What Happened August 23, 1971?

The Turning Point of a Nation

August 23, 1971 is the day that broke America. It marks the start of explosive epidemics, including but not limited to, obesity, incarceration rates, student loan debt, carbon emissions, metabolic disease, opioid addiction, sugar consumption, healthcare costs, credit card debt, personal bankruptcies, commodity pricing, depression, and not coincidentally, lobbying. It heralds the genesis of the widest wealth gap in human history, an economic precursor to toxic political polarization. It marks tragic declines in upward economic mobility, and our ultimate downgrade to a "flawed democracy". What was enleashed in America that day was something so toxic that it has poisoned our systems and psyches.

Before That Infamous Date

Before that date, businesses minded their own business, and capitalism was doing great.  America's labor force experienced a healthy growth that mirrored the overall growth of our nation. The average wages of the American worker grew in direct proportion to the overarching economic growth of the country, and these parallel growth trends represented a time when the economic strength of our nation also represented the economic strength of its people. The country had a booming middle class that was the envy of the world, and we had the highest rates of upward mobility that animated the “American Dream." A family could live comfortably on the income of one wage earner; there was free and affordable access to healthcare; higher education required no student loans. The relative cost of a home was only 2x the average salary. And it was virtually guaranteed that each generation would do even better than the last. Capitalism was being leveraged to generate the resources we needed to advance our democratic ideals. Until it wasn't.

What Happened on August 23rd?

On August 23, 1971, a corporate attorney named Lewis Powell wrote a memo. This came at the request of the U.S. Chamber of Commerce, asking for intruction on how US businesses might engage in Washington politics. The document was intended to be a confidential memorandum to the Chamber’s board, but effectively became the blueprint for corporate domination. It grew into a manifesto for new business-oriented think tanks, lobbying groups, trade associations, and professional organizations committed to shaping the government to better shape their needs, a notion that hadn't existed before its penning.

The Interesting Thing About Lou

Lewis wasn’t just any attorney. He was a corporate attorney for the tobacco industry, which was reeling from a recent ruling that would result in its impending loss of market share. At the time, Congress frowned upon predatory practices, deceptive messaging, and business models that thrived as people died. (Those were the golden days of democracy.) And just seven months earlier, Congress banned the advertising of cigarettes on television and radio. This was due to mounting evidence of the health risks associated with smoking and the need to protect public health.

Enthroning The Profit Motive

Lewis used the banning of tobacco ads to frame his memo. He characterized such actions as "An Attack on American Free Enterprise." We can deduce, from the contents of the memo, that Lewis felt that preventing companies from making people sick and dead for profit was an unreasonable restriction, and that we must take a stand and protect our inalienable rights to make a profit at all costs. And in 34 otherwise unassuming pages, The Powell Memo turned the tobacco industry’s playbook into America’s industry standard - a model that would prioritize profit at all costs, absolve corporations of virtually any responsibility in the name of personal responsibility, embrace a mantra of "freedom" as a cloke for vice, and in effect institutionalize the Gospel of Greed. All in the name of The (almighty) Profit Motive.

Forgone Fiduciary Duties

The Powell Memo became a call to arms. And it threw open the doors for corporate dollars to infiltrate American politics, and turn our government into the mutant institution we see today. Big corporations, Wall Street, and wealthy individuals began to use their money to quite literally purchase policies that tipped the game ever in their favor. And as politicians received big checks through lobbying and campaign dollars, they felt compelled to cater to their corporate constituents, forgetting or forgoing their fiduciary duty to the American people. Profit became the American idol, and all the founding ideals of "we the people" for "a more perfect union" and "general welfare" were being sacrificed at its altar.

A Dangerous Shift

That process was almost invisible, for decades. It happened inside administrative agencies, within legislatures, and behind the brick walls and solemn columns that none of us could be bothered to pay attention to. But the net effect was to very subtly, and dramatically, change the rules of the game, and the reality of our daily lives. These policies prioritized profit over people; placed the bottom line over the greater good; shifted our culture from American ideals to American idols; and slowly distorted the definition of the American Dream from a call to morality to the pursuit of materialism. We were groomed to consume, like lambs fattened for slaughter. The American people simply became a means to an end; and the end was profit.

The Birth of Bad Capitalism

The Profit Motive has metasticized into “profit at all cost”. And this has inevitably come at a very high cost. Predatory practices designed to maximize profit without consequence have led to some of America’s most damaging (and iconic) features today. Because the Profit Motive, unhindered by any moral compass or legislative oversight, incentivizes bad behavior, and turns its profit-seeking artillery against people and planet. And by turning profit against people and planet, it has in effect turned Capitalism against Democracy. This is what I will call "Bad Capitalism". On August 23, 1971, he Powell Memo gave birth to Bad Capitalism. And Bad Capitalism is cannibalizing democracy.