Monday, March 25, 2013

Silence on American Oligarchs Because They Own the Media

Russian oligarchs have been in the news a lot recently. We have all read about them paying for sex with ballerinas, committing suicide in strange ways and seeing their money confiscated by the Eurocrats. Yves Smith at Naked Capitalism has a great post on the silence about America's oligarchs. The NY Times does its best to portray the Cypriot banking system as a conduit for dirty, dark Russian mob money. There is a bit of truth to it, but the facts paint a grey picture. Cyprus is more like Russia's Cayman Islands, Bermuda or for Western Europe, Switzerland. It is a low tax investment haven with safe rules and secrecy protection. Yves Smith does a nice job explaining how crooked the American elite are, how income inequality is worse in the USA, and how no one calls the elites oligarchs, but they are the same. What Yves misses is that the modern robber barons of the USA are aligned with the media through ideological sympathies and direct ownership.
 
While written with a liberal slant, Naked Capitalism is one of the best econ-finance blogs on the Internet. Yves and contributors do a great job of explaining complicated concepts in simple terms. That is why her inability to see the alignment of the media and big money shocks me. She mentions Carlos Slim by name yet never mentions that Slim owns 8% of the NY Times stock. Slim floated them a multi-hundred million dollar loan in the financial crisis when their stock plunged & liquidity was an issue. Her post on the silence about America's oligarchs is a perfect time to bring up Warren Buffett's steady purchases of newspapers. She remains silent on it. The megaphone to call out America's oligarchs is the mainstream media, especially the NY Times now with it's online reach. For the time being, we can get a Matt Taibbi article with some good points but tainted by swears and the Rolling Stone name. Newspapers hold an amazing position in US society, and with declining revenues and stock prices, they are vulnerable to vultures in the form of billionaires. Because the big banks own quite the slice of major newspapers, they can protect themselves from the media airhorn. Same applies to individuals.
 
Buffet is a special case that an interested reporter could evaluate. Buffett is known for picking up undervalued private firms, private firms that he can strip down or, in recent years, companies that can become wards of the state. Despite being the 2nd richest man in America, Buffett loves the estate tax because inheritors are forced to sell their family business when it passes down to them or face a big tax bite. Why would Buffett buy newspapers if they are a declining industry with declining revenues? These newspaper acquisitions can act as a vertical integration play for his brick and mortar businesses' advertising costs. He can reduce expenses on his already lean companies. There's another incentive. Buffett is a follower of Graham's value investing. He used to trumpet that solid approach. Intrinsic value is tangible and intangible value combined. Buffett sees what others are discounting with newspapers. While the papers have little value and possibly are guaranteed losses they have a giant intangible value in molding public opinion. He sees the non-monetary value in having media protection. Sure, Berkshire will stay away from editorial influence (whatever), but they can control which news items make it onto page one or into the paper's back pages. It's a duplication of Slim's investment in the NY Times, where they avoid mentioning immigration's negative effects at all. Buffett's papers can explain why pipelines and the trucking industry are bad, which helps his rail business. The newspaper can act as a cost leader, but its payoff is to all of his primary businesses.
 
The interests of our oligarchs are aligned with the media. The Sulzbergers (family owners of the NY Times) and other media conglomerate owners like Sam Zell are million or billionaire oligarchs as well. They dare not pry too deep into the interests and workings of our multinational corporations because those interests are very much in sync. Recall, the Washington Post only makes money through the college racket now. Billionaires like Slim and Buffett can gobble up media properties, and with their advertising purchases, can threaten big media into compliance. As more billionaires come out in favor of more immigration or more regulation, an honest media would be slicing the platitudes mouthed by billionaires to shreds to get to the truth. They don't now. The old business oligarchy is gone and what is left of our natural resource producers is not aligned with them (see: North Dakota oil boom hit pieces in the NY Times). The ascendant Big Health-Big Pharma-Big Bank-Big Uni economic sectors of the last 25 years are buddy buddy with the goals of our cathedral media. After all, who is going to fund that welfare state? 

1 comment:

peterike said...

Excellent points. And another dynamic is at work, of course, which is the unholy alliance of American oligarchs, media and the Democratic Party. You could draw a circle out of arrows with each of these three pointing to the others. The media pimps the Democrats, who in turn create legislation that favors the oligarchs who in turn fund the Democrats with dollars and the incalculable value of a complacent and fawning press. Round and round she goes.

Even Matt Taibbi, who does some good things, tries desperately to avoid mentioning any Democrat duplicity with the banksters while simultaneously trying to drag in Republicans any way he can.

Of course Republicans stand outside this Circle of Virtue, satisfied with the scraps that fall from it into their waiting hands. Meanwhile, the media pounds them into dust, but as long as they have their safe seats they get to keep their perks and their access, and most of them end up millionaires as well.

It's all gotten so dirty that it will take a Hercules to sweep out all the stinking shit in the stables.