fox News, or playing golf):
Remember: the right is the movement that says that governments are inefficient and corrupt, so right wing elected leaders make their own case by being incompetent and corrupt. Someone like Trump has to convince people that they can't rely on institutions or their neighbors. His path to power lies through convincing people that the system is rigged and that he β as a man who is an expert at cheating β knows how to rig it in your favor:
But merely claiming "the system is rigged" doesn't actually win the day. If you want to convince people that the system is rigged, it really helps if the system is actually rigged. Want to convince people that elections are corrupt? Legalize unlimited dark money spending and fill our polling places with defective, unauditable voting machines made by Beltway Bandits selling into no-bid contracts:
Want to convince people that there's a shadowy cabal of rich pedophiles hiding children in a pizza parlor basement? It helps if there's an actual cabal of rich pedophiles hanging out on a private island, abusing more than a thousand children (and counting). Want to convince people that the financial system is a rigged casino so you might as well just gamble on cryptocurrency and betting markets? It helps if the actual financial system is run by banks who receive billions in public money and then steal millions of Americans' homes after Obama takes Treasury Secretary Tim Geithner's advice to "foam the runways" for the banks using Americans' houses:
Which is all to say, if you want to understand the origins of the surge of suckers for fascists who are desperate for a strong man to cheat on their behalf in a rigged system, it helps to look beyond racism and xenophobia, to the ways in which the system is, indeed, rigged. Racism and misogyny alone aren't enough to bring about fascism. To groom a nation of fascist patsies, you first need a crooked system:
This is why it's worth understanding finance. The finance sector hides its sins behind the Shield of Boringness (h/t Claire Evans). The layers of overlapping jargon and performative complexity make it hard for everyday people to criticize the finance sector. Finance ghouls exploit this, leveraging confusing ambiguities in the system to insist that their critics don't know what they're talking about and that everything is fine, actually. This is an incredibly destabilizing dynamic. Living in a system where you're being fleeced every day but where people who seem smarter than you have reasonable-seeming explanations about why it's all legit and above-board is a recipe for abandoning all faith in the system, in experts, and in lawful processes, and throw your lot in with a strongman who promises to cheat on your behalf.
Take stock buybacks, a form of stock swindle that was illegal until 1982. In a stock buyback, a company buys its own shares on the open market. When the number of shares goes down, the price per share goes up. This is just a form of "wash-trading," like when NFT and shitcoin scammers buy their own products in order to make it look like they're valuable and desirable:
Advocates for markets as a system of allocation (as opposed to allocating via a democratically accountable state, say) insist that markets are efficient because prices "encode information" about the desirability, viability, and other qualities of goods and services. This is the whole argument for the new crop of rigged casinos we call "prediction markets" that are grooming the next generation of fascist footsoldiers by robbing them blind and then insisting that the whole process was not only legitimate, but scientific, a way to retrieve the "encoded information" about the world around us.
In a market system, stock prices are supposed to reflect the aggregated information about the health and prospects of a company. When a company buys its own stock back, though, its price goes up while its value goes down.
I mean that literally: say a company that's sitting on a billion dollars cash is valued at $10 billion. From this, we can infer that the company's capital stock (factories, inventory, etc), IP (patents, processes, copyrights, etc) and human capital (payrolled employees, contractors) are worth $9 billion. That's a reliable estimate, because we know exactly how much one billion dollars cash is worth: it's worth one billion dollars.
Now, let that company piss that billion dollars up the wall with a stock buyback. The company is relieved of its billion dollars cash on hand, leaving it with no cash, only its physical capital, IP and human capital, which are worth $9b. The company is now worth less than it was before the stock buyback.
What's more, the drop in corporate valuation is more than the billion the company just blew on its buyback. A company with no cash reserves is brittle and prone to failures. Without a cash cushion, any rent shock, change in market conditions, or other adverse incident will leave the company scrambling to borrow money (at punitive rates, thanks to its desperation) to weather the storm. If share prices are actually "encoding information" about a company's worth, a billion dollar buyback should lop more than a billion dollars off the company's share price. Instead, it sends the share price up.
This is just stock manipulation, which is why it was illegal until 1982. But apologists for this system will tell you that a stock buyback is just a dividend by another name β just another way for a company to return value to its shareholders, who, after all, are the owners of the company and entitled to extract those profits.
This is categorically untrue. Dividends do take money out of the company's coffers and distribute them to its shareholders, sure β but a dividend is a bet on the company's future success, which is why a company's share prices rise after a dividend is declared. Investors observe a company that is so well-run that it can afford to drain some of its cash reserves in favor of its shareholders, so they buy the company's stock in anticipation of more dividends derived from more skilled operations.
