No, Mr. Robert Reich and Yahoo Finance, Capitalism is not broken, what is broken, and has always been in need of repair is Representative Democracy, because it puts the political system at the service of capitalists

On  Monday, September 6, 2021, Yahoo Finance interviewed Robert Reich “celebrated US economist” and former US Secretary of Labour.

The interview is available in Yahoo. Yahoo summarised the interview. My comments address what, according to the summary, Mr. Reid said.

Perhaps in the interview, Mr. Reich said things that made sense; several statements Yahoo attributes to Mr Reich in the summary make little sense and I address them. I also take issue what some of Yahoo’s Financial staff statements.

According to Yahoo, even before the virus, many people saw Capitalism as a system that failed them. Not that the statement is false, it is literally true; but you can also say that many people feel democracy failed them, or that many people feel Socialism failed them, or Catholicism, or Buddhism and many other ideas.

If Yahoo had said; thanks to Capitalism millions of people in China, India, Africa, etc., have left poverty behind, but many still feel Capitalism has failed them, it would have been a much more reasonable and truthful statement.

The interview is framed as an effort to see what business can do to make Capitalism more equitable; in principle it is a good goal, unfortunately, they interview the wrong guy. Anyhow, to expect that business will do much to make Capitalism more equitable is like asking the fox to look after the chickens; the job of business is to do whatever the system allows to maximize profits. We have to change the system, not ask anything of business.

The interview, can be considered as an effort to distract, just like the foil warplanes drop to “distract” the enemy’s radar.

“Capitalism is broken to the extent that big companies or very wealthy individuals, are able to become so powerful that they essentially override democracy”.

Reich describes capitalism in the US, and to some extent in the UK, as probably the most brutal form of trade and economic relationships we see around the World”.  This is an idiotic statement because there are many other places like China, most of Africa, most of Latin America, Russia, practically all Middle Eastern countries (with the possible exception of Israel), etc., as places that practice far more brutal forms of trade and economic relationships than the US and the UK, and even much worse things than trade and economics.

If Mr. Reich had said that “Anglo-Saxon Capitalism is far less socially oriented than the Capitalism they practice in Germany, Switzerland, Northern Europe, France and perhaps Japan, Canada, New Zealand, Australia and few other places”, Mr Reich would have been partly right, but he is wrong.

I do not know if Mr. Reich can not see US and UK Capitalism objectively because he is ignorant, or if he is a self-hating American, or he just says what he says as anti-American and Anti-UK propaganda for some ulterior motive.

He is right about the bankers, GM and others getting bail outs by the Obama Government and Congress while people lost their homes was extremely unfair. He could also add that some executives might have been tried and gone to jail. But remember, Mr. Reich was a member of President Obama’s economic transition advisory board…

According to Yahoo, Mr. Reich also states: “What we need, if we are going to have Capitalism and Democracy, is for democracy to be in charge”. “We need regulations, antitrust rules, we need to restrict the kinds of subsidies that go to business that are unrelated to any social goods”.

Yahoo also seems to attribute to the outsize donations to political campaigns by large business and wealthy individuals, as the cause of the outsize influence they have on American democracy. Yahoo could also add outsize donations by unions, professional associations and the political lobbies.

By the way, I would like to know how much Yahoo, or the wealthy people who own or run Yahoo, contribute to political campaigns.

Because of the large donations, “a handful of CEOs control substantial portions of the economy”, Yahoo-Reich states, “this prevents government from doing very much about the power they amassed.”

The summary of the interview continues along similar lines. Mr Reich manages to say incredibly foolish and demago-illogical things, but you can read the summary yourself in Yahoo.

Well, Mr. Reich and “Mr. Yahoo”; let me tell you, you have in front of your faces the answer to prevent too much influence of big corporation and the rich in politics, it is called direct democracy.

Direct democracy transfers most political power from the elected politicians to ordinary voters. Direct democracy means that voters vote to elect politicians but, and this is much more important, they also vote to stop laws, they also can propose and decide laws and even changes to the constitution. They can, and do that, regardless of what the politicians, the large corporations and the wealthy may want.

