The Soft Money Present

Charles Hughes Smith is one of my favorite long-term blogger-turned-authors, and he had an excellent post earlier this week about multinationals, credit markets, and its impact on the careers and life choices of typical people.

The second factor is the status quo grants all the advantages to global corporations and the central state.The mechanisms used to enforce these advantages are both numerous and well-masked. One is cheap, limitless access to capital–what I call free money for financiers. Imagine how many profitable assets you could buy if you too could borrow $1 billion at .25% interest from the Federal Reserve or another central bank.

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Once you can access unlimited nearly-free capital, it’s a snap to buy political influence, at which point the state (government) enforces your monopoly/cartel on the populace as rule of law. And we all know what happens if you challenge the state: you are targeted for marginalization, impoverishment and trumped-up Kafkaesque charges.

Given all these advantages, Corporate America and the State can afford to pay those who pledge their fealty far more handsome sums than can typically be earned outside these fortified fiefdoms. Above the entry level, Corporate America and the State both pay far in excess of the median wage in salary and benefits, and in the security promised to government employees.

It’s not that difficult to earn $60,000 or more in government service (remember to include all the bennies–healthcare, vacation, personal days off, sick leave, pensions, etc.) and Corporate America pays its managerial/technocratic class very well.

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But there is a cost to this sacrifice of one’s working life and fealty. It’s difficult to put a price tag on it, but for most of us it’s a significant sum–often hundreds of thousands of dollars over a lifetime. For those who can’t stomach the absurdity of spending their lives in service to these fiefdoms, it’s not really a choice; it simply isn’t an option.

This is also why hard money systems would be so disruptive. Part of what makes multinationals so competitive, despite all their other problems, is access to cheap credit at scale. While it is possible to compete with them in the dollar system, it’s only really possible to do that once you gain full access to the regulated capital markets.

Access only ceases to be competitive when the currency stops being competitive, and the state that manages that system loses the strength to continue handling its financial obligations. The nation-state and the corporate system that grew out of it were a definite break with the independent economic tradition of family-owned enterprises. It’s also coincident with the compulsory education system, which breaks the natural affinities and economic connections between parents and children.

The nation-state economic system encourages people to drop their natural loyalties and to surrender them to bureaucratic ones, on the theory that it’s more efficient. If it really were more efficient in an economic sense, it would not need the enormous subsidies represented by the enormous soft money apparatus.

Corporations today struggle with the same things that the state struggles with: breakdowns in loyalty and trust, which it must ironically overcome with endless streams of propaganda, which exist to make the characters of brand marketing as more real and readily identifiable than folk heroes and family members.

This breakdown in trust is likely to be epoch-marking, and it may not be as simple to bridge as some seem to think.