But imagine if a company parted with a dividend so large that it meant that the firm would struggle to keep its doors open in the coming year. Imagine a publisher, say, whose dividend was so large that it couldn't afford to pay advances for any more books in the next season, meaning it could only make money from the backlist titles it already had in the warehouse, but was entirely out of the running when it came to publishing next year's blockbuster book.
That dividend would not send investors chasing the company's stock. Why would you bet on a stock whose management had just doomed the company to a bad season, and maybe an unrecoverable death-spiral? Without new books to sell, the company won't have any cash to pay dividends, and when it stops paying dividends, its stock price will fall, leaving shareholders with a hole in their own balance-sheets.
Contrast that with buybacks: to do a buyback, the company need merely spend its free cash flow, or money it borrows, or money derived from the sale of key capital, or money saved through mass layoffs, to buy its own stock. Then the share price goes up.
In other words: when a company's stock price rises on news of a dividend, that's "encoding information" about the market's confidence in the company's management and its future growth. When a company's stock price rises on news of a buyback, that's "encoding information" about the market's confidence in the company's future looting to the point of collapse.
I used to think that this was the whole stock buyback story, but as is ever the case with finance, buybacks are fractally corrupt. This week, I've been reading Boston College law prof Ray D Madoff's book The Second Estate: How the Tax Code Made an American Aristocracy, and I've learned even more scummy truths about buybacks:
For tax purposes, dividends are "ordinary income," meaning that they are taxed at up to 37%. Meanwhile, if you sell your shares after a stock buyback juices the price, the profits are treated as "capital gains," whose tax rate caps out at about half that (20%). This means that shareholders pay half the tax on money that comes from strip-mining a company than they would get from money derived from managing a company for sustainable growth.
It's worse than that, though, because capital gains can be offset by capital losses. If you invested in a stock that tanked, you can hold that stock in your portfolio until you are ready to sell a profitable stock, and deduct your losses from the gains you've made.
But you don't even have to sell the stock to realize tax-free income from it: the ultra-rich live according to a financial arrangement called "buy, borrow, die" that lets them avoid all taxes.
Here's how that works: if you're sitting on a bunch of stock, you can stake it as collateral for a loan that is tax-free. Better than that, if you're smart, some or all of the interest on that loan is tax-deductible. If you're rich enough, you don't have to make regular payments on the loan, either β you just wait as the stock continues to grow while your loan is maturing, and when it's due, you borrow even more money against the new valuation and pay off the old loan.
That's "buy" and "borrow." Here's "die." When you die, you transfer your assets to your kids, who benefit from something called the "step-up in basis," which lets them avoid all capital gains on the appreciated value of your assets.
Now, maybe you're thinking that you can benefit from this arrangement. I've got bad news for you: you won't qualify for one of those cool loans that you don't need to pay regularly! What's more, if you own any stock you almost certainly own it through a retirement plan like a 401(k), and when you cash out that 401(k), that is treated as "ordinary income" at nearly twice the rate that our plutocrat overlords pay.
Buybacks, then, are part of a system whereby rich people get much richer every time a company that makes something good and employs ordinary people guts itself and sets itself on the path to bankruptcy. Meanwhile, working people don't benefit from this system, even if they own stock. They just get to live in a world where businesses are looted and shuttered and public services are slashed thanks to balanced budget rules that mean that governments can't spend when rich people don't pay taxes.
This is why buybacks have apologists. Buybacks β a stock swindle that was illegal in living memory β make rich people richer, and they spend some of that loot to fund an army of reply-ghouls who push the message that buybacks are dividends by another name.
It's part of the ripoff economy that has seen crypto-billionaires lobby, bribe and terrorize lawmakers into merging their speculative assets with the real economy, endangering the economic well-being of everyday people:
The ripoff economy is baked into the American experience. It is the foundation of Trumpism. It is the financial basis for things like "Project 2025" β literally! The Heritage Foundation (who created Project 2025) was founded and funded by the founders of Amway, a destructive Ponzi scheme that was rescued from criminal prosecution when Gerald Ford (Congressman to Amway's founders) became president and ordered the FTC to let them off the hook:
Trump's right: the system is rigged. If you're going to pull the people you love back from the nihilistic descent into fascism, you have to be able to understand and explain how the rigging works. We can't insist β as Hillary Clinton did β that "America is already great":
America is not great. It has been gutted by the Epstein class, who robbed us blind, raped our kids, and are now selling us shitcoins and chatbots and the spectacle of protesters being shot in the streets. But it's not enough to know that the system is rigged. Everybody knows the system is rigged. To build a movement and save our future, we have to know how it is rigged and who rigged it.
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