But direct democracy never comes up in the summary of the interview. Perhaps Yahoo and Mr. Reich never took the trouble to study direct democracy, perhaps they know about direct democracy but do not believe in it because “ordinary voters are not smart enough”, or perhaps because “the issues are too complex for ordinary voters”, or some other nonsensical stuff. Most ordinary voters run their lives competently, constantly making decisions of great consequence in the personal and business lives.

No issue is too complex for a competent specialist to explain in terms lay people can understand. By the way, most politicians learn about complex issues because specialists explain the issues to them; what does Joe Biden, or Trump, or Sanders, or most anybody else, know about high tech, low tech, nuclear energy, climate change, etc., not much. Most ordinary voters are as capable as most politicians to understand complex issues.

But even more important is that direct democracy places the issues right in front of the people for the people to decide. In direct democracy there are no meetings between the lobbyists  and the politicians to decide a new or a new policy, because the politicians and the lobbies know the people have the final say, not them; why waste a lot of money and effort on the politicians is they can not deliver?

Once the people have real power, once they are really empowered, instead of the fake stuff that passes for empowerment, but it is more like charity from politicians to those without power.  Once the people have real power, the big corporations, the very wealthy, lose all that disproportionate influence over public policies and laws.

How do we know that? Because we have an example of direct democracy in Switzerland.

For almost 200 years, the Swiss people themselves decide when a to reject a law, when to propose a new one or when to change the constitution. There is nothing the politicians, or Nesté, or UBS, or Swatch, or Roche, or any rich Swiss can do about that. Not even the Swiss Supreme Court has the power to overturn the results of a popular referendum. This is why California is not a real direct democracy; the California Supreme Court and the US Supreme Court can overturn, and have, popular referendums.

But there is another reason California, or any of the other states who practice direct democracy at the state level, are not direct democracies; in the US the government with most power to influence, and even control, the lives of Americans, is the Federal Government; there is no people’s power at all at the Federal level. At the Federal level all Americans can do is vote, forget and hope for the best.

I suspect that Mr. Reich does not believe in direct democracy, or is ignorant of it, otherwise he would be promoting direct democracy as the remedy to America’s huge political problems and growing polarization and instability. I suspect Mr Reich is an elitist, people who believe that ordinary people need special people to lead them, special people that somewhat have been chosen by nature because of their special vision and ability to lead the masses. It is total baloney; Switzerland is far better governed than the US, and most, if not all, other countries.

It is because of direct democracy, direct democracy forces voters to look at the facts themselves, instead of listening to demagogues like Trump, Biden and practically all politicians in the US Congress, and to people like Mr. Reich himself.

Do not listen to Mr. Reich. Mr. Reich proposes that another elite pass laws and regulations to control capitalists, it will never work. In fact, that is what the US has been doing for decades; change the people at the top but, after lots of smoke, mirrors and slogans from the Right and the Left, nothing really changes because the large corporations, the rich and the political lobbies of the Right and the Left know their contributions create obligations for politicians to help the donors and “vote deliverers”.

If you want real change, the people will have to do it ourselves, that is called direct democracy.

Victor Lopez


Texas abortion law and direct democracy

I just learned that Texan politicians voted 81 against 63 to pass a new law which, according to its critics, will ban most abortions in Texas.

I do not want to discuss if abortion is right, wrong, ethical, unethical, is against the rights of women or against the rights of the unborn.

What I want to discuss is that a decision by 81 politicians is thoroughly undemocratic; they do not have an explicit mandate by the people to do that. Even if they campaigned on that issue, unless they campaigned on that issue alone, they would not have a mandate.

Abortion is a controversial issue in Texas, and in most other places. A controversial issue of that importance should not be decided by 81 politicians, no matter how ethical, principled they believe they are. It is not a democratic decision because it is not an explicit decision by the people.

No matter how many conservatives of liberals try to paint the decisions by elected politicians as democratic, they are not because democracy means government by the people. Only a decision explicitly made by the people in a referendum is a democratic decision.

Naturally, it would not be a democratic decision if the elected politicians decided that abortion is legal. Furthermore, the Texan Supreme Court or the US Supreme Court should have no say on the matter if the decision in Texas was the result of a popular referendum.

A decision by politicians would barely be democratic, even if Texan voters had an easy and simple way to call a referendum on the matter. Such a simple way would be, for example, if any Texan, group of Texans, a Texan political party, a union, a group of pro, or anti abortionists, were able to collect 300 000 signatures in one year.

If with that procedure in place nobody is willing or able to collect the 300 000 signatures to force the Texan government to hold a referendum, then perhaps we could say the decision by Texan politicians on abortion is democratic because the people, decided not use the opportunity they have to challenge and reject the law.

Bu the way they did in Texas on abortion and other issues, and the way they do it in other states, in the whole of the US, in France, and the rest of representative “democracies”, it is not democratic at all because the decisions by their parliaments are not decisions by the people.

To say a country is a democracy because they elect their representatives, and the executive and the legislative check each other’s power, or because the Supreme Court can check the power of both, it is false. For example, the politicians in the executive and the legislative often belong to the same party; where are the checks and balances on that? They want us to believe that because the politicians of rival parties fight each other bitterly to destroy the rival and get more votes, it is a check and a balance, it is not that at all, it is just a bitter fight for power, not a fight to honestly control the power of the other branch.

As for the Supreme Court, what sort of check and balance can it provide when the Judges are appointed by politicians and we see how the Judges fall in the conservative or the progressive camp. The hard truth is that what they want us to believe are checks and balances is just more politics.

Just in case you are thinking. “But in California and in some other 30 US states, they have popular referendums”. Those referendums are not worth much because the judges can declare the results are contrary to the constitution of the State or the US Constitution. Popular referendums, if the country is a real democracy, can not be stopped by anybody; only another popular referendum could do that.

It is time that the people in Texas, in California, in the whole of the US, in Canada, France, the UK, Germany, Japan and other representative democracies, have the right to call for referendums with mandatory outcomes for the politicians.

Just in case you think this is not possible, or that it is “Promised Land” messianic stuff; the Swiss have been doing it for not much less that 200 years.

That is right. For example, the Swiss people legalised abortion in Switzerland by a popular referendum.

Swiss citizens proposed that abortion should be permitted in Switzerland. They collected the required number of signatures and, in June 2002 the voters decided abortions would be legal.

Naturally, if the values of the public change, in a few years’ time another group could collect signatures to hold another referendum that abortion be banned.

That is the way it should be; the people, not the judges, not the politicians, not the Church, not anybody else, only the people, should decide by referendum any issue that enough people consider should be decided by referendum.

When the people decide, nobody can question the democratic credentials of such decision; when the politicians decide we all know the decision is not democratic, that is why the groups that are pro-abortion in Texas will not accept it.

The root problem in the US, and in all representative democracies, is that people are brought up to believe that they need leaders, special people with the wisdom to know better than ordinary people what is right or wrong. Anybody who believes that is as naïve as you can get. Few people believe that, that is why the US Congress gas such poor reputation among Americans.

The reality of Switzerland shows they have been able to get rid of “leaders with vision”. Swiss citizens decide the destiny of the country by themselves, they do not need more or less “illuminated” politicians to lead them. In Switzerland the voters decide and the politicians do what the people want; should it not be like that in all countries who call themselves democracies.

But in 2002, the Swiss decided by binding popular referendums on many other issues. For example, they decided the country should join the UN, that working hours should NOT be reduced, the use of the country’s gold reserves, a law regulating the electricity market, on asylum seeking, on unemployment, etc.

In addition, they held cantonal and municipal referendums on many other issues.

In Switzerland, while they still elect politicians, the enormous direct power to decide that voters have makes Switzerland the only real democracy we have on Earth. While it is not a fully direct democracy, it has the laws and practices that make Switzerland very close to a direct democracy.

You may be surprised to know that Taiwan, inspired by Switzerland, is the only other country where the people have comparable levels of power. If Taiwan, with only a few years of voting and electing politicians (it was a dictatorship before) can introduce direct democracy; what is the matter with the Americans, the Canadians, the British, the French, the Germans and many others, that seem unable to transition to direct democracy?

The Germans in particular should be eager to bring direct democracy to their country because Hitler was not the root problem of Germany in the 30s, the root problem was Germany’s representative democracy that messed up things so badly, particularly with hyperinflation, that the people, desperate, turned to Hitler; to a “visionary leader.

Anyone observing the US can see how US representative democracy is rapidly deteriorating because the politicians can not help but use their excessive power to corrupt everything, including the voters with many “gifts; mostly by approving many laws and policies that are weakening the country. Americans should demand direct democracy before the time when they can demand nothing arrives in America.

Victor Lopez

Bitcoin and crypto are, to money and finance, what direct democracy is to representative democracy; a threat, to politicians and those who lobby them.

That is why the political and financial ruling elites like neither. They pay lip service to democracy but when it comes down to real issues; they dislike direct democracy, which decentralises political power, and they dislike crypto because it decentralises economic and financial power, as well as pushing the decentralisation of political power.

Let us look at the facts, at what the politicians on the Right and the Left say, as well as to their policies.

After their statements, I put my comments in brackets.


“Cryptocurrencies are a disaster waiting to happen”.

(It is obvious that if he could he could ban crypto to “prevent” a “disaster” he would. Trump can not resist spewing out what the New York financial and political clique, an his professors at the Wharton MBA school say; the only “serious financial system is the one we support and the supports us…”)

He isn’t a big fan of digital currencies because they’re hurting the dollar.

(No, Mr Trump, the dollar is hurting because the politicians like yourself keep printing money with nothing to back it up with. It is as if a person had a printing machine in the basement and prints dollars to go to Costo. Mr. Trump and Mr. Biden and Congress are in fact giving Americans dollar, just as is they printed the dollars in their basements. To say that Crypto is hurting the dollar is like saying that Toyota hurts GM because it makes better cars.)

“They certainly are something that people don’t know very much about,”

(I do not think Mr. Trump knows much either, otherwise he would not make the comments he makes.)

As for Biden and his administration, they are not as hostile as Trump but they are no friends of Crypto either. For example, the US Administration has rejected all applications to set up Exchange Traded Funds (ETFS) for the major cryptos, Bitcoin and Ethereum. Even Canada, where the establishment is no fan of direct democracy or crypto either, has approved several ETFs for Bitcoin and Ethereum.

Other US politicians, like Senator Warren, say things like:

“There are substantial difficulties with our current payment system.  Nearly 33 million Americans have been locked out of the traditional banking system. They’re forced to use check cashers and payday lenders for basic banking services. And even those with traditional checking and savings accounts find that many of the largest banks have proven to be untrustworthy, gouging customers for overdraft or other fees or, in the case of Wells Fargo, just outright cheating their customers with fake accounts and fake services for which customers paid dearly.”

(Very interesting perspective; she says the current system is not working, but instead of aiming her guns at the political and financial operators of the current system, that leaves 33 million Americans locked out of the financial system, and many more trapped in it, she attacks crypto, a new technology that could help the 33 million and everybody else, in the US and around the World.)

(Warren shows her true beliefs; she is not concerned about the people, what she is concerned about is power and control, she does not like freedom, all politicians in power like control.  She uses protection of the people as the fig leaf to hide her private true beliefs. The difference between representative democracies and dictatorships is that in representative democracies the people can replace those in control; the control changes. but the control never goes away. Warren knows she needs the big money of big money, the money of those who leave 33 million out, and have others trapped, to get elected)

(When Internet started, and even today, it had political and financial enemies, and not only in totalitarian regimes. Elected politicians like democracy only because it makes it possible for them to get elected and replace those currently in power, but once in power, they dislike democracy; they dislike the people to have any say on any specific decision.)

(Warren just reacts in the natural way elected politicians react. When something new challenges their decision-making power, they fight it. Crypto challenges their decision-making power. They know it and they dislike it. But they will never say that. They are very articulate, they know how to find cover with clever words about “protection of the weak”, “fairness”, “equality” and so on. But they hate and fear that the people have as much power as they do, and far less do they like that the people have more power, power to stop their laws and decisions.)

(Her reaction to Crypto, which means the people will have financial freedom and independence from banks and politicians, is like the reaction of Swiss elected politicians when the Swiss people decide to bring in direct democracy in 1867; Swiss politicians did not like direct democracy, either. During the Second World War, they even tried to revert to representative democracy, but the people stopped them. For all the talk about the Swiss banks, Switzerland is far friendlier to crypto than the US.)

Warren continues: “So, what are the alternatives? Digital currencies have been hyped as a solution to these problems. Early advocates claimed that cryptocurrencies would open up the financial system and deliver fast, cheap, and secure payments to anyone with an Internet connection. Others pointed out that crypto was a way to avoid the risks of dealing with the giant banks that squeezed customers dry.”

(Crypto is barely 11 years old; the most important crypto, Bitcoin, was launched in 2009. The second most important, Ethereum, was launched in 2013. All others are also very new. The services that crypto can provide are barely starting. Unfortunately, Warren does not want to give them a chance, I think I know why.)

“Cryptocurrencies have turned out to be a fourth-rate alternative to real currency. First, cryptocurrencies are a lousy way to buy and sell things. Unlike the dollar, their value fluctuates wildly depending on the whims of speculative day traders. You know, in just the last two months, the value of Dogecoin increased by more than ten-fold and then declined by nearly 60%. Now that may work for speculators and fly-by-night investors, but not for regular people who are looking for a stable source of value to get paid in and to use for day-to-day spending.”

(These are silly arguments. The people who buy crypto know what they are doing; they are not the naïve or the very old. The value of crypto only fluctuates wildly because it is just starting, it is mostly investors that are not averse to risk that buy crypto, just like the investors not averse to risk invested in Netscape, Apple, Google and all the others, and continue to invest in new ones, when they start. It is normal their value fluctuates wildly; it is in the nature of any new industry. I am sure the same happened with steam engine, cars, etc.)

“Second, crypto is a lousy investment. Unlike, say, the stock market, the crypto world currently has no consumer protection – none.  As a result, honest investors and people trying to put aside some savings are at the mercy of fraudsters.  Pump and dump schemes are outlawed in the case of ordinary stock, but they have become routine in crypto trading. One study found that the level of price manipulation in cryptocurrency is – and I quote – “unprecedented in modern markets.” ”

(This is laughable. If she is arguing current laws, and action by politicians, protect consumers, she is joking. Let us remember 2008; nobody rescued the millions homeowners who lost their homes, but the politicians rescued that big banks; is an interesting twist in consumer protection. Don’t sometimes naïve investors lose their shirts in stocks?)

She continues:

“And third, crypto has become a haven for illegal activity. Online theft, drug trafficking, ransom attacks, and other illegal activity have all been made easier with crypto.  Experts estimate that last year more than $412 million was paid to criminals in ransom through cryptocurrencies.  And unlike other payment systems that make it tougher to move money illegally, a key feature of crypto is its secrecy. So just in the past few weeks, cryptocurrencies made it possible for hackers to collect a ransom to release the Colonial pipeline hack and to free JBS, the world’s largest meat producer, from a paralyzing cyberattacks. And every hack that is successfully paid off with a cryptocurrency becomes an advertisement for more hackers to try more cyberattacks.”

(Crypto-related crime does not even come close to the dollars drugs, theft, smuggling and many other illegal stuff move around the World. If use in criminal activities is the argument to attack crypto, a much stronger case can be mounted against the US Dollar.)

“Finally, there are the environmental costs of crypto. Many cryptocurrencies are created through “proof-of-work” mining. It involves using computers to solve useless mathematical puzzles in exchange for newly minted cryptocurrency tokens. Such mining has devastating consequences for the climate. Some crypto mining is set up near coal plants, spewing out filth in return for a chance to harvest a few cryptocoins. Total energy consumption is staggering, driving up demand for energy.  If, for example, Bitcoin – just one of the cryptocurrencies – were a country, it would already be the 33rd largest energy user in the world – using more energy yearly than all of the Netherlands. ”

(She has a small case here, but small. The carbon footprint of bit coin is relatively easy to calculate; so many computers using consuming so many watts of electricity. But for paper money, trees have to be cut and transported, processed in polluting pulps and paper mills, shipped to printers and shipped again to the banks. Something similar is necessary with coins; mining, transporting, refining, etc. I doubt bitcoins have more environmental impact than paper and metal money. The pollution and contribution to global warming of crypto is minuscule compared to many other industries)

“And all those promised benefits-the currency that would be available at no cost to millions of unbanked families and that would provide a haven from the tricks and traps of big banks-well, those benefits haven’t materialized.”

(Isn’t she going too fast? Services based on crypto are barely starting. It is not logical to speak like that, unless you have already decided crypto is evil; like Trump, but in longer sentences.)

So, I leave there for you. But if we want to have political and economic freedom, we need direct democracy and crypto.

Victor Lopez